Exam 13: Aggregate Supply and Aggregate Demand

A rise in the U.S.price level brings a ________ in the price of U.S.exports relative to imports that ________ exports of U.S.goods, bringing a ________ in the quantity of U.S.real GDP demanded.

If firms' expectations about the future become pessimistic so that they think future profits will be lower, then

A rise in the price level brings a ________ in the buying power of money that ________ consumption expenditures and causes the quantity of real GDP demanded to ________.

The government increases the level of government expenditure.If there is no change in the aggregate supply curve, then aggregate demand will ________, real GDP will ________, and the price level will ________.

Which of the following shifts the aggregate supply curve rightward? i. the money wage rate rises ii. potential GDP increases iii. government expenditure on goods and services increases

An increase in the quantity of money ________ aggregate demand and ________.

What is a recessionary gap? Can a recessionary gap arise from a decrease in aggregate demand?

A change in the price level brings a ________ the aggregate supply curve, NOT a ________ the aggregate supply curve.

Give examples of factors that decrease aggregate supply.Which way does the AS curve shift?

Price level (GDP deflator) Potential GDP (billions of 2005 dollars) Real GDP supplied (billions of 2005 dollars) Real GDP demanded (billions of 2005 dollars) 150 25 34 16 140 25 31 19 130 25 28 22 120 25 25 25 110 25 23 28 -The table above gives data for the nation of Pearl, a small island in the South Pacific.The economy is at full employment when real GDP is

Over a business cycle, the quantities of capital, human capital, and entrepreneurial talent

Moving along the AS curve, when the price level increases the

If the money wage rate is constant and the price level increases, what happens to the real wage rate, firms' profits, and the aggregate quantity supplied?

An inflationary gap is created when

What is an inflationary gap and how does the price level change? What is a deflationary gap and how does the price level change?

A combination of declining real GDP and rising price level is referred to as

-In the figure above, the shift in the aggregate demand curve from AD₁ to AD₃ could be the result of an increase in

Potential GDP

When the price level falls,

The economy is at full employment and then aggregate demand increases.Describe what happens as an immediate result of the increase in aggregate demand.Describe how the economy adjusts back to full employment.