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

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?

When the economy is operating at an output beyond its full-employment potential,the

Use the figure below to answer the following question(s). Figure 10-16 -Suppose an economy is currently operating at output Y₁ associated with AD₁ and SRAS₁,shown in Figure 10-16.Initially,the output of this economy is

If the general level of prices is lower than business decision makers anticipated when they entered into long-term contracts for raw materials and other resources,which of the following is most likely to occur?

The situation in which actual output exceeds potential output

What impact did the soaring oil prices of 2007 and the first half of 2008 have on the economy?

Suppose the economy is in long-run equilibrium.In a short span of time,there is a pessimistic revision of expectations about future business conditions and an unexpected rise in the value of the dollar.In the short run,we would expect

If there is an unanticipated increase in aggregate demand,which of the following is most likely to occur?

For the following question(s),assume that the economy is in long-run equilibrium in the aggregate demand/aggregate supply model and that some sort of event takes place.In each case,mark the most likely impact of the event on the aggregate demand/aggregate supply diagram given below. Figure 10-19 -Refer to Figure 10-19.Consumers and businesses all suddenly decide that the future looks much better than it previously had.

Within the AD/AS model,an unanticipated increase in short-run aggregate supply will cause real output to

How would aggregate demand change if foreign incomes increase and the exchange rate value of the dollar increases?

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?

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

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

Suppose there is an unexpected increase in real interest rates.Using the AD/AS model,describe the effects of this policy in the long run and the short run,assuming everything else equal.

Which of the following will most likely occur as the result of an unanticipated increase in aggregate demand that pushes output beyond long-run capacity?

Use the figure below to answer the following question(s). Figure 10-2 -At which point in Figure 10-2 is the economy experiencing an economic boom?

Use the figure below to answer the following question(s). Figure 10-15 -The economy's short-run (SRAS )and long-run (LRAS)aggregate supply curves are shown in Figure 10-15,along with three alternative aggregate demand curves and the accompanying equilibrium points.At which point will resource prices naturally tend to increase?

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

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