Exam 9: Aggregate Demand and Aggregate Supply

The short run aggregate supply curve assumes that in the short- run:

The short run aggregate supply curve is upward sloping and very steep.

When the economy is in a boom, the intersection between the:

The aggregate demand curve would shift to the left if:

Recall Application 2, "Two Approaches to Determining the Causes of Recessions," to answer the following questions: -According to the application, a recession is likely to be caused by a decrease in aggregate supply if:

If the economy is in long run equilibrium at full employment, the level of overall economic activity:

A large technological improvement will shift the aggregate supply curve to the right.

If the economy is in equilibrium at full employment, an increase in aggregate demand will:

Why are the prices of some intermediate inputs sticky in the short run? What causes the stickiness in the prices of labor?

Comment on the following statement: "An economy's aggregate demand curve is derived by horizontally summing the market demand curves for all the products consumed in the economy."

In the long run, output is determined by:

The marginal propensity to consume can never be equal to zero.

In the long- run, an increase in the money supply will cause output:

Wages are classified as custom prices, because they do not adjust very quickly.

In the short run, the primary determinant of output of firms is the:

Figure 9.2 -Refer to Figure 9.2. Suppose the economy is at Point A, a decrease in the price level causes a movement to Point:

When the general price level rises:

If the marginal propensity to consume is 0.8, the value of the multiplier is:

Figure 9.6 -Refer to Figure 9.6. In the short run, an improvement in the technology will move the equilibrium to:

When we draw the aggregate demand curve, _______ should be on the x- axis and _______ should be on the y- axis.