Make use of the misperceptions theory to explain why the short-run aggregate supply curve is upward sloping.
Which of the following is NOT an example of a supply shock?
A) a drought in the Midwest
B) a decline in natural gas prices following discovery of new fields
C) the introduction of a new line of computer-controlled machine tools in manufacturing
D) a substantial increase in federal government spending on Medicare
According to the new classical theory,why may output differ from its full-employment level in the short run?
How do new Keynesians use the existence of long-term nominal contracts to help explain the failure of prices to adjust in the short run?