Exam 22: Aggregate Demand and Aggregate Supply

Suppose that an increase in government purchases of $100 million caused the aggregate demand curve to shift to the right by $350 million at each price level.What is the value of the multiplier?

If an economy is operating at its potential output level, a change in aggregate demand or short-run aggregate supply will induce an inflationary or a recessionary gap.

The intersection of the economy's aggregate demand and long-run aggregate supply curves I.determines its equilibrium real GDP in both the long run and the short run. II.determines its equilibrium price level in both the long run and the short run. III.occurs at the economy's potential output.

The multiplier is given by

Figure 7-2 -Refer to Figure 7-2.The potential output in this economy is

All of the following statements is true about the short-run aggregate supply curve except

A graph that depicts the relationship between the total quantity of goods and services demanded and the price level is the

All other things unchanged, a lower exchange rate

The sticky price explanation of the short-run aggregate supply curve says that when the average price level rises,

Which of the following will decrease the aggregate quantity of output supplied?

According to the international trade effect, holding everything else unchanged,

All other things unchanged, an increase in government spending will

An economy adjust on its own to close a recessionary gap because there is

Suppose the economy is initially in long-run equilibrium.Which of the following events leads to an increase in the price level and real GDP in the short run?

In the long run, an increase in aggregate demand, all other things unchanged, will cause the price level to _______ and potential output to _______ .

When the Great Depression reached its trough in 1933, real GDP had fallen by ________ since the depression began in 1929.

As an inflationary gap is eliminated through an economy's self-correcting adjustments process,

Suppose the economy is initially in long-run equilibrium.Which of the following events leads to a decrease in the price level and an increase in real GDP in the short run?

Inflationary and recessionary gaps are always eliminated automatically through changes in aggregate demand.

A change in the aggregate quantities of goods and services demanded at each price level is called a