Exam 12: The Aggregate Demand and Supply Model

12.2 Equilibrium in Aggregate Demand and Supply Analysis AD - AS Equilibrium -On the graph above,consider a point A at which output is greater than potential output.At this point,________.

AD - AS Shocks -On the graph above,suppose the economy is at point F when there is a permanent positive supply shock.The new long-run equilibrium is at point ________.

Suppose there is a temporary supply shock because of a war in the Middle East,then,ceteris paribus,the ensuing cost push shock ________.

In the AD-AS framework,long-run equilibrium implies that ________.

By the time Paul Volcker took office as the new Federal Reserve chairman in 1979,both the inflation and unemployment rates were higher than during most of the 1950s,60s and early 70s.The Federal Reserve implemented an autonomous tightening of monetary policy that resulted in the famous Volker Disinflation which was successful in bringing both problems under control.What would have been a likely long-run result had Mr.Volker conducted an expansionary monetary policy instead?

In the mid-to-late 1990s,changes in the health care industry,substantially reduced health care costs relative to other goods and services.Which of the following is an appropriate description of the mechanism behind this supply shock?

In the 1960s and 1970s,research funding by the U.S.government and some universities led to revolutionary advances in network computing.These advances in communication and network technology remained largely isolated to governmental and academic use.By the mid-to-late 1990s,the Internet began to be widely adopted with massive increases in productivity (which journalists dubbed the "new economy").Which of the following is an appropriate description of the mechanism behind this supply shock?

The "tech bubble" burst of 2000,the terrorist attacks of 2001 and the corporate scandals of 2001 and 2002 all had similar qualitative effects on the economy.Which of the following is an appropriate description of the mechanism that would have ensued?

The aggregate demand curve shifts to the left when there is ________.

Between 2007 and 2009,which of the following occurred in the United States,but not in the United Kingdom?

AD - AS Shocks -On the graph above,suppose point G is on the short-run aggregate supply curve π = 2.5 + 2 × (Y - 22)and aggregate demand curve Y = 29.25 - 0.5π.If output at point G is 25,and inflation expectations are adaptive,then the inflation rate next period will be ________.

AD - AS Shocks -In the long run,following a combination of a negative demand shock and a temporary negative supply shock,________.

By the time Paul Volcker took office as the new Federal Reserve chairman in 1979,the inflation rate exceeded 10%.By the end of 1986 the inflation rate had been brought down to 1.9%.Which of the following is true about the Volcker Disinflation?

How does the aggregate supply curve differ from a supply curve for,say,bananas?

12.2 Equilibrium in Aggregate Demand and Supply Analysis AD - AS Equilibrium -On the graph above,if inflation is falling,while the quantity demanded and output are rising,the economy may be at a point on ________.

12.2 Equilibrium in Aggregate Demand and Supply Analysis AD - AS Equilibrium -On the graph above,if output is falling,while the quantity demanded is rising,the economy may be at a point on ________.

12.2 Equilibrium in Aggregate Demand and Supply Analysis AD - AS Equilibrium -On the graph above,at the point where quantity demanded equals quantity supplied (let's call it pointA),the economy has reached its ________.

The effect on the aggregate demand curve of which of the following is most similar to the effect of a decrease in the barriers to efficient functioning of financial markets?

AD - AS Shocks -On the graph above,an example of a positive demand shock is the movement from point ________ to point ________.

An economy is in long-run equilibrium when output equals potential output.Why is there no long-run equilibrium rate of "potential inflation"?