Exam 9: Aggregate Demand and Aggregate Supply Analysis

Explain how the aggregate demand and aggregate supply model can be made more dynamic.

Inflation will

Which of the following is considered a negative supply shock?

Figure 9.7 Alt text for Figure 9.7: In figure 9.7, a graph comparing real GDP and price level. Long description for Figure 9.7: The x-axis is labelled, real GDP (trillions of dollars), with values 11.0, 11.8, 12.1 marked.The y-axis is labelled, price level, with values 110 and 112 marked.6 lines are shown; SRAS1, SRAS2, AD1, AD2, LRAS1, LRAS2.Line SRAS1 begins near the bottom left and slopes up to the top right corner.Line SRAS2 follows the same slope as line SRAS1, but is plotted to the right.The area between lines SRAS1 and SRAS2 is indicated by a right pointing arrow.Line AD1 begins at the top left corner and slopes down toward the bottom center.Line AD2 follows the same slope as AD1, but is plotted to the right.The area between lines AD1 and AD2 is indicated by a right pointing arrow.Line LRAS1 is perpendicular to the x-axis, and begins from value 11.0.Line LRAS2 perpendicular to the x-axis, and begins from point 12.1.The area between lines LRAS1 and LRAS2 is indicated by a right pointing arrow.Line LRAS1 intersects lines AD1 and SRAS1 at point A (11.0, 110).Lines AD2 and SRAS2 intersect at point B (11.8, 112).Points A and B are connected to their respective coordinates on the x-axis and y-axis with dotted lines.Line LRAS2 intersects lines SRAS1 and SRAS2 on the right end of these lines.Similarly, line LRAS2 intersects lines AD1 and AD2 on the right end of these lines. -Refer to Figure 9.7.Given the economy is at point A in year 1, what is the inflation rate between year 1 and year 2?

A decrease in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?

The level of real GDP in the long run is

An increase in disposable income will shift the aggregate demand curve to the right.

Which of the following correctly describes the automatic mechanism through which the economy adjusts to long-run equilibrium?

In the dynamic aggregate demand and aggregate supply model, what is the result of aggregate demand increasing faster than potential real GDP?

If full-employment GDP is equal to $1.9 trillion and the current price level is 130, what does the long-run aggregate supply curve look like?

Explain how "menu costs" affect the slope of the short-run aggregate supply curve.

Figure 9.1 Alt text for Figure 9.1: In figure 9.1, a graph comparing real GDP and price level. Long description for Figure 9.1: The x-axis is labelled, real GDP, and the y-axis is labelled, price level, with 0 at the vertex.Line AD1 begins in the top left corner and slopes down to the bottom center.Line AD2 follows the same slope as line AD1 but is plotted to the right.Points A and B are plotted along line AD1.Point A is a little less than half way along the left side of the line, and point B is little more than half way on the right side of the line. -Refer to Figure 9.1.Ceteris paribus, an increase in the price level would be represented by a movement from

Why does the short-run aggregate supply curve shift to the left in the long run, following an increase in aggregate demand?

Which of the following was not a cause the Canadian recession of 2008-2009?

The invention of the integrated circuit by Jack Kilby of Texas Instruments gave rise to the information age.What did this technological change do to the short-run supply curve?

Which of the following will shift the aggregate demand curve to the right, ceteris paribus?

Explain how each of the following events would affect the long-run aggregate supply curve. a.a lower price level b.a decrease in the labour force c.a decrease in the quantity of capital goods d.technological change

A decrease in aggregate demand causes a decrease in ________ only in the short run, but causes a decrease in ________ in both the short run and the long run.

Figure 9.1 Alt text for Figure 9.1: In figure 9.1, a graph comparing real GDP and price level. Long description for Figure 9.1: The x-axis is labelled, real GDP, and the y-axis is labelled, price level, with 0 at the vertex.Line AD1 begins in the top left corner and slopes down to the bottom center.Line AD2 follows the same slope as line AD1 but is plotted to the right.Points A and B are plotted along line AD1.Point A is a little less than half way along the left side of the line, and point B is little more than half way on the right side of the line. -Refer to Figure 9.1.Ceteris paribus, an increase in personal income taxes would be represented by a movement from

Why does the short-run aggregate supply curve slope upward?