Solved by verified expert :41)
Aggregate demand determines output in the short run if prices are flexible.
42)
If the supply of money increases, the long-run aggregate supply curve suggests
that output will not change but price level will.
43)
Aggregate demand and aggregate supply must be combined to determine the price
level and the “real” GDP.
44)
In the long run, output is determined solely by the supply of capital and the
supply of labor, not the price level.
45)
In the long run, the level of output depends on the price level.
46)
In the short run, the price level is determined primarily by the supply of
goods.
47)
Adverse supply shocks can cause a recession with increasing price level.
48)
The term “stagflation” is used to define an economic situation where
there are adverse supply shocks which cause a fall in output but with
increasing price level.
49)
Explain why the long-run aggregate supply curve is vertical.
50)
Explain why the short-run aggregate supply curve is a relatively flat,
horizontal line.
