Exam 14: Aggregate Demand and Aggregate Supply

Why is the aggregate-supply curve upward sloping in the short run?

All explanations for the upward slope of the short-run aggregate-supply curve suppose that output supplied increases when the price level increases more than expected.

In the 1970s people had become accustomed to high inflation.In 1979,the Bank of Canada decided to fight inflation and decreased the money supply growth rates.Many people thought that the Bank of Canada's action would cause a recession.Is this thinking consistent with the aggregate demand and aggregate supply model? Explain.According to monetary misperceptions theory,what should have happened to output if the inflation rate fell relative to what people expected? Explain.

If the government increased the money supply in response to a decrease in aggregate supply,unemployment would return towards its natural rate,but prices would rise even more.

Which of the following best describes the effects of an increase in the price level?

An increase in which of the following (assuming the increase was not due to a price level change)shifts aggregate demand to the right?

Suppose the economy is in long-run equilibrium.In a short span of time,there is a sharp increase in the minimum wage.In the short run,what would we expect to happen?

A change in the money supply changes only nominal variables in the long run.

What are the effects of a decrease in the price level?

Most economists believe that classical theory explains the world in the short run,but not the long run.

Which of the following shifts aggregate demand to the left?

In which of the following situations does investment spending decrease?

Which of the following would cause prices to rise and real GDP to fall in the short run?

According to the sticky-wage theory,which of the following is consistent with a more-than-expected increase in the price level?

Which of the following could create an increase in the price level and a decrease in real GDP in the short run?

Suppose the economy is in long-run equilibrium.Premier Aviary succeeds in getting a major new highway project for his province.At the same time,Premier Green succeeds in getting major new restrictions on logging enacted for her province.In the short run,what would we expect to happen?

An aggregate-supply curve is described by the equation Y=80 + 0.5P.The expected price level is 100.How much is the long-run level of output?

Which of the following has NOT been suggested as a cause of the Great Depression?

Which of the following shifts the short-run,but not the long-run,aggregate supply right?

In response to a decrease in output,the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in aggregate supply.