Exam 15: Aggregate Demand and Aggregate Supply Analysis

In the dynamic aggregated demand and aggregate supply model,inflation occurs if

In 2005,Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico which subsequently drove up natural gas,gasoline,and heating oil prices.Three years later,once the refining capacity was restored,these prices came back down.The restoration of refining capacity should

An increase in investment causes the price level to ________ in the short run and ________ in the long run.

Lower personal income taxes

The long-run aggregate supply curve shows the relationship between

The basic aggregate demand and aggregate supply curve model helps explain

The automatic mechanism ________ the price level in the case of ________ and ________ the price level in the case of ________.

In the long run

Explain how each of the following events would affect the long-run aggregate supply curve. a.A lower price level b.A decrease in the labor force c.A decrease in the quantity of capital goods d.Technological change

Potential GDP refers to the level of

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in the growth rate of domestic GDP relative to the growth rate of foreign GDP would result in U.S.exports increasing faster than U.S.imports.This would be represented by a movement from

When people became ________ concerned with the underlying value of their houses and became ________ concerned with the expectations of the prices of their houses increasing,a housing bubble occurred.

The level of long-run aggregate supply is affected by all of the following except

Figure 15-4 -Refer to Figure 15-4.Given the economy is at point A in year 1,what is the inflation rate between year 1 and year 2?

Figure 15-3 -Refer to Figure 15-3.Suppose the economy is at point C.If government spending decreases in the economy,where will the eventual long-run equilibrium be?

The invention of the integrated circuit by Jack Kilby of Texas Instruments gave rise to the information age.What did this technological change do the short-run supply curve?

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,an increase in firms' expectations of the future profitability of investment spending would be represented by a movement from

Suppose the U.S.GDP growth rate is slower relative to other countries' GDP growth rates.This will

Workers and firms both expect that prices will be 2.5% higher next year than they are this year.As a result

Figure 15-4 -Refer to Figure 15-4.Given the economy is at point A in year 1,what will happen to the unemployment rate in year 2?