26 Which of the following accurately contrasts short run and long run equilibrium a In short run equilibrium, the aggregate demand curve intersects the long run aggregate supply curve in long run equilibrium, the aggregate demand curve intersects the short run aggregate supply curve b In short run equilibrium, the aggregate demand curve intersects the short run aggregate supply curve in the long run equilibrium, the aggregate demand curve intersects the long run aggregate supply curve c In short run equilibrium, the aggregate demand curve intersects the short run aggregate supply curve in the long run equilibrium, the aggregate demand curve intersects the long run aggregate expenditures curve d In short run equilibrium, the aggregate demand curve intersects the short run aggregate supply curve in long run equilibrium, the aggregate demand curve intersects both the short run and the long run aggregate supply curves 29 The term natural level of unemployment means that the real GDP is at a level for which there is a no cyclical unemployment and the long run aggregate supply curve is vertical b no cyclical unemployment and the short run aggregate supply curve is vertical c no frictional unemployment and the long run aggregate supply curve is vertical d no structural unemployment and the long run aggregate supply curve is vertical 30 Which of the following statements is true with respect to the beliefs of the different schools of thought about the shape of the aggregate supply curve a Classical economists believe that the aggregate supply curve is upward sloping, therefore, an increase in aggregate demand increases both the price level and real GDP b Classical economists believe that the aggregate supply curve is vertical, therefore, an increase in aggregate demand only causes an increase in inflation and no change in real GDP c Keynesian economists believe that the aggregate supply curve is horizontal, therefore, an increase in aggregate demand only causes an increase in inflation and no change in real GDP d Keynesian economists believe that the aggregate supply curve is upward sloping, therefore, an increase in aggregate demand increases both the price level and real GDP

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26 Which of the following accurately contrasts short-run and long-run equilibrium? a. In short-run equilibrium, the aggregate demand curve intersects the long-run aggregate supply curve;

Which of the following accurately contrasts short-run and long-run equilibrium?

In short-run equilibrium, the aggregate demand curve intersects the long-run aggregate supply curve; in long-run equilibrium, the aggregate demand curve intersects the short-run aggregate supply curve

In short-run equilibrium, the aggregate demand curve intersects the short-run aggregate supply curve; in the long-run equilibrium, the aggregate demand curve intersects the long-run aggregate supply curve

In short-run equilibrium, the aggregate demand curve intersects the short-run aggregate supply curve; in long-run equilibrium, the aggregate demand curve intersects both the short-run and the long-run aggregate supply curves

The term "natural level of unemployment" means that the real GDP is at a level for which there is:

no cyclical unemployment and the long-run aggregate supply curve is vertical

no cyclical unemployment and the short-run aggregate supply curve is vertical

no frictional unemployment and the long-run aggregate supply curve is vertical

no structural unemployment and the long-run aggregate supply curve is vertical

Which of the following statements is true with respect to the beliefs of the different schools of thought about the shape of the aggregate supply curve?

Classical economists believe that the aggregate supply curve is upward sloping, therefore, an increase in aggregate demand increases both the price level and real GDP

Classical economists believe that the aggregate supply curve is vertical, therefore, an increase in aggregate demand only causes an increase in inflation and no change in real GDP

Keynesian economists believe that the aggregate supply curve is horizontal, therefore, an increase in aggregate demand only causes an increase in inflation and no change in real GDP

Keynesian economists believe that the aggregate supply curve is upward sloping, therefore, an increase in aggregate demand increases both the price level and real GDP