Exam 14: Aggregate Demand and Aggregate Supply

Adverse supply shocks can cause a recession with increasing price level.

Figure 14.2 -Refer to Figure 14.2. A movement from point b to point a could be caused by a(n)

The ratio of the total shift in aggregate demand to the initial shift in aggregate demand is known as the multiplier.

Adjustments in ________ take the economy from the short-run equilibrium to the long-run equilibrium.

Suppose consumer tastes and preferences shift from pizza to tacos. In the short run case, these changing tastes will result in pizza restaurants ________ pizza prices and taco restaurants ________ taco prices.

Changes in demand will often be met with changes in output rather than changes in prices because of formal and informal contracts.

Figure 14.2 -Refer to Figure 14.2. A movement from point b to point d could be caused by a(n)

Recessions occur because of

Aggregate demand refers to the relationship between

Figure 14.2 -Refer to Figure 14.2. A movement from point b to point c could be caused by a simultaneous ________ and ________.

Figure 14.1 -Figure 14.1 shows three aggregate demand curves. A movement from curve AD₁ to curve AD₂ could be caused by a(n)

If the MPC = 0.9, the multiplier would be

Figure 14.2 -Refer to Figure 14.2. A movement from point a to point d could be caused by a simultaneous ________ and ________.

Which of the following is a problem with the price system that can lead to fluctuations in output?

If the government decreases its purchases of goods and services by $12,000 and the MPS is 0.5, GDP and income will eventually decrease by

Recall the Application about falling oil prices and their effect on the U.S. economy to answer the following question(s). -According to this Application, lower oil prices should ________ aggregate ________.

During an economic boom

Which of the following does NOT decrease aggregate demand in the United States?

Prices that adjust nearly on a daily basis are

For most firms, the biggest cost of doing business is wages.