Exam 23: Aggregate Demand and Supply Analysis

Everything else held constant, a decrease in planned investment expenditure ________ aggregate ________.

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

An unfavourable supply shock causes ________ to ________.

The aggregate demand-aggregate supply framework indicates that the long-run effect of a ________ in the money supply is an increase in ________, everything else held constant.

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

The run-up of oil prices in 2007 led to ________.

-In the figure above, a ________ supply shock will shift the aggregate supply curve to AS₂ and the economy will return to the long run equilibrium at point ________.

The increase in energy prices that occurred in 2007-2008 led to a ________ in the ________ aggregate supply curve.

According to aggregate demand and supply analysis, the U.S. involvement in the Vietnam War had the effect of ________.

Why is the aggregate demand curve downward sloping?

Everything else held constant, aggregate demand increases 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?

Everything else held constant, a decrease in the cost of production ________ aggregate ________.

Everything else held constant, an increase in the cost of production ________ aggregate ________.

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

Everything else held constant, an autonomous monetary policy easing ________ aggregate ________.

Suppose the Canadian economy is operating at potential output. A negative supply shock that is accommodated by an open market purchase by the Bank of Canada will cause ________ in real GDP in the long run and ________ in the aggregate price level in the long run, everything else held constant.

Aggregate demand and supply analysis can be used ________.

Explain and demonstrate graphically the effects of a negative supply shock. What happens to the economy if no action is taken? What happens if monetary and or fiscal policy is used to reduce unemployment?