Exam 23: Aggregate Demand and Supply Analysis

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

-In the figure above, the shift of the aggregate supply curve from AS₁ to AS₂ and the following shift back to AS₁ is called ________.

Suppose the economy is producing at the natural rate of output. A decrease in consumer and business confidence will cause ________ in real GDP in the long run and ________ in the inflation rate in the long run, everything else held constant.

Assuming the economy is starting at the natural rate of output and everything else held constant, the effect of ________ in aggregate ________ is a rise in both the inflation rate and output in the short-run, but in the long-run the only effect is a rise in the inflation rate.

Enumerate the four implications for aggregate output from algebraic expression of the aggregate demand curve.

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

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

Explain why the short-run aggregate supply curve has a positive slope.

Everything else held constant, an increase in government spending will cause ________.

According to aggregate demand and supply analysis, the negative demand shock of 2000-2004 had the effect of ________.

The total quantity of an economy's final goods and services demanded at different inflation rates is ________.

-In the figure above, output levels below Y_n will cause the aggregate ________ function to shift to the ________.

One way to derive aggregate demand is by looking at its four component parts, which are ________.

The long-run aggregate supply curve shifts to the right when there is ________.

Everything else held constant, when actual output exceeds the natural rate of output ________ aggregate supply ________.

According to aggregate demand and supply analysis, the negative supply shocks of 1973-1975 and 1978-1980 had the effect of ________.

Economists believe the natural rate of unemployment is approximately ________ percent.

Everything else held constant, an increase in net exports ________ aggregate ________.

The long-run aggregate supply curve is ________.

Everything else held constant, a purchase of government securities by the Bank of Canada will cause ________.