Exam 13: Aggregate Demand and Aggregate Supply Analysis

Beginning with long-run equilibrium,use the aggregate demand and aggregate supply model to illustrate what happens in the short run when the economy suffers a negative supply shock.

An increase in aggregate demand causes an increase in ________ only in the short run,but causes an increase in ________ in both the short run and the long run.

Figure 13-2 -Refer to Figure 13-2.Ceteris paribus,an increase in the expected price of an important natural resource would be represented by a movement from

An increase in government spending will result in an increase in the price level and an increase in real GDP in the long run.

Which of the following would not be considered a positive addition to household wealth?

When the price level rises from 110 to 115,the aggregate level of GDP supplied rises from $80 billion to $120 billion.This ________ relationship represents the ________ relationship between the quantity of real GDP firms are willing to supply and the price level.

What variables cause the short-run aggregate supply curve to shift? For each variable,identify whether an increase in that variable will cause the short-run aggregate supply curve to shift to the right or to the left.

The ________ shows the relationship between the price level and quantity of real GDP demanded.

Figure 13-3 -Refer to Figure 13-3.Which of the points in the above graph are possible short-run equilibria?

One factor which brought on the recession of 2007-2009 was the financial crisis in 2008.

While in office,President Obama discussed raising income taxes for individuals earning over $250,000 in income.Explain how these higher income taxes would affect the aggregate demand curve.

According to ________,entrepreneurship does not contribute anything of value to production.

Which of the following is one explanation as to why the aggregate demand curve slopes downward?

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,a decrease in firms' expectations of the future profitability of investment spending would be represented by a movement from

The long-run aggregate supply curve

Using the aggregate supply and demand model,illustrate what happens in the long run when the economy suffers a supply shock.Begin your analysis by assuming the economy has suffered the supply shock in the short run,but has not yet adjusted to it in the long run.

Which of the following models advocate that the quantity of money should be increased at a constant rate?

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

Figure 13-2 -Refer to Figure 13-2.Ceteris paribus,a decrease in productivity would be represented by a movement from

Because of the slope(s)of the ________,we can say that a decrease in the price level leads to a higher level of real GDP demanded.