Which of the following is the correct expression for short-run aggregate supply in the new classical view? A) YP = Y + a(P - Pe) B) Y = YP + a(P - Pe) C) YP = Y + a(P + Pe) D) Y = YP + a(P + Pe)
According to the new classical approach to the aggregate supply curve,the aggregate supply curve slopes upward because A) increases in the price level result in lower real money balances. B) higher current output results in higher desired investment. C) higher prices result in higher levels of spending as consumers attempt to stay ahead of inflation. D) businesses have difficulty in distinguishing relative price increases from general price increases.
What does the coefficient a in the new classical expression for short-run aggregate supply represent? A) the full employment level of output B) the price level in the previous period C) how much output responds when the actual price level differs from the expected price level D) how much the price level responds when the actual level of output differs from the full-employment level of output
If the coefficient a in the new classical expression for short-run aggregate supply were equal to zero A) aggregate output would always be at its full-employment level. B) the short-run aggregate supply curve would slope down. C) the short-run aggregate supply curve would be a horizontal line. D) aggregate output would only differ from its full-employment level if the actual price level did not equal the expected price level.