Suppose the economy is in long-run equilibrium. Using the monetarist model, what happens to the price level
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Question:
- Suppose the economy is in long-run equilibrium. Using the monetarist model, what happens to the price level and to Real GDP in in the long run as a result of an increase in velocity?
a.The price level falls and there is no change in Real GDP.
b.The price level rises and there is no change in Real GDP.
c.The price level remains constant and Real GDP rises.
d.The price level falls and Real GDP rises.
e.none of the above
- In the monetarist model, shown in terms of the AD-AS framework, the
a.AD curve is downward sloping, the SRAS curve is upward sloping, and the LRAS curve is vertical.
b.AD curve is downward sloping, the SRAS curve is vertical, and the LRAS curve is upward sloping.
c.AD curve is upward sloping, the SRAS curve is downward sloping, and the LRAS curve is vertical.
d.AD curve will shift if there is a change in either the money supply or velocity.
e.a and d
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