Exam 9: Aggregate Demand and Supply

If the intersection of the short-run aggregate supply and the aggregate demand curves also intersects the long-run aggregate supply curve, then the economy is:

When the price of a given product declines, the consumer's spendable income rises because it takes less income to purchase the same quantity. This is called the:

The _____ is positively sloped because some input costs are slow to change.

If the marginal propensity to consume is 0.8, then $80 of every additional $100 of income will be spent on consumption.

Which of the following best illustrates the wealth effect?

The _____ shows the amount of output that firms are willing to produce at various price levels.

(Figure: Predicting Aggregate Demand Shifts) Which of the following would shift the aggregate demand curve from AD₂ to AD₁?

The concept of the vertical long-run aggregate supply curve is inconsistent with the classical model.

An increase in net export spending will result in a(n):

Which of the following would cause cost-push inflation?

The Great Depression demonstrated that:

The long-run economic growth model assumes that:

The decline in aggregate demand that occurred during the Great Depression caused a drop in real GDP:

The collapse of home values in 2008 led to _____ in Americans' saving rates, shifting aggregate demand to the _____.

A shift to the _____ of the _____ curve would cause the price level and employment to decrease.

Which of the following would cause a movement along a country's aggregate demand curve, but not a shift in its aggregate demand curve?

If a country increases the amount of goods it imports but its exports remain unchanged:

_____ taxes and _____ interest rates in the United States, along with _____ incomes in other countries, will shift the U. S. aggregate demand curve to the right.

_____ occurs when aggregate demand expands so much that equilibrium output exceeds full employment output.

If the money supply is fixed and prices rise, the cost of borrowing will _____ and business investment will _____. This is called the _____.