Exam 9: Aggregate Demand and Supply

If the U.S. aggregate price level rises

If both consumers and businesses are pessimistic about the future of the economy

If the price level is stable and if aggregate spending increases, a significant change in output occurs, showing the full impact of the spending multiplier.

Which of these would NOT cause a shift in the short-run aggregate supply curve?

Suppose the economy is at full employment and companies suddenly increase their level of investment. A short-run increase in output will be followed by a reduction in output, resulting in an overall decrease in output.

The idea that new spending creates more new spending is known as the _____ effect.

If the amount of regulation in an economy increases, the aggregate supply curve shifts _____ and output supplied will _____.

Suppose the economy is at full employment and a booming stock market encourages consumption spending to rise dramatically. What would be the MOST likely long-run impact?

An increase in interest rates will cause the aggregate demand curve to shift to the left.

According to John Maynard Keynes, what determines employment and income?

In the aggregate demand/aggregate supply model, the vertical axis is labeled

The full-employment level is greater than the natural rate of employment.

Consumer spending is NOT affected by

Cost-push inflation is a result of too much spending on goods and services.

If income increases across Europe, what will happen to the aggregate demand curve for the United States?

Factors that can shift the entire aggregate demand curve are called determinants of aggregate demand.

If the market power of firms increases, what happens in the AD/AS model?

During cost-push inflation, aggregate output _____ and the aggregate price level _____.

Suppose workers are under a contract in which wages are fixed for 5 years. How would this contract affect the shape of the aggregate supply curve?

Government spending on Social Security