Exam 22: Aggregate Demand and Supply Analysis

Everything else held constant,a decrease in net taxes ________ aggregate ________.

Explain and demonstrate graphically the effects of a negative supply shock in both the short-run and long-run.

Everything else held constant,when actual output exceeds the natural rate of output ________ aggregate supply ________.

Suppose the economy is producing below the natural rate of output and the government is suffering from large budget deficits.To deal with the deficit problem,suppose the government takes a policy action to reduce the size of the deficits.This policy action will cause ________ in the unemployment rate in the short run and ________ in inflation in the short run,everything else held constant.

The long-run rate of unemployment to which an economy always gravitates is the

Suppose the economy is producing at the natural rate of output.An open market sale of bonds by the Fed will cause ________ in real GDP in the long run and ________ in inflation in the long run,everything else held constant.

If workers demand and receive higher real wages (a successful wage push),the cost of production ________ and the short-run aggregate supply curve shifts ________.

Suppose the economy is producing at the natural rate of output.An open market purchase of bonds by the Fed will cause ________ in real GDP the the short run and ________ in inflation in the short run,everything else held constant.

Suppose the U.S.economy is producing at the natural rate of output.A depreciation of the U.S.dollar will cause ________ in real GDP in the short run and ________ in inflation in the short run,everything else held constant.(Assume the depreciation causes no effects in the supply side of the economy.)

Suppose the U.S.economy is producing at the natural rate of output.An appreciation of the U.S.dollar will cause ________ in real GDP in the short run and ________ in inflation in the short run,everything else held constant.(Assume the appreciation causes no effects in the supply side of the economy.)

Suppose the economy is producing at the natural rate of output.A decrease in consumer and business confidence will cause ________ in real GDP in the long run and ________ in inflation in the long run,everything else held constant.

The price of a barrel of oil doubled between 2007 and the middle of 2008.To make matters worse,a financial crisis hit the U.S.economy starting in August of 2007.Which of the following is TRUE of the Chinese experience?

A central bank that does NOT follow the Taylor principle will fail to raise nominal interest rates by more than the increase in expected inflation.As a result,the monetary policy curve is ________ sloping and the aggregate demand curve is ________ sloping.

The long-run aggregate supply curve shifts to the right when there is

Suppose the economy is producing at the natural rate of output.Assuming a fixed natural rate of output and everything else held constant,the development of a new,more productive technology will cause ________ in the unemployment rate and ________ in the inflation in the long run.

Using the aggregate demand-aggregate supply model,explain and demonstrate graphically the short-run and long-run effects of an increase in the money supply.

Everything else held constant,when output is ________ the natural rate level,wages will begin to ________,increasing short-run aggregate supply.

The price of a barrel of oil doubled between 2007 and the middle of 2008.To make matters worse,a financial crisis hit the U.S.economy starting in August of 2007.Which of the following is an appropriate description of the mechanism that would have ensued?

The expectations-augmented Phillips curve implies that as expected inflation increases,nominal wages ________ to prevent real wages from ________.

The long-run aggregate supply curve shifts to the right when there is