MRU videos (AD, Long-run AD, Sticky wages)

All of the following factors are fundamental to an economy's potential growth rate except for:

• Labor

• Capital

• Money supply

• Ideas

How does inflation affect the long-run real growth?

• Inflation causes long-run real growth to increase.

• Inflation causes long-run real growth to decrease.

• Inflation does not have an effect on long-run real growth.

• There are many other factors to consider before determining how inflation will affect long-run real growth.

An economy's potential growth rate is also known as what?

• Solow growth rate

• Keynesian growth rate

• Inflation rate

• Real interest rate

Which of the following is an example of a negative real shock to an economy?

• Consumer confidence in the future of the economy falls.

• A drought stifles crop growth for the season.

• The government spends more money on a war.

• The government reduces taxes.

A negative real shock to the economy shifts the LRAS curve to the left, causing a(n)____ in growth and a(n) ___ in inflation.

• decrease/increase

• increase/decrease

• increase/increase

• decrease/decrease

If the aggregate demand curve has M' = 8% and V' = 0%, what will inflation plus real growth be?

• 0%

• 4%

• 8%

• 16%

If we discover that real growth (Y') is 2%, what is inflation (')?

• 0%

• 2%

• 6%

• 10%

If real growth (Y') is 0%, what is inflation (')?

• 0%

• 8%

• 10%

• 16%

If _____ increases, we can expect a corresponding decrease in inflation, because more money will be chasing more goods.

• Real growth
• Velocity

• Money supply

• Unemployment

If 'I + Y' represents inflation plus the real growth rate, then M' + V' can be interpreted as:

• Real GDP growth rate

• Inflation

• Consumption

• Nominal GDP growth rate