A) a substantial reduction in the rate of inflation. B) a negative inflation rate. C) the same as hyperinflation. D) a sudden change in the normal behavior of inflation, unrelated to the nation's output gap. A) a substantial reduction in the rate of inflation. B) a negative inflation rate. C) the same as hyperinflation. D) a sudden change in the normal behavior of inflation, unrelated to the nation's output gap.

Exam 27: Aggregate Demand, Aggregate Supply, and Inflation

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Based on the given figure, the economy is initially in long-run equilibrium at point A. If there is a favorable supply shock that increases potential output and shifts the long-run aggregate supply curve from LRAS to LRAS', then there is initially gap and the short-run aggregate supply curve will .

(Multiple Choice)

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Question 141

Because increases in inflation reduce planned spending and short-run equilibrium output:

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Question 142

An inflation shock is:

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Question 143

Based on the given figure, the economy is initially in long-run equilibrium at point A. If there is a favorable supply shock that increases potential output and shifts the long-run aggregate supply curve from LRAS to LRAS', then the new long-run equilibrium is reached at point:

(Multiple Choice)

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Question 144

For a fixed inflation rate target, an increase in the inflation rate corresponds to a the aggregate demand curve and an increase in exogenous spending corresponds to a the aggregate demand curve.

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Question 145

Starting from long-run equilibrium, an increase in autonomous consumption results in output in the short run and output in the long run.

(Multiple Choice)

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Question 146

In the given figure, the economy is initially in long-run equilibrium at point A. If there is an adverse supply shock that reduces potential output and shifts the long-run aggregate supply curve from LRAS to LRAS', then the new long-run equilibrium is reached at point:

(Multiple Choice)

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Question 147

Changes in aggregate spending not caused by changes in output or the inflation rate, also known as exogenous changes in spending, will shift the:

(Multiple Choice)

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Question 148

Inflation inertia is the result of the behavior of and the existence of .

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Question 149

When actual output equals potential output and the inflation rate is stable, the economy is said to be in ________ equilibrium.

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Question 150

The self-correcting tendency of the economy means that rising inflation eventually eliminates:

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Question 151

Disinflation is

(Multiple Choice)

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Question 152

High expected inflation leads to increases in wages and costs and to actual inflation.

(Multiple Choice)

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Question 153

If the Fed's monetary policy reaction function does not change, then when inflation decreases the Fed responds by the real interest rate, which consumption and investment spending, which output.

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Question 154

Starting from potential output, if firms become more optimistic about the future and decide to increase their investment in new capital, then this will generate a(n) gap and inflation will .

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Question 155

The aggregate demand curve shows the relationship between inflation and:

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Question 156

The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:

(Multiple Choice)

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Question 157

The aggregate demand curve shifts when there are changes in:

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Question 158

An upward shift in the Fed's policy reaction function is a(n) of monetary policy, and the aggregate demand curve .

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Question 159

Showing 141 - 159 of 159

Exam 27: Aggregate Demand, Aggregate Supply, and Inflation

Because increases in inflation reduce planned spending and short-run equilibrium output:

An inflation shock is:

Based on the given figure, the economy is initially in long-run equilibrium at point A. If there is a favorable supply shock that increases potential output and shifts the long-run aggregate supply curve from LRAS to LRAS', then the new long-run equilibrium is reached at point:

For a fixed inflation rate target, an increase in the inflation rate corresponds to a ________ the aggregate demand curve and an increase in exogenous spending corresponds to a ________ the aggregate demand curve.

Starting from long-run equilibrium, an increase in autonomous consumption results in ________ output in the short run and ________ output in the long run.

In the given figure, the economy is initially in long-run equilibrium at point A. If there is an adverse supply shock that reduces potential output and shifts the long-run aggregate supply curve from LRAS to LRAS', then the new long-run equilibrium is reached at point:

Changes in aggregate spending not caused by changes in output or the inflation rate, also known as exogenous changes in spending, will shift the:

Inflation inertia is the result of the behavior of ________ and the existence of ________.

When actual output equals potential output and the inflation rate is stable, the economy is said to be in ________ equilibrium.

The self-correcting tendency of the economy means that rising inflation eventually eliminates:

Disinflation is

High expected inflation leads to ________ increases in wages and costs and to ________ actual inflation.

If the Fed's monetary policy reaction function does not change, then when inflation decreases the Fed responds by ________ the real interest rate, which ________ consumption and investment spending, which ________ output.

Starting from potential output, if firms become more optimistic about the future and decide to increase their investment in new capital, then this will generate a(n)________ gap and inflation will ________.

The aggregate demand curve shows the relationship between inflation and:

The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:

The aggregate demand curve shifts when there are changes in:

An upward shift in the Fed's policy reaction function is a(n)________ of monetary policy, and the aggregate demand curve ________.

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Elasticity

Demand

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

An Introduction to Behavioral Economics

Externalities, Property Rights, and the Environment

The Economics of Information

Labor Markets, Poverty, and Income Distribution

Public Goods and Tax Policy

International Trade and Trade Policy

Macroeconomics: The Birds Eye View of the Economy

Measuring Economic Activity: GDP and Unemployment

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

The Labor Market: Workers, Wages, and Unemployment

Saving and Capital Formation

Money Prices and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economic Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: The Role of the Fed

Exchange Rates and the Open Economy

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For a fixed inflation rate target, an increase in the inflation rate corresponds to a the aggregate demand curve and an increase in exogenous spending corresponds to a the aggregate demand curve.

Starting from long-run equilibrium, an increase in autonomous consumption results in output in the short run and output in the long run.

Inflation inertia is the result of the behavior of and the existence of .

High expected inflation leads to increases in wages and costs and to actual inflation.

If the Fed's monetary policy reaction function does not change, then when inflation decreases the Fed responds by the real interest rate, which consumption and investment spending, which output.

Starting from potential output, if firms become more optimistic about the future and decide to increase their investment in new capital, then this will generate a(n) gap and inflation will .

An upward shift in the Fed's policy reaction function is a(n) of monetary policy, and the aggregate demand curve .