Exam 14: Aggregate Demand and Aggregate Supply

What are the four components of aggregate demand?

If the supply of money increases, the long-run aggregate supply curve suggests that output will not change but the price level will.

Assuming a long-run aggregate supply curve, a decrease in consumer confidence results in ________ in output and ________ in price level.

If the government increases its purchases of goods and services by $3,000 and the MPC is 0.8, GDP and income will eventually increase by

If home prices are falling, consumers purchasing a home will find their purchasing power of money has increased. This benefit to consumers is called the

In modern economies

A supply shock is an ________ event that shifts the aggregate ________ curve.

Prices that adjust slowly are

Aggregate demand and aggregate supply must be combined to determine the price level and the "real" GDP.

The long-run aggregate supply curve is horizontal.

Aggregate demand is the total demand for intermediate goods and services in an entire economy.

If potential output exceeds actual output, ________ shifts downward over time.

Identify three key factors that can cause a shift in the aggregate demand curve.

What three effects can alter the aggregate demand curve?

If the multiplier = 2.5, the MPC would be

Assuming a long-run aggregate supply curve, an increase in the money supply results in ________ in output and ________ in price level.

What are supply shocks? Explain what effect adverse and favorable supply shocks have on the supply curve.

Prices of industrial products and wages tend to be the most "flexible."

Which of the following types of workers might have wages that change quickly?

Recall the Application about the behavior of prices in retail catalogs to answer the following question(s). Economist Anil Kashyap of the University of Chicago examined the prices of 12 selected goods from L.L. Bean, REI, and The Orvis Company, Inc. Kashyap tracked the prices from the companies' catalogs which were reissued every six months. -Even though the catalogs listed in the Application were reissued every six months, the prices which were tracked in these retail catalogs