The market is effectively able to make sure goods are produced by their lowest-cost producers because

In the early 1970s there was a dramatic increase in the price of oil. At the time, oil was a very important input into the production process for the manufacturing sector. In the New Keynesian Model, where prices are slow to adjust, we would depict this as an inward shift of the [answer1] which would result in [answer2] inflation and [answer3] GDP growth.

The short-run aggregate supply curve shows the                 relationship between the inflation rate and real growth during the period when prices and wages are                .

Given the difficulties that central bankers face in conducting monetary policy, it is extremely hard to get the amount and timing of monetary policy “just right”. The main problem associated with too much expansionary monetary policy is:

Year Quantity Produced Price 2000 200 $100 2021 300 $400   The above Table consists of data on a country of geniuses that produces only textbooks. Using the data in the table, this country’s nominal GDP in 2000 is                  and its real GDP in 2000 (in 2021 dollars) is                    :

The aggregate demand curve shows all the combinations of               and                that are consistent with a specified rate of              .

Suppose that the price of Hershey bars (a substitute) falls and the price of peanuts (an input) rises. What would you expect to happen to the price and quantity of Snickers bars in the market?

The Federal Reserve has the most direct control over

Fiscal policy is subject to the same real shock dilemma as monetary policy. Which of the following illustrates an additional issue fiscal policy faces when trying to combat a recession brought on by a negative real shock?

  The economy in the figure initially begins at point A and a negative supply shock (real shock) takes it to point Y. The Fed reacts by increasing money growth, and therefore spending growth, by 3 percentage points. In response to the Fed’s actions, inflation would be [answer1] in the short run and [answer2] in the long run, and real GDP growth would be [answer3] in the short run and [answer4] in the long run.