Exam 13: The Aggregate Demandaggregate Supply Model

Suppose housing values fall during a recession.In the short run:

Perfect summer weather increases farm output by 30%.In the short run,this can be expected to __________ the price level and __________ real wealth.

If the current short-run equilibrium level of output is less than full employment output,we can then expect that in the long run:

When a change in the price level leads to a change in saving,this is known as the:

If the economy is in a recession caused by lower aggregate demand,then in the absence of policy action,the price level will __________,output will __________,and employment will __________ in the long run.

Suppose the majority of students who are graduating in May from a large university have found jobs and signed employment contracts by February.Starting in February,these students are likely to __________ spending and __________ saving.

When decision makers have time to fully adjust to changes in the overall price level,we refer to this as:

If the current short-run equilibrium level of output is greater than full employment output,we can then expect that in the long run:

What is the difference between a movement along the aggregate demand curve and a shift of the aggregate demand curve? Explain in terms of what causes a movement and what causes a shift.

When median home prices rise,the value of real wealth __________ and aggregate demand __________.

If the price level falls by 5%,then all else being equal,the long-run aggregate supply curve will:

Refer to the following figure to answer the next five questions. -Based on the figure,if the economy starts at point A and ends up at point E,then in the short run,there was:

All else being equal,as the population ages and many people leave the labor force:

Which of the following would shift aggregate demand to the right?

When foreign income rises,U.S.aggregate:

The economy is in short-run equilibrium when:

Refer to the following figure to answer the next five questions. -Based on the figure,starting at point A,if there is an increase in government spending,then in the short run we would move to point __________ and in the long run to point __________.

You read a study that predicts that rising oil prices projected for this summer are certain to fuel inflation.Having taken an economics class,due to this expected change in prices,you predict that spending today will _________ and aggregate demand today will _________.

A rightward shift of the long-run aggregate supply curve means there has been:

When saving declines,the quantity of investment will __________,and therefore aggregate demand will __________.