Exam 9: Aggregate Demand and Aggregate Supply

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 demand if:

Figure 9.5 -Refer to Figure 9.5. Suppose the economy is a point B. A large _______ in the price level will move the economy to _______.

An example of a good/service that has custom prices is

Which of the following would cause the long- run aggregate supply curve to shift to the right?

Which of the following will not cause the price level to increase in the long- run?

Prices of inputs tend to be sticky in the short run because of informal and formal price arrangements between the buyer and seller of inputs.

Suppose that the economy is at a short- run equilibrium above the potential output. Explain the adjustments that the economy experiences as it moves back to potential output.

In the short run, higher taxes will lead to a higher price level and a higher level of real GDP.

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

If prices are slow to adjust, then it is possible that:

The economy moves from a short- run equilibrium to the long- run equilibrium through:

A rightward shift in the aggregate demand curve cannot be caused by:

In the long- run, the amount of output that the economy can produce will depend on:

Goods and services with custom prices have prices that adjust very quickly.

Based on our understanding of the aggregate demand curve, we know that a(n) _______ in the price level causes the quantity of real GDP demanded to _______.

Recall Application 1, "Measuring Price Stickiness in Consumer Markets," to answer the following questions: -According to the application, which of the following goods showed considerable price stickiness?

Suppose there are three economies with 3 different consumption functions: Country A: C = 100 + 0.8Y Country B: C = 200 + 0.75 Y Country C: C = 75 + 0.9Y If the government spending increases by 10, in which of these countries would the shift of the AD curve be the largest?

As the marginal propensity to consume decreases, the value of the multiplier

Recall Application 1, "Measuring Price Stickiness in Consumer Markets," to answer the following questions: -According to the application, Bils and Klenow found that between 1995- 1997, prices in more than half of the 350 goods that they were studying showed frequent price changes. This finding was contrary to Kashyap's finding because:

An improvement in technology will cause: