Exam 23: Aggregate Demand and Supply Analysis

Explain through the component parts of aggregate demand why the aggregate demand curve slopes down with respect to the price level. Be sure to discuss two channels through which changes in prices affect demand.

The aggregate demand curve has the usual downward slope, since a higher price level reduces the real money supply, ________ interest rates, and ________ the equilibrium level of aggregate output, everything else held constant.

The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse, a financial crisis hit the U.S. economy starting in August of 2007. Which of the following is an appropriate description of the mechanism that would have ensued?

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

Some unemployment is always present due to the ________ and ________ components, which are greater than zero.

To manage the large export losses resulting from the U.S financial crisis, China implemented ________ policy, amounting to ________ percent of Chinese GDP.

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

Explain how not following the Taylor principle leads to unstable inflation

A decrease in the availability of raw materials that increases the price level is called a ________ shock.

Everything else held constant, expansionary monetary policies will cause ________.

Everything else held constant, a change in workers' expectations about the inflation rate will cause ________ to change.

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.

The aggregate demand curve is the total quantity of an economy's ________.

The Lehman Brothers bankruptcy caused a ________ ________ shock.

Everything else held constant, if workers expect an increase in the price level, ________ aggregate supply ________.

The total quantity of final goods and services offered for sale at different price levels is ________.

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

The aggregate supply curve shows the relationship between ________.

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

Prior to the financial crisis in 2007-2008, the Chinese economy was growing at ________ per year.