Exam 14: Aggregate Demand and Aggregate Supply

In response to a decrease in output, the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in aggregate supply.

How does the size of investment as a fraction of GDP compare to its importance in creating economic fluctuations?

Aggregate demand shifts to the left if the money supply decreases.

In which of the following situations would the long-run aggregate supply curve shift right?

Suppose the economy is in long-run equilibrium. If there is a tax cut at the same time that major new sources of oil are discovered in the country, what would we expect will happen in the short run?

Suppose a stock market boom makes people feel wealthier. What are the effects of this increase in wealth?

Which of the following government actions will shift the aggregate demand right?

What changes are likely to happen in an economy when production costs rise?

What is the effect of a change in taxes on aggregate demand?

Increased uncertainty and pessimism about the future of the economy decreases investment spending shifting aggregate demand to the left.

Which of the following best explains the slope of the aggregate demand curve?

The explanations for the downward slope of the aggregate demand curve say that as the price level rises, consumption, investment, and net exports all fall.

Suppose the economy is in long-run equilibrium. In a short span of time, there is a large influx of skilled immigrants, a major new discovery of oil, and a major new technological advance in electricity production. In the short run, what would we expect to happen?

According to the sticky wage theory, which of the following is consistent with an unexpected increase in the price level?

Which of the following explains the downward slope of the aggregate demand curve?

Because we understand what things change GDP, we can predict recessions with a fair amount of accuracy.

What are the implications of a depreciation of the dollar?

Scenario 14-1. The economy is in long-run equilibrium. Suddenly, due to improved international relations and the increased confidence of policymakers, citizens become more optimistic about the future and stay this way for a long time. -Refer to Scenario 14-1. Which of the following are predicted by the aggregate demand and aggregate supply theory?

According to the sticky price theory, which of the following is consistent with a more-than-expected rise in the price level?

Which of the following terms refers to a short period of falling incomes and rising unemployment?