Exam 9: Aggregate Demand and Aggregate Supply

Define the marginal propensity to consume (MPC)and the marginal propensity to save (MPS), and explain why MPC + MPS always equals 1.

Which of the following would cause a decrease in aggregate demand?

Assuming a long-run aggregate supply curve, an increase in the money supply results in ________ in output and ________ in price level.

Figure 9.2 -Refer to Figure 9.2. A movement from point d to point a could be caused by a simultaneous ________ and ________.

Figure 9.2 -Refer to Figure 9.2. A movement from point b to point d could be caused by a(n)

The long-run aggregate supply curve is horizontal.

The relationship between consumer spending and income is known as the

When consumers spend and buy things regardless of their level of income, this is known as

In the long run, output is determined solely by the supply of capital and the supply of labor, not the price level.

The relationship between the level of prices and the total demand for all goods and services is known as

The aggregate demand curve is

Which of the following is a problem with the price system that can lead to fluctuations in output?

Figure 9.2 -Refer to Figure 9.2. A movement from point d to point b could be caused by a(n)

Which of the following does NOT decrease aggregate demand in the United States?

What are the two types of prices in an economy?

The increase in spending that occurs because domestic goods become cheaper relative to foreign goods when the price level falls is known as the

Which of the following causes a movement along the aggregate demand curve?

When considering the aggregate demand curve, the wealth effect, interest rate effect and effects from international trade reinforce each other.

Recall the Application about the causes of oil price increases to answer the following question(s). Economist Lutz Kilian examined the importance of supply disruptions to the U.S. oil market by constructing measures of supply disruptions in oil producing countries based on a detailed examination of prior trends in demand and specifications in oil contracts. -According to this Application, oil price increases may be caused by

Suppose consumer tastes and preferences shift from pizza to tacos. In the short run case, these changing tastes will result in pizza restaurants ________ pizza prices and taco restaurants ________ taco prices.