Exam 13: The Aggregate Demandaggregate Supply Model

The wealth effect, interest rate effect, and international trade effect all explain why the

When the general price level rises and firms decide not to change their prices in the short run, this can be attributed to

An increase in expected future prices causes

Consider the wealth effect, interest rate effect, and international trade effect. Of these, the ________effect is the most significant and the ________ effect is the least significant.

Aggregate demand is determined by adding up the spending of

Suppose there is a surge in stock market values. In the short run, we would expect the price level to________ and the unemployment rate to ________.

Consider shifts in aggregate demand that push the level of real GDP GDP) away from the level of potential output. Explain why, in the long run, RGDP will always return to potential output.

Refer to the following figure to answer the next questions. -Based on the figure, starting at point A, if there is an increase in the price of oil, then in the short run we move to point ________ and in the long run to point ________.

New computer technologies can be expected to

Refer to the following figure to answer the next questions. -Based on the figure, which points represent long-run equilibrium?

You read in the paper that there has been a significant increase in the consumer confidence index.Having taken an economics class, you predict that spending in the economy will ________ and aggregate demand will ________.

When an economy experiences economic growth, the

When the price level rises and U.S. goods become relatively more expensive than foreign goods, there will be an)

Suppose people are worried about losing their jobs. In the short run, this will

Suppose that the dictator of a small country decides that all prices both inputs and outputs) must be fixed by contract each year and then renegotiated at the end of each year. What does this imply about short-run aggregate supply SRAS)?

Which of the following is true about the price level and aggregate supply?

If the price level falls by 5 percent, then all else being equal, the long-run aggregate supply curve will

You read a study that predicts that rising oil prices projected for this summer are certain to fuel inflation. Having taken an economics class, due to this expected change in prices, you predict that spending today will ________ and aggregate demand today will ________.

When the price level rises, ________ declines from the wealth effect, ________ declines from the interest rate effect, and ________ decline(s) from the international trade effect.

Explain and illustrate how the long-run equilibrium levels of output and the price level are affected by a technological advance that increases labor productivity.