Exam 10: Aggregate Supply and Aggregate Demand

An individual holds $10,000 in a checking account and the price level rises significantly. Hence

At long- run macroeconomic equilibrium, .

The aggregate demand curve illustrates relationship between the price level and the quantity of real GDP demanded.

The long- run aggregate supply (LAS) curve

-The curve labeled A in the above figure is a

Which of the following statements is TRUE?

Your real wealth is measured as the

A monetarist economist believes that if the economy was left alone, it would rarely operate at full employment.

The government increases taxes. As a result, in the short run, real GDP and the price level )

Compare the policy prescriptions of Keynesian, Classical, and Monetarist economists.

If the money prices of resources changes,

The long- run aggregate supply curve illustrates the

If the money wage rate rises, then the

In the above figure, when the economy is in a long- run equilibrium, real GDP will be

If the money price of a resource such as oil falls, then the

A decrease in foreign incomes

The intertemporal substitution effect of the price level on aggregate demand

-In the above figure, the economy initially is at point B. Then price level rises by 10. The wealth effect will help

Over time in a growing economy, the long- run aggregate supply curve will

-In the figure above, the economy is at point A when the price level rises to 120. Money wage rates and other resource prices remain constant. Firms are willing to supply output equal to