The maximum possible number of points is 200. You should have 7 pages, counting this one. State whether each of the following six propositions is true or false. This is equivalent to imposing a price ceiling in the market for money. Someone figures out a way to make dishwashers more cheaply.
Labor demand increases because more workers can now enter the workforce.
This in turn increases Aggregate Supply. Since real wages in the Third World are extremely low, businesses that invest there make exceptionally high profits. Questions 5 and 6 refer to the following diagram. The move from AD to AD' could reflect an increase in the money supply. The move from SRAS to SRAS' could reflect the public's expectation that rapid monetary growth will continue.