In the short run in periods of low inflation, an increase in aggregate demand fr
ID: 1203618 • Letter: I
Question
In the short run in periods of low inflation, an increase in aggregate demand from a position of full employment leads to: higher prices and higher unemployment. higher prices and higher output. lower prices and higher output. lower prices and higher unemployment. 40. As people get used to inflation: the short-run aggregate demand curve adjusts more rapidly. wages adjust faster, and the short-run aggregate supply shifts quickly to the right. wages adjust faster, and the short-run aggregate supply shifts quickly to the left. the long-run aggregate demand adjusts more slowly. The inflation tax is the effect on the public of: the increase in the real value of money caused by inflation. the decrease in the real value of money caused by inflation. the result of indexing wages to inflation. cost of living adjustments. Okun's law suggests that a increase in a positive output gap the unemployment rate by 1%; increases; 0.5% 1%; decreases; 0.5% 0.5% ; increases; 1% 0.5%; decreases; 1% Investment banks differ from commercial banks because commercial banks, but investment banks are allowed to advertise; must not advertise. can have offices only in one state; can have offices in many countries do not sell foreign currencies; sell foreign currencies accept deposits from customers; do not accept deposits One of the first forms of paper money emerged when: the Federal Reserve was formed in the early 1900s. the government of Rome printed money to pay Roman soldiers. customers who had deposited gold and silver with medieval goldsmiths began to use their receipts to pay for purchases. Europe adopted the euro.Explanation / Answer
(39) (B)
Higher aggregate demand shifst the AD curve rightward, leading to higher price level (inflation) and higher output (real GDP).
(40) (C)
(41) (B)
Since inflation reduces purchasing power, the real value of money falls.
(42) (B)
As per Okun's law, 2% increase in output will decrease unemployment by 1%.
So, 1% increase in output will decrease unemployment by 0.5%.
(43) (D)
This is the most important difference.
(44) (C)