Consider the short run and the long run time frames used in macroeconomics. The

Question

Consider the short run and the long run time frames used in macroeconomics. The of the short run is The time period when the labor force participation rate is fixed The time period when supply of money is fixed. The time period when inflation is positive The time period before the economy has fully adjusted to an unexpected change in aggregaite demand According to most economics, including those at the federal Reserve, what is a desirable rate of inflaction? Precisely 5 % Something mad and predictable, like 2 % Zero % Something negative, which is deflation, to counter all the past years of inflation According to the ADIAS recressions are causes by: negative aggregate demand shocks negative real shocks positive real shocks both A and B Which necal policy would help a government fight a recerssion due to back of paying down the national deby increasing government spending blocking raising

Explanation / Answer

1. d.

2. b.

3. d. both A and B

4. b. increasing government spending as it increases the purchasing power of individual which resulted in increase in the demand.

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