Exam 20: Aggregate Demand and Aggregate Supply

Other things the same, a decrease in the price level makes the interest rate decrease, which leads to a depreciation of the dollar in the market for foreign-currency exchange.

Wages tend to be sticky

Which of the following rises when the U.S. price level falls?

The model of short-run economic fluctuations focuses on the price level and

A decrease in U.S. interest rates leads to

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,

A decrease in the money supply causes the interest rate to rise so that investment falls.

A decrease in the expected price level shifts short-run aggregate supply to the

Suppose that a decrease in the demand for goods and services pushes the economy into recession. What happens to the price level? If the government does nothing, what ensures that the economy still eventually gets back to the natural rate of output?

Other things the same, the aggregate quantity of goods demanded in the U.S. increases if

The long-run aggregate supply curve would shift right if immigration from abroad

Historically, the change in real GDP during recessions has been

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

Suppose the economy is in long-run equilibrium and the government decreases its expenditures. Which of the following helps explain the logic of why the economy moves back to long-run equilibrium?

Other things the same, when the price level rises, interest rates

We depart from the assumptions of classical economics when we focus on the relationship between

The misperceptions theory of the short-run aggregate supply curve says that if the price level is higher than people expected, then some firms believe that the relative price of what they produce has

Historical evidence for the U.S. economy indicates that

Most economists believe that money neutrality holds