Suppose the Economy Is Initially in Long-Run and Short-Run Equilibrium

question 27

Multiple Choice

Suppose the economy is initially in long-run and short-run equilibrium. If the Fed decides to pursue a contractionary monetary policy, we will see

• A) bond prices fall, interest rates fall, aggregate demand remains unchanged as consumption spending decreases, but investment spending increases. GDP remains constant in both the short run and the long run, but the price level falls in both.
• B) bond prices fall, interest rates rise, aggregate demand falls as investment and consumption spending decrease, and real GDP and the price level decreasing in the short-run, but only the price level decreasing in the long run.
• C) bond prices fall, interest rates rise, aggregate demand falls as investment spending decreases and consumption spending remains unchanged, and real GDP and the price level decrease in the short run, but only the price level falls in the short run.
• D) interest rates rise but no change in bond prices. Aggregate demand falls as consumption spending and investment spending decrease, and the price level and real GDP fall in both the short run and the long run.

Comprehend the influence of various factors on demand and capacity adjustments in aggregate planning.

Understand the role of disaggregation in translating aggregate plans into specific production schedules, such as the Master Production Schedule.

Grasp the advantages and limitations of graphical techniques in aggregate planning.

Evaluate the impact of workforce adjustment strategies, such as hiring, layoffs, and the use of part-time workers, on cost and quality.

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Definitions:

Digital Media

Content or devices that allow for the digital creation, distribution, and consumption of information and entertainment.

Virtual Reality

A simulated digital environment that can be interacted with in a seemingly real or physical way, often through specialized equipment.

X-Ray Images

Radiographic images used in medicine to view the internal structure of the body.

Camera Photographic Film

Light-sensitive material used in analog cameras to capture images through a chemical reaction triggered by exposing the film to light.