ScholarMatic: Explanation & Answer
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Why does the SRAS curve have a positive slope?
Because your (boring) instructor says it
does
When P rises, people substitute away from more expensive goods and services so SRAS decreases
When P rises, input prices rise so SRAS increases
When P rises, the supply of money shifts right so r decreases so SRAS increases
None of the above
Suppose the economy is in its long run equilibrium. If there is a decline in government spending, what happens in the short run?
Price level rises and output rises
Price level falls and output rises
Price level rises and output falls
Price level falls and output falls
Not enough information
From the previous question, what happens in the long run (relative to the initial equilibrium)?
Price level rises and output is unchanged
Price level falls and output is unchanged
Price level rises and output falls
Price level falls and output falls
Not enough information
ScholarMatic: Explanation & Answer
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