Exam 9: Aggregate Demand and Aggregate Supply

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 supply disruptions explain ________ of the variability of oil prices.

Suppose the demand for hamburgers increases. In the short run, firms that produce hamburgers will experience a rise in prices, which will induce them to

The purchasing power of money decreases as the

Recessions occur because of

Prices that adjust slowly are

As the price level ________, the purchasing power of money ________.

To determine the equilibrium price level and equilibrium level of real GDP, the aggregate demand and aggregate supply must

Recall the Application about the behavior of prices in retail catalogs to answer the following question(s). Economist Anil Kashyap of the University of Chicago examined the prices of 12 selected goods from L.L. Bean, REI, and The Orvis Company, Inc. Kashyap tracked the prices from the companies' catalogs which were reissued every six months. -Even though the catalogs listed in the Application were reissued every six months, the prices which were tracked in these retail catalogs

Which of the following is an example of a supply shock?

In modern economies

Assuming a long-run aggregate supply curve, a decrease in government spending results in ________ in output and ________ in price level.

The level of output determined by the intersection of the short-run aggregate supply curve and the aggregate demand curve

Explain why the short-run aggregate supply curve is a relatively flat, horizontal line.

Which of the following curves reflects the idea that in the long run, output is determined only by the factors of production and given technology?

-Figure 9.1 shows three aggregate demand curves. A movement from curve AD₁ to curve AD₀ could be caused by a(n)

The increase in spending that occurs because the real value of money increases when the price level falls is known as the

Assuming a long-run aggregate supply curve, a decrease in consumer confidence results in ________ in output and ________ in price level.

What three effects can alter the aggregate demand curve?

A decrease in spending on new homes will, other things equal,

If the government increases its purchases of goods and services by $3,000 and the MPC is 0.8, GDP and income will eventually increase by