Exam 23: Output and Prices in the Short Run

FIGURE 23-1 -Refer to Figure 23-1.Assume the economy is initially in equilibrium with desired aggregate expenditure equal to real GDP at point V.The price level is P0.Other things being equal,exogenous changes in the price level will cause

Consider the basic AD/AS model.Real GDP is demand determined along the

Other things being equal,when the domestic price level rises exogenously,

In a macro model with a constant price level,an increase in autonomous desired consumption will cause the AE curve to shift

Consider the relationship between the AE curve and the AD curve.A rise in the amount of desired investment expenditure at each level of national income

Consider the economyʹs aggregate supply curve.Other things being equal,unit costs will tend to fall if

The aggregate supply curve is usually assumed to get progressively steeper at relatively higher levels of output because

FIGURE 23-1 -Refer to Figure 23-1.Assume the economy is initially in equilibrium with desired aggregate expenditure equal to real GDP at point V.The price level is P0.Now,suppose the AE curve shifts to AE2 and we move to a new equilibrium level of GDP at Y2 and point E on AD2.A possible cause of this change in equilibrium is

Which of the following represents a positive aggregate supply shock?

In a macro model with a constant price level,an increase in government purchases will cause the AE curve to shift

Consider the following news headline: ʺWorld commodity prices rise sharply.ʺ Choose the statement below that best describes the likely macroeconomic effects in Canada.(Remember that Canada is both a producer and a consumer of commodities.)

Suppose the economy is hit by a shock and we observe that the price level has decreased whereas real GDP has increased.We can conclude that this shock was

Which of the following would likely cause an upward parallel shift in the AE curve and a rightward shift in the AD curve?

The economyʹs aggregate supply curve is drawn under two main assumptions.They are

Consider the relationship between the AE curve and the AD curve.A rise in the amount of desired consumption,investment,government purchases,or net exports at any given level of national income

The economyʹs aggregate supply (AS)curve shows the relationship between the price level and the total

If the AS curve is vertical and there is a decrease in aggregate demand,the result is

The aggregate supply curve relates the price level to the quantity of output that firms would like to produce and sell,given the assumption that

Consider the basic AD/AS model.If their unit costs rise as output increases,price -taking firms will be prepared to produce ________ only if ________.

FIGURE 23-1 -Refer to Figure 23-1.Assume the economy is initially in equilibrium with desired aggregate expenditure equal to real GDP at point V.The price level is P0.Now,suppose there is an increase in desired investment and no change in the price level.Which of the following statements describes the likely macroeconomic effects?