Exam 10: Classical and Keynesian Macro Analyses

11.4 Consequences of Changes in Aggregate Demand -Refer to the above figure. An increase in aggregate demand between real Gross Domestic Product (GDP)levels Y₀ and Y₁

-The above figure presents the view of the economy according to

According to classical economists, when aggregate demand decreases

Assume equilibrium real GDP per year is equal to full-employment real GDP. If aggregate demand falls, then

According to Say's law,

If the economy is operating at a point at which short-run aggregate supply is horizontal, then

Which one of the following statements is TRUE?

-Consider the above figure. If the aggregate demand went from AD₂ to AD₃, our nation would have gone from

According to classical theory, desired saving always equals investment due to changes in

Cost-push inflation can be shown on an aggregate supply aggregate demand diagram as

In the above figure, an increase in aggregate demand has resulted in

-In the above figure, if the relevant aggregate demand curve is AD₂, what are the short-run equilibrium price level and real GDP?

Keynes argued that an economy could be in equilibrium when the economy was

A stronger dollar leads to lower input prices for U.S. firms because

Which of the following will shift the Keynesian short-run aggregate supply curve downward and to the right?

If aggregate demand and nominal GDP increase while the price level is constant, we would conclude that

The short-run aggregate supply (SRAS)curve represents the relationship between

The approach to understanding the determination of real GDP and the price level that emphasizes incomplete adjustment in the prices of many goods is

In the classical model, what happens to the level of real GDP if aggregate demand increases?

Demand-pull inflation is