Exam 33: Aggregate Demand and Aggregate Supply

The misperceptions theory of the short-run aggregate supply curve says that if the price level is higher than people expected,then some firms believe that the relative price of what they produce has

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

Suppose the economy is in long-run equilibrium.If the government increases its expenditures,eventually the increase in aggregate demand causes price expectations to

The effects of a higher than expected price level are shown by

Figure 20-2. -Refer to Financial Crisis.If nominal wages are sticky,which of the following helps explains the change in output?

Suppose the economy is in long-run equilibrium.Concerns about pollution cause the government to significantly restrict the production of electricity.At the same time,the value of the dollar falls.In the short-run

An increase in the money supply

Keynes thought that the behavior of the economy in the short run was influenced by what he called "animal spirits." By this he meant that business people sometimes felt good about the economy,and carried out lots of investment,and at other times felt bad about the economy,and so cut back on their investment spending.Explain how such fluctuations in investment would lead to fluctuations in real GDP and prices.

Keynes believed that economies experiencing high unemployment should adopt policies to

The initial impact of an increase in an investment tax credit is to shift

Sticky nominal wages can result in

Figure 20-2. -Refer to Pessimism.In the long run,the change in price expectations created by pessimism shifts

Which of the following is correct?

Which of the following shifts short-run aggregate supply right?

The recessions of the 1970s are often attributed to

Which of the following is correct?

We can explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time.

An increase in the actual price level does not shift the short-run aggregate supply curve,but an expected increase in the price level shifts the short-run aggregate supply curve to the left.

In 1986,OPEC countries increased their production of oil.This caused

Figure 20-2. -Refer to Optimism.In the short run what happens to the price level and real GDP?