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ECON 203 Lab 9 Question 1 Introduction to Macroeconomics (Concordia University)
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ECON 203 Lab 9 Question 1 Introduction to Macroeconomics (Concordia University)
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lOMoARcPSD|63 53920ECON 203 Lab 9 Question 1 Introduction to
Macroeconomics (Concordia University)
)
, lOMoAR cPSD| 6353920
Lab 9 (Question 1)
Question 1 [5 points]
Your solution to the question was :
For all the questions below select the appropriate answer:
a) The speed of an economy's built-in adjustment to persistent output gaps depends on:th
degree of wage and price flexibility in labour and product markets.
the absence of a central bank and monetary policy interference.
commitments by labour and management to fixed long term wage and price contrac
public concern about the government sector's budget balance.
b) If the economy experiences an aggregate demand shock, monetary policy: can
react in a way that stabilizes inflation but not real GDP.
can react in a way that stabilizes real GDP but not inflation. is
powerless to offset the effects on real GDP and inflation.
can react in a way that stabilizes both inflation and real GDP.
c) A short run AS curve giving the relationship between the inflation rate and the level of r
is horizontal because producers are willing to produce whatever level of output is de
prices are rising at a constant rate.
is upward sloping because when inflation rates are higher than rates of increase in w
relative to costs and higher output is profitable.
is downward sloping because lower inflation rates provide incentives to sell more ou
revenue growth.
is upward sloping because higher levels of output in the short run require more capi
increase production capacity.
d)
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