1-)If inflation is less than expected, wealth is redistributed to ______________
ID: 1208733 • Letter: 1
Question
1-)If inflation is less than expected, wealth is redistributed to ____________________.
2-)____________________. costs are the costs of changing prices. When inflation is higher, firms will change their prices more frequently.
3-)According to the quantity theory of money, an increase in the money supply causes the price level to ____________________. and the value of money to ____________________.
4-)During periods of stagflation, output (GDP) ____________________ and prices ____________________ in the economy. (You must provide answers in the proper order to receive credit)
5-)In the aggregate demand and aggregate supply model, the point where the aggregate demand curve (AD), the short run aggregate supply curve (SRAS) both intersect with the long run aggregate supply curve (LRAS), and the expected price level equals the actual price level, is known as ____________________.
6-)Suppose a country experiences an increase in capital investment. The ____________________.curve and the ____________________.curve in the aggregate demand and aggregate supply model would shift to the ____________________. (You must provide answers in the proper order)
7-)The theory that the interest rate adjusts to bring money supply and money demand into balance is referred to as the theory of ____________________.
8-)The ____________________is the additional shifts in aggregate demand that result when expansionary fiscal policy increases income and thereby increases consumer spending.
9-)____________________ are changes in fiscal policy that stimulate aggregate demand when the economy goes into a recession, without policymakers having to take any deliberate action.
Explanation / Answer
Ans. 1. Lender from borrower (if inflation is less, it is beneficial for lender and vice versa)
2. Menu Costs.
3. Rise, Fall (Because according to QTM, MV = PY , a direct relation between M and P. As price rises, real value of money falls means purchasing power falls.)
4. Output remains stagnant or falls but price rises (A combination of stagnant output and rising prices )
5. Long run equilibrium because LRAS and SRAS are intersecting to AD curve at the same point.
6. The Long run demand curve and short run supply curve will shift to the right.
7. The theory of liquidity preference.
9. Tax cut or increase in government spending
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