Exam 13: Aggregate Demand and Aggregate Supply Analysis

Suppose the U.S.GDP growth rate is faster relative to other countries' GDP growth rates.U.S.imports will therefore increase faster than U.S.exports,and this will

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?

Use the dynamic model of aggregate demand and supply to illustrate a situation where aggregate demand and short-run aggregate supply are both increasing from year 1 to year 2,resulting in a higher price level and higher level of real GDP at macroeconomic equilibrium in year 2.

At a short-run macroeconomic equilibrium,real GDP is always equal to potential GDP.

The long-run aggregate supply curve shows the relationship between

What are sticky prices,and how can contracts make them "sticky"?

Figure 13-3 -Refer to Figure 13-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y₁ represents potential GDP.

Changes in ________ do not affect the level of aggregate supply in the long run.

Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy.As a result

One factor which brought on the recession of 2007-2009 was the end of the housing bubble.

A supply shock causes the long-run aggregate supply curve to shift left,decreasing the price level.

The long-run aggregate supply curve shows the relationship between the ________ and ________.

A decrease in the price level will

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,a decrease in the value of the domestic currency relative to foreign currencies would be represented by a movement from

Starting from long-run equilibrium,use the basic aggregate demand and aggregate supply diagram to show what happens in both the long run and the short run when there is a decline in wealth.

Which of the following is an assumption made by the dynamic model of aggregate demand and aggregate supply?

Monetarists believe that the quantity of money should be increased at an increasing rate.

Figure 13-4 -Refer to Figure 13-4.Given the economy is at point A in year 1,what will happen to the price level in year 2?

Which of the following best describes the "wealth effect"?

The short-run aggregate supply curve is vertical.