Exam 23: the Self-Correcting Aggregate Demand and Supply Model

Beginning from long-run equilibrium at point E₁ in Exhibit 6, the aggregate demand curve shifts to AD₂. The real GDP and price level (CPI)in short-run equilibrium will be:

The long-run aggregate supply curve (LRAS)is represented by a ________ curve with respect to the CPI.

The long-run aggregate supply curve (LRAS)is:

A decrease in nominal incomes cause a:

Economic growth is represented by a rightward shift of the long-run aggregate supply curve (LRAS).

In the short run, an increase in the price level causes which of the following:

The short-run aggregate supply curve is upward-sloping because:

Long-run full-employment equilibrium assumes:

The long-run aggregate supply curve is:

Which of the following explains why higher prices in the goods and services market measured by the CPI leads to an upward-sloping aggregate supply curve?

Beginning from a position of long-run equilibrium at the full-employment level of real GDP, the economy's short-run response to an increase in the aggregate demand curve would be:

The full-employment level of real GDP is the level which can be produced with:

Along the short-run supply curve (SRAS), a decrease in the aggregate demand curve will decrease:

In long-run full-employment equilibrium, the CPI equals AD equals SRAS equals LRAS.

In the long run, a decrease in aggregate demand causes the price level to _______ and the long-run aggregate supply curve to _____________.

Which of the following would cause a decrease (leftward shift)in the short-run aggregate supply curve (SRAS)?

If both the price level and nominal incomes change by the same percentage:

The intersection between the long-run aggregate supply and aggregate demand curves determines the:

In the short run, wages are assumed to be:

Given the shift of the aggregate demand curve from AD₁ to AD₂ in Exhibit 1, the real GDP and price level (CPI)in long-run equilibrium will be: