Exam 33: Aggregate Demand and Aggregate Supply

Scenario 33-2 Imagine that in the current year the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time. -Refer to Scenario 33-2. Which curve shifts and in which direction?

A change in the supply of labor, all else remaining the same, will shift the short-run aggregate-supply curve.​

Aggregate demand includes

Suppose a country experiences an increase in its capital stock. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

An increase in the money supply shifts the long-run aggregate supply curve to the right.

Illustrate the classical analysis of growth and inflation with aggregate demand and long-run aggregate supply curves.

List the three reasons for why the aggregate-demand curve slopes downward.

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

Figure 33-2 ​ -Refer to Figure 33-2. If the economy is in long-run equilibrium, a favorable shift in short-run aggregate supply curve would move the economy from

The economic boom of the early 1940s resulted mostly from

An increase in household saving causes consumption to

The term ​business cycle​ implies that economic fluctuations follow a regular, predictable pattern.​

When output rises, unemployment falls.

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Stagflation results from continued decreases in aggregate demand.

When the Fed buys bonds the supply of money

Other things the same, if technology increases, then in the long run

Identify the direction of the change during a recession in each of the following: consumption expenditures, investment expenditures, and unemployment.

Other things the same, as the price level falls, the exchange rate rises. A rise in the exchange rate leads to a decrease in net exports.

Scenario 33-1 Suppose that political instability in other countries makes people fear for the value of their assets in these countries so that they desire to purchase more U.S assets. -Refer to Scenario 33-1. What would the change in the exchange rate make happen to U.S. net exports and U.S. aggregate demand?