Exam 13: Aggregate Demand, Aggregate Supply, and Business Cycles

Shifts in ______ can return the economy to long-run equilibrium.

A demand shock is a change in planned spending that is:

Starting from potential output, if consumer confidence decreases and consumers decide to spend less, then this will shift the ______ curve to the left and generate ______.

A positive demand shock will shift the ______ curve to the ______.

To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:

Graphically, long-run equilibrium occurs at the intersection of the aggregate demand curve and:

When actual output is less than potential output, there is ______ output gap and the inflation rate will ____.

When actual output is less than potential output, there is ____ output gap and the rate of inflation will tend to ____.

The aggregate supply curve shows the relationship between the amount of output firms want to produce and the ______.

The aggregate supply curve will shift rightward in response to:

When the interest rate in the U.S.falls, U.S.financial assets:

For a given inflation rate, if increasing threats to domestic security cause the government to increase military spending, then the ______ shifts _____.

When actual output equals potential output and the inflation rate is equal to the expected rate of inflation, the economy is said to be in ______ equilibrium.

When actual output equals potential output there is ____ output gap and the rate of inflation will tend to ____.

When the interest rate in the U.S.rises, U.S.financial assets:

An inflation shock is:

For a given inflation rate, if a stock market crash makes consumers less willing to spend, then the ______ shifts _____.

As the quality of available resources becomes worse:

Refer to the figure below.Long-run equilibrium in this economy:

When actual output exceeds potential output there is ____ output gap and the rate of inflation will tend to ____.