Exam 24: Aggregate Demand and Aggregate Supply

The aggregate demand curve shows that, if other factors are held constant, a

If aggregate demand grows only slightly faster than potential GDP, then the economy will ________.

People expect that the El Nino effect will cause drought in Australia in coming years. If most Australian firms expect that their profits will fall during the next five years, Australia's ________ this year.

If the economy is in short- run equilibrium, then

In Australia, during the past five decades, inflation was highest during the ________.,

-Refer to the above figure. The changes represented

The Reserve Bank lowers interest rates. As a result, in the short run, real GDP ________ and the price level ________.

In the long run

According to the intertemporal substitution effect, when the price level increases, the interest rate

Which of the following changes would NOT shift the aggregate demand curve?

Which of the following increases aggregate demand and shifts the AD curve rightward?

A decrease in government expenditure shifts the AD curve ________ and a decrease in taxes shifts the AD curve ________.

Which of the following is true about the long- run aggregate supply curve?

-In the above figure, the economy is initially at point C. Then the domestic price level rises by 10. A

Which of the following statements correctly describes the policy stance of a macroeconomist?

We distinguish between the long- run aggregate supply curve and the short- run aggregate supply curve. In the long run

Business cycles are the result of

A decrease in government transfer payments

In the short run, firms expand their production when the price level rises because

-In the above figure, point A represents