Starting from Long-Run Equilibrium,if the Public Anticipates That Policymakers Will

question 34

Multiple Choice

Starting from long-run equilibrium,if the public anticipates that policymakers will increase aggregate demand by less than policymakers do increase aggregate demand,and if the short-run aggregate supply curve fully adjusts to the (incorrectly) anticipated increase in aggregate demand,then Real GDP will __________ and the price level will __________.

• A) rise; rise
• B) decline; fall
• C) stay constant; rise
• D) decline; rise

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Definitions:

Openness to Experience

A personality trait characterized by a willingness to try new things, be creative, and think outside the box.

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Open and willing to consider or accept new ideas, suggestions, or changes.

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