Exam 15: Aggregate Demand and Aggregate Supply Analysis

The impact of Hurricane Katrina on consumers in the economy was to make them very pessimistic about their future incomes.How does this increased pessimism affect the aggregate demand curve?

Using aggregate demand and aggregate supply,explain what happens in the short run if the Federal Reserve raises interest rates in the economy? Be sure to detail what happens to aggregate demand,the price level,the level of GDP,and unemployment.Assume that the economy is at full employment before the interest rate increase.

When potential GDP increases,short-run aggregate supply also increases,but long-run aggregate supply does not change.

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,a decrease in productivity would be represented by a movement from

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,an increase in the value of the domestic currency relative to foreign currencies would be represented by a movement from

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in interest rates would be represented by a movement from

If full-employment GDP is equal to $4.2 trillion,what does the long-run aggregate supply curve look like?

Workers and firms both expect that prices will be 2.5% higher next year than they are this year.As a result

Which of the following is one explanation as to why the aggregate demand curve slopes downward?

President Obama has discussed raising income taxes for individuals earning over $250,000 in income.Explain how these higher income taxes will affect the aggregate demand curve.

Which of the following could explain why there is an increase in potential GDP but the equilibrium level of GDP falls?

According to ________,entrepreneurship does not contribute anything of value to production.

If technological change occurs in the economy

What are sticky prices,and how can contracts make them "sticky"?

As the recession persisted into 2009,the unemployment rate in the United States rose to ________,the highest rate since the recession of 2001-2002 and the second highest since the Great Depression.

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,an increase in the expected future price level would be represented by a movement from

If aggregate demand just increased,which of the following may have caused the increase?

Figure 15-4 -Refer to Figure 15-4.In the figure above,LRAS₁ and SRAS₁ denote LRAS and SRAS in year 1,while LRAS₂ and SRAS₂ denote LRAS and SRAS in year 2.Given the economy is at point A in year 1,what is the growth rate in potential GDP in year 2?

The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off

Changes in the price level