The real-balance effect explains a shift in aggregate demand, white the wealth e

Question

The real-balance effect explains a shift in aggregate demand, white the wealth effect explains a moment along the AD curve. True False Macroeconomic equilibrium in the short run always occurs at full-employment GDP. True False In the aggregate expenditures model of a private closed economy. If aggregate expenditures are greater than output or income, then real GDP will increase towards its equilibrium level. True False The data below is the consumption schedule in an economy. All figure are in ballons of dollars. Refer to the above table. If a government sector is introduced and a tump-sum tax of $530 billion is imposed at levels of GDP then the consumption in the table becomes.

Explanation / Answer

1. False as real balance effect is along the curve not shift.

2. False . in short run it could be above or below

3. True , GDP will increase with increase of production to meet shortage of demand.

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