Exam 10: Dynamic Change, Economic Fluctuations, and the Ad--As Model

An increase in the general level of prices in the goods and services market that is accompanied by a short-run reduction in real GDP is most likely caused by

When economic growth (a gradual shift of LRAS to the right) expands the production possibilities of an economy,

Use the figure below to answer the following question(s). Figure 10-5 Given the aggregate demand and aggregate supply conditions depicted in Figure 10-5, which of the following is the most likely occurrence?

Which of the following will most likely occur in the United States as the result of an unexpected rapid growth in real income in Canada and Mexico?

If the long-run equilibrium of an economy is disrupted by an unanticipated increase in aggregate demand (such as might result from unexpectedly strong demand for exports due to the rapid growth of incomes abroad),

During an economic expansion, housing and stock prices generally

Which will cause a larger short-run increase in prices: an anticipated or unanticipated increase in aggregate demand? Will they cause the same increase in prices in the long run?

How will an increase in the world price of crude oil influence the economy of an oil-importing country such as the United States?

The situation in which actual output exceeds potential output

Which of the following would be most likely to cause an increase in current aggregate demand in the United States?

How does the self-correcting mechanism act to pull the economy out of a recession?

Suppose we observe an economy experiencing an economic expansion and high inflation. This means the expansion is attributed to

Which of the following, other things the same, would make the price level decrease and real GDP increase?

An unanticipated decline in the real interest rate in the loanable funds market will cause the

Use the figure below to answer the following question(s). Figure 10-6 Given the aggregate demand and aggregate supply curves for the economy depicted in Figure 10-6, the economy's current output and price level are

Starting from long-run equilibrium at point A, which of the following points would occur immediately following an unanticipated decrease in stock prices?

Within the AD/AS model, if consumers and investors become more optimistic about the future direction of the economy,

If an unanticipated increase in aggregate demand results in an output beyond the economy's long-run capacity, long-run equilibrium will eventually be restored by

If a market economy was in a recession, which of the following would help direct it back toward the full employment rate of output?

Use the figure below to answer the following question(s). Figure 10-1 At which point in Figure 10-1 is the economy experiencing an economic recession?