Short-run macroeconomic equilibrium occurs when:

a.structural and frictional unemployment equal zero.

b.the equilibrium lies on the long-run aggregate supply curve.

c.aggregate demand and short-run aggregate supply intersect.

d.A and B

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Question 2

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There has been a decrease in investment. As a result, real GDP will ________ in the short run, and ________ in the long run.

a.decrease; increase to its initial level

b.increase; increases further

c.decrease; decrease further

d.increase; decrease to its initial value

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A decrease in aggregate demand will:

a.cause inflation.

b.decrease unemployment.

c.cause the short-run Phillips curve to shift to the right.

d.move the economy to a lower point on the short-run Phillips curve.

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A decrease in aggregate demand results in a(n) ________ in the ________.

a.recession; long run

b.expansion; short run

c.expansion; long run

d.recession; short run

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A decrease in the price level will _______________

a.shift the aggregate demand curve to the left.

b.shift the aggregate demand curve to the right.

c.move the economy down along a stationary aggregate demand curve.

d.move the economy up along a stationary aggregate demand curve.

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A decrease in the price level results in a(n) ________ in the quantity of real GDP demanded because a lower price level ________ consumption, investment, and net exports.

a.decrease; decreases

b.decrease; increases

c.increase; increases

d.increase; decreases