Exam 33: Aggregate Demand and Aggregate Supply

Figure 33-2. -Refer to Figure 33-2.Suppose the economy starts at Z.If changes occur that move the economy to a new short run equilibrium of P₁ and Y₁ ,then it must be the case that

Although wages,incomes,and interest rates are most often discussed in nominal terms,what matters most are their real values.

According to the aggregate demand and aggregate supply model,in the long run an increase in the money supply leads to

In the context of aggregate demand and aggregate supply,the wealth effect refers to the idea that,when the price level decreases,the real wealth of households

Aggregate demand shifts to the left if the money supply increases.

Suppose the economy is in long-run equilibrium.In a short span of time,there is a sharp increase in the minimum wage,a major new discovery of oil,a large influx of immigrants,and new environmental regulations that raise the cost of electricity production.In the short run

The sticky-price theory implies that

Figure 20-2. -Refer to Figure 20-2.The shift of the short-run aggregate-supply curve from AS₁ to AS₂

Suppose the economy is in long-run equilibrium.If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions,then in the short run,real GDP will

The classical model is appropriate for analysis of the economy in the

A decrease in the expected price level shifts short-run aggregate supply to the

As the price level rises,the exchange rate

In which case can we be sure that real GDP rises in the short run?

Other things the same,a decrease in the price level causes real wealth to

If there are floods or droughts or a decrease in the availability of raw materials

Suppose the economy is in long-run equilibrium.Senator A succeeds in getting taxes raised.At the same time,Senator B succeeds in getting major new restrictions on logging enacted.In the short run

In response to a decrease in output,the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in short-run aggregate supply.

In the aggregate demand and aggregate supply model,the point where the aggregate demand curve crosses the long run aggregate supply curve,and the expected price level equals the actual price level,is known as what?

Menu costs help explain

During a recession the economy experiences