Exam 19: Aggregate Supply and Aggregate Demand

Define potential GDP. Under what circumstances does actual real GDP fall short of potential GDP, equal potential GDP, and exceed potential GDP?

If the economy is at macroeconomic equilibrium, then real GDP

According to the AS-AD model,

The aggregate supply curve shifts

When potential GDP increases,

When the price level rises and increases the demand for money, the nominal interest rate ________ and the real interest rate ________.

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

If the quantity of real GDP demanded is greater than the quantity of real GDP supplied, then

Demand-pull inflation starts with

Cost-push inflation can be started by

A rise in the price level

The aggregate demand curve shifts when any of the following factors change EXCEPT

If the economy is above full employment, there is ________ gap and as the economy adjusts toward full employment the price level ________.

If potential GDP increases, then the

When potential GDP increases the potential GDP line ________ and the aggregate supply curve ________.

An increase in technology ________ potential GDP and ________ aggregate supply.

-In the figure above, the economy is at an equilibrium with real GDP of $13 trillion and a price level of 110. At this point there is

It is profitable to hire more labor if the price level ________ and the money wage rate ________.

How does a recession in Asia affect U.S. aggregate demand and the U.S. aggregate demand curve?

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