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

During the crisis of 2008 housing prices ________ and stock prices ________. (Fill in the blank)

During an economic contraction, housing and stock prices generally

If an economy operates at a short-run equilibrium output that exceeds its long-run capacity, which of the following will be most likely to direct the economy toward full employment?

Other things constant, a reduction in the real interest rate will

If a market economy has a self-correcting mechanism, when output is lower than potential or full-employment output,

Other things constant, an increase in the real interest rate will

Within the framework of the AD/AS model, if consumers and investors become more pessimistic about the future direction of the economy, this will lead to

If the U.S. price level decreased relative to price levels in foreign countries, what would be the impact on domestic aggregate supply and aggregate demand curves?

During the past 50 years, the production possibilities of the United States have expanded, increasing both short-run and long-run aggregate supply. Other things constant, this would lead to

Use the figure below to answer the following question(s). Figure 10-6 In the short-run equilibrium depicted in Figure 10-6, the economy's output is

Use the figure below to answer the following question(s). Figure 10-1 At which point in Figure 10-1 is the economy at long-run equilibrium?

Show the short-run impact of the following factors on GDP using a graph of the aggregate goods and services market. Assume the economy was originally in long-run equilibrium. a.a stock market crash b.a decrease in the real interest rate c.a flood that destroys most agricultural crops d.a decrease in resource prices e.an increase in the labor force f.an increase in the expected inflation rate

Use the figure below to answer the following question(s). Figure 10-10 Given the aggregate demand and aggregate supply conditions depicted in Figure 10-10, which of the following will tend to occur?

The economic boom between 2002 and 2006 was primarily a result of

Since the end of World War II, the U.S. has almost always had rising prices and an upward trend in real GDP. To explain this

Which of the following will most likely occur as the result of an unanticipated increase in aggregate demand?

Within the AD/AS model, how does an economy adjust to an output beyond its long-run capacity as a result of an unanticipated increase in aggregate demand?

Within the AD/AS model, an increase in capital formation that permits the economy to achieve a larger output will

Within the AD/AS model, if consumers increase their savings and cut back on their spending, the

Use the figure below to answer the following question(s). Figure 10-8 If the economy were operating at point a in Figure 10-8, the real rate of interest would tend to