Exam 22: Aggregate Demand and Supply Analysis

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 long run,everything else held constant.(Assume the depreciation causes no effects in the supply side of the economy.)

In the long run,following a combination of a negative demand shock and a temporary negative supply shock,

Everything else held constant,a change in workers' expectations about inflation will cause ________ to change.

The long-run aggregate supply curve is

The aggregate demand curve is the total quantity of an economy's

The Phillips curve indicates that when the labor market is ________,production costs will ________ and aggregate supply increases.

Everything else held constant,aggregate demand increases when

Because shifts in aggregate demand are not viewed as being particularly important to aggregate output fluctuations,they do not see much need for activist policy to eliminate high unemployment."They" refers to proponents of

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.

Assuming the economy is starting at the natural rate of output and everything else held constant,the effect of ________ in aggregate ________ is a rise in both inflation and output in the short-run,but in the long-run the only effect is a rise in inflation.

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 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 long run,everything else held constant.(Assume the appreciation causes no effects in the supply side of the economy.)

Everything else held constant,a decrease in the cost of production ________ aggregate ________.

Suppose the economy is producing at the natural rate of output. An increase 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.

Everything else held constant,an increase in net taxes ________ aggregate ________.

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 in the long run and ________ in inflation in the long run,everything else held constant.

Everything else held constant,an increase in government spending ________ aggregate ________.

A positive supply shock causes ________ to ________.

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

Everything else held constant,when financial frictions increase,the real cost of borrowing ________ so that planned investment spending ________ at any given inflation rate.