Exam 19: Aggregate Supply and Aggregate Demand

In the figure above, the economy is at an equilibrium with real GDP of $10 trillion and a price level of 110. As the economy moves toward its ultimate equilibrium, the ________ curve will shift ________.

If the costs of production increase, there is

The aggregate demand curve illustrates the relationship between

Describe how a demand-pull inflation can occur.

An economy is at a full-employment equilibrium, and then the aggregate demand curve shifts leftward. As a result, the price level ________ and real GDP ________.

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

State how shifts in the aggregate demand curve can explain the movement of real GDP around potential GDP.

Inflation can be started by

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. If a supply shock decreases the quantity of real GDP supplied by $6 billion at each price level, the new equilibrium real GDP is

"Moving along the AS curve, the real wage rate is constant while moving along the potential GDP line, the real wage rate changes." Explain whether the previous statement is correct or incorrect.

During the late 1960s, U.S. defense spending increased as the United States fought in Vietnam. This increase in government expenditure on goods and services most likely created

At a trough in the business cycle, the macroeconomic equilibrium is ________ the level of potential real GDP.

When OPEC nearly tripled the price of oil in late 1973,

The figure above shows aggregate demand curves. -Based on the figure above, the aggregate demand curve will shift from AD₀ to AD₂ when

If the equilibrium price level is 135 but the actual price level is 120, then

Which of the following factors could start a demand-pull inflation ?

In a demand-pull inflation, money wage rates rise because

What two variables are determined in an aggregate supply-aggregate demand figure? Is the slope of the aggregate supply curve positive or negative? Is the slope of the aggregate demand curve positive or negative?

________ increases the quantity of real GDP supplied and is shown as a movement along the AS curve.

If the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP less than potential GDP, there is