Economic Growth and Aggregate Supply

What are the three policy options discussed to address recessionary or inflationary gaps?

• No policy, fiscal policy, and monetary policy

• Fiscal policy, monetary policy, and trade policy

• Fiscal policy, trade policy, and no policy

• Monetary policy, trade policy, and no policy

In the short run, what is the effect of a decrease in interest rates on aggregate demand?

• Aggregate demand shifts up

• Aggregate demand shifts to the left

• Aggregate demand shifts to the right

• Aggregate demand remains unchanged

How does increased investment due to lower interest rates affect the long-run aggregate supply?

• It shifts the long-run aggregate supply to the left

• It shifts the long-run aggregate supply to the right

• It keeps the long-run aggregate supply unchanged

• It causes the long-run aggregate supply to fluctuate

What happens to the short-run aggregate supply when there is an increase in government spending without an increase in machinery?

• Short-run aggregate supply shifts to the left

• Short-run aggregate supply fluctuates

• Short-run aggregate supply shifts to the right

• Short-run aggregate supply remains unchanged

What is the long-term effect on wages when aggregate demand increases due to factors other than investment?

• Wages decrease

• Wages remain constant

• Wages increase

• Wages fluctuate