Exam 13: Business Fluctuations: Aggregate Demand and Supply

Use the following to answer questions: Figure: Oil Market Diagrams -(Figure: Oil Market Diagrams) Consider the world oil market diagrams presented in the figure. Which of the panels correctly depicts what happened in the market for oil during the 1973 OPEC oil crisis?

The main reason(s) for the slope of SRAS is:

A decrease in the supply of oil makes capital and labor less productive.

An increase in expected inflation will cause the economy's aggregate demand curve to:

The long-run aggregate supply curve shows that inflation has no impact on real long-term growth.

Which of the following explains why the inflation rate is slow to adjust over time?

According to the AD-AS model, demand shocks affect real GDP growth while real shocks do not affect real GDP growth.

When did the first oil shock occur in the United States?

A positive real shock causes the aggregate demand curve to:

An increase in the money supply is an example of a real shock.

In the graph of the AD-AS model, what is measured on the vertical axis?

In the AD-AS model, wages are sticky but prices are not.

The slope of the long-run aggregate supply curve is:

Sticky wages and prices are incorporated in the AD-AS model by the:

Answer the following three questions about the Great Depression. A) What were the four major shocks that contributed to the Great Depression? B) Using a graph, show how these shocks affected AD. C) Did the monetary authorities have a hand in causing and/or exacerbating the Great Depression? Explain.

In 1970, 1.3 barrels of oil produced $1,000 of GDP. In 2004, it took only 0.64 barrels of oil. What implications does this have for economic fluctuations in the United States today?

The following question has three parts, which are to be answered independently of each other. Graphically show your response to the following shocks in the AD-AS model: A) If a new round of consumer pessimism abounds, what would happen to the economy's short-run growth rate? B) If there is a positive, but temporary, monetary shock, what would happen to the economy's short-run growth rate? C) If a country's imports temporarily increase, but exports stay the same, what would happen to the economy's short-run growth rate?

Approximately what percentage of banks failed between 1930 and 1932?

What happened to the U.S. money supply during the early years of the Great Depression?

Productivity in an agricultural economy could be significantly affected by: