Exam 9: Aggregate Demand and Supply

During the 1970s, some countries stopped oil sales to the United States. As petroleum prices rose

The actual price level is determined by

A shift to the _____ of the _____ curve would cause the price level and employment to decrease.

The output of all the goods and services demanded in an economy at various price levels is called

Suppose the economy is at full employment, and consumers spend more than usual. In the short run, prices will _____; in the long run, prices will _____.

Increased consumer confidence will shift the aggregate demand curve to the _____ and _____ output demanded.

A rising aggregate price level _____ interest rates and therefore _____ output demanded.

A breakthrough in solar energy research that halves the cost of electricity will

The long-run aggregate supply curve is horizontal.

Aggregate supply shifts to the left when

If firms believe that the business climate is improving, then short-run aggregate supply will shift to the right.

According to the wealth effect, as prices fall, people feel wealthier and purchase more goods and services.

Which of these would shift the short-run aggregate supply curve but not have any impact on the long-run aggregate supply curve?

The aggregate demand curve is positively sloped.

Describe how an increase in the price level will affect net exports and the aggregate demand curve.

What would cause the price level to decrease and employment to increase?

Cost-push inflation occurs when aggregate demand expands so much that equilibrium output exceeds full employment output.

Which statement partly explains why the aggregate demand curve is negatively sloped?

An increase in productivity, a decrease in taxes, and reduced regulation all shift aggregate supply to the right.

One reason the price level did not rise after the implementation of the 2008-2009 stimulus policy actions is that U.S. capacity was fully utilized.