Exam 13: Business Fluctuations: Aggregate Demand and Supply

The AD-AS model is most useful for explaining what causes:

On a given aggregate demand curve, if the rate of spending growth is 10% and the growth rate of the money supply is 2%, then the velocity of money must be growing at:

A reduction in oil supply will cause the long-run aggregate supply curve to:

Discuss the effects of an unexpected increase in the growth rate of the money supply in the AD-AS model.

During the Great Depression, the long-run aggregate supply curve:

Economic growth is a smooth process.

An increase in expected inflation will cause the economy's short-run aggregate supply curve to:

Many economists blame the severity of the Great Depression on:

Since people will always come to expect the actual inflation rate in the long run, the expected inflation rate is found graphically where the:

The U.S. stock of physical capital was:

At all points along the long-run aggregate supply curve, prices and wages are assumed to be perfectly flexible.

What factors triggered the Great Depression?

From an initial equilibrium in the basic model that includes the AD and LRAS curves only, an increase in money supply growth will cause inflation:

If nominal spending growth is 5% and the economy is in recession at a -1% real growth rate, what is the inflation rate?

A temporary decrease in aggregate demand:

In the AD-AS model, both real and demand shocks cause business fluctuations.

A temporary decrease in spending decreases inflation but not real growth in the long run.

Which of the following does NOT represent a shock that can affect GDP?

A negative real shock causes the long-run aggregate supply curve to:

Suppose consumption growth suddenly falls as a result of a decline in consumer confidence. With the aid of a diagram including the AD and LRAS curves, explain how the change in consumption growth affects the inflation rate and the real growth rate in the long run.