Exam 14: The Aggregate Model of the Macro Economy

A decrease in resources, efficiency, or technology will shift the:

Decreases in the NAIRU represent a:

An open market purchase, a decrease in the discount rate, and a decrease in the reserve requirement would shift the aggregate demand curve rightward.

The combination of rising inflation and higher unemployment is called:

An adverse oil price increase will shift the short-run aggregate supply curve:

An open market purchase of government securities by the Fed would shift the aggregate demand curve leftward.

At a given price level, an increase in expected profits and business confidence will shift the aggregate demand curve:

Expansionary monetary policy should be used if:

Decreases in autonomous spending cause rightward shifts of the aggregate demand and supply curves.

If the government spending increases without an equal increase in taxes, the government must borrow funds in the financial markets.

An increase in taxes would shift the:

An open market sale, an increase in the discount rate, and an increase in the reserve requirement would shift the aggregate demand curve leftward.

At a given price level, a decrease in consumer credit will shift the aggregate demand curve:

Increases in resources and efficiency would increase potential GDP.

Using the aggregate demand-aggregate supply diagram, graphically illustrate and explain the impact of an expansionary monetary policy on the price level and real income in the long run.

Expansionary fiscal policy should be used if:

An increase in wealth would shift the:

Higher prices and price increases combined with lower real output and income, resulting from a major increase in input prices in the economy is called:

The full-employment level of output is called:

The level of potential GDP does not change because the factors determining potential output are fixed in the short run.