Exam 9: Aggregate Demand and Aggregate Supply Analysis

When the price level in Canada rises relative to the price level of other countries, ________ will rise, ________ will fall, and ________ will fall.

Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

Stagflation occurs when inflation ________ and GDP ________.

Assume interest rates in the economy have fallen.How will this affect aggregate demand and equilibrium in the short run?

The long-run adjustment to a negative supply shock results in

Figure 9.3 Alt text for Figure 9.3: In figure 9.3, a graph comparing real GDP and price level. Long description for Figure 9.3: The x-axis is labelled, real GDP, with 0 at the vertex, and the y-axis is labelled, price level.2 lines are shown; SRAS1 and SRAS2.Line SRAS1 begins a little above the vertex and slopes up to the top right corner.Line SRAS2 follows the same slope as line SRAS1, but is plotted to the right.Points A and B are plotted on line SRAS1.Point A is near the left end of the line and point B is near the center of the line. -Refer to Figure 9.3.Ceteris paribus, an increase in productivity would be represented by a movement from