10-8. Assume that the position of a nation’s aggregate
| 10-8. Assume that the position of a nation’s aggregate | ||||||
| demand curve has not changed, but the long-run | ||||||
| equilibrium price level has declined. Other things | ||||||
| being equal, which of the following factors might | ||||||
| account for this event? (See page 219.) | ||||||
| this canhappen when AS in short run rises. | ||||||
| a. An increase in labor productivity | ||||||
| YES AS will rise to reduce prices. | ||||||
| b. A decrease in the capital stock | ||||||
| No this will not lead to lower prices as As will fall . | ||||||
| c. A decrease in the quantity of money in | ||||||
| circulation | ||||||
| this will lower prices in long run as per classical theory | ||||||
| this is because money supply and prices are directly proportional in this theory. | ||||||
"96% of our customers have reported a 90% and above score. You might want to place an order with us."
