Exam 17: Monetary Theory I: The Aggregate Demand and Aggregate Supply Model

According to the aggregate demand-aggregate supply model, what is the short-run impact of a reduction in the money supply by the Fed?

Explain why some economists claim that the persistence of high unemployment rates during the recovery from the recession of 2007-2009 is evidence of "hysteresis."

A decrease in the price level will lead to

An increase in the expected price level

According to New Keynesians, why can firms increase output in the short run in response to higher prices?

How does an increase in interest rates affect net exports?

According to the New Classical theory, why may output differ from its full-employment level in the short run?

According to Robert Gordon, what led to the decline in unemployment in the 1940s?

Which of the following most accurately describes the behavior of the U.S. economy during the 2001 recession?

How is a monopolistically competitive firm likely to respond to fluctuations in demand in the short run?

All of the following have been proposed as explaining the limited effectiveness of monetary policy during and after the Financial Crisis of 2007-2009 EXCEPT:

According to the new classical view, aggregate output will differ from full-employment output

Economists generally agree that in the long run changes in aggregate demand affect

A shift of the AD curve

An increase in all of the following will increase aggregate demand EXCEPT

Which of the following statements is correct?

An argument in support of hysteresis is

Which of the following statements concerning stabilization policy is correct?

In the new Keynesian view a monopolistically competitive firm may fail to increase the price of its product as demand increases because

Most economists believe that changes in the price level have