Exam 22: Aggregate Demand and Supply Analysis

Because shifts in aggregate demand are not viewed as being particularly important to aggregate output fluctuations,they do not see much need for activist policy to eliminate high unemployment."They" refers to proponents of

Suppose the U.S.economy is producing at the natural rate of output.A depreciation of the U.S.dollar will cause ________ in real GDP in the short run and ________ in inflation in the long run,everything else held constant.(Assume the depreciation causes no effects in the supply side of the economy.)

Suppose the economy is producing at the natural rate of output.An open market purchase of bonds by the Fed will cause ________ in real GDP the the short run and ________ in inflation in the short run,everything else held constant.

Everything else held constant,when financial frictions increase,the real cost of borrowing ________ so that planned investment spending ________ at any given inflation rate.

The short-run aggregate supply curve shifts to the right when

By looking at aggregate demand via its component parts,we can conclude that the aggregate demand curve is downward sloping because

Which of the followings does not shift the short-run aggregate supply curve?

The long-run rate of unemployment to which an economy always gravitates is the

The Phillips curve indicates that when the labor market is ________,production costs will ________ and aggregate supply increases.

Everything else held constant,when output is ________ the natural rate level,wages will begin to ________,increasing short-run aggregate supply.

A theory of aggregate economic fluctuations called real business cycle theory holds that

Explain and demonstrate graphically the effects of a negative supply shock in both the short-run and long-run.

Suppose the economy is producing at the natural rate of output and the government passes legislation that severely restricts a company's ability to reduce production costs via outsourcing.Everything else held constant,this policy action will cause ________ in the unemployment rate in the short run and ________ in inflation in the short run.

The long-run aggregate supply curve is a vertical line passing through

Everything else held constant,a decrease in net exports ________ aggregate ________.

According to aggregate demand and supply analysis,America's involvement in the Vietnam War had the effect of

Suppose the economy is producing below the natural rate of output and the government is suffering from large budget deficits.To deal with the deficit problem,suppose the government takes a policy action to reduce the size of the deficits.This policy action will cause ________ in the unemployment rate in the short run and ________ in inflation in the short run,everything else held constant.

Using the aggregate demand-aggregate supply model,explain and demonstrate graphically the short-run and long-run effects of an increase in the money supply.

In the long run,following a combination of a negative demand shock and a temporary negative supply shock,

The fact that an economy always returns to the natural rate level of output is known as