Exam 20: Aggregate Demand and Aggregate Supply

A decrease in the price level makes consumers feel wealthier, so they purchase more. This logic helps explain why the aggregate demand curve slopes downward.

If the dollar appreciates, perhaps because of speculation or government policy, then U.S. net exports

Suppose businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases. Their reaction would initially shift

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U. S. Which pair of GDP growth rates and unemployment rates is realistic?

Political Instability Abroad Suppose that political instability in other countries makes people fear for the value of their assets in these countries so that they desire to purchase more U.S assets. -Refer to Political Instability Abroad. What would happen to the dollar?

Other things the same, as the price level falls, the exchange rate rises. A rise in the exchange rate leads to a decrease in net exports.

We can explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time.

Which of the following would cause stagflation?

Which of the following, other things the same, would make the price level decrease and real GDP increase?

An increase in the money supply shifts the long-run aggregate supply curve to the right.

The aggregate demand curve shifts right if either

The saying "Money is a veil." means that

Which of the following would cause prices to fall and output to rise in the short run?

Which of the following will both make people buy more?

The aggregate quantity of goods and services demanded changes as the price level rises because

Other things the same, if the long-run aggregate supply curve shifts left, prices

Other things the same, an unexpected fall in the price level results in some firms having

According to classical macroeconomic theory, changes in the money supply change nominal but not real variables.

When the price level falls

The sticky-price theory of the short-run aggregate supply curve says that if the price level rises by 5% and people were expecting it to rise by 2%, then firms have