Exam 10: Aggregate Supply and Aggregate Demand

Explain the reasons why the AD curve slopes downward.

During an above-full-employment equilibrium, actual GDP is greater than potential GDP.

-In the above figure, the economy is initially at point B. If the Fed decreases the quantity of money, there is

In the short run, an increase in aggregate demand

A change in the money wage rate shifts

If the quantity of money increases, the

-In the above figure, which movement illustrates the impact of a rising price level and a constant money wage rate?

When the labor market is at full employment

Which of the following would NOT shift the U.S. aggregate demand curve?

Technological progress will

In the long-run, the quantity of real GDP supplied increases when the price level increases.

Assume that the economy is at a long run equilibrium and oil prices rise. As a result, the ________ shifts ________.

An aggregate supply curve depicts the relationship between

If the economy is in long run equilibrium and aggregate demand increases, then in the short run

-The table above shows Purpleland's economy aggregate demand and supply schedules. Purpleland's potential GDP is $675 billion. a)Plot the aggregate demand curve, the short-run aggregate supply curve, and the long-run aggregate supply curve. b)What are the short-run equilibrium real GDP and price level in Purpleland? c)What is the long-run equilibrium real GDP? d)Is Purpleland's short-run macroeconomic equilibrium a full-employment equilibrium, below full-employment equilibrium, or above full-employment equilibrium? What is the recessionary gap (if any)? What is the inflationary gap (if any)? e)Suppose aggregate demand increases by $150 billion. Plot the new aggregate demand curve. How do real GDP and the price level change in the short run? f)Is Purpleland's new short-run macroeconomic equilibrium a full-employment equilibrium, below full-employment equilibrium, or above full-employment equilibrium? What is the recessionary gap (if any)? What is the inflationary gap (if any)?

Stagflation is the combination of

If aggregate demand decreases and neither short-run nor long-run aggregate supply changes, then

If the money price of a resource such as oil falls, then the

-In the above figure, the shift from AD? to AD? might have been the result of

In a change to immigration policy during 2012, "people younger than 30 who came to the United States before the age of 16, pose no criminal or security threat, and were successful students or served in the military can get a two-year deferral from deportation", Homeland Security Secretary Janet Napolitano said, according to CNN, 06/16/2012. If many of these immigrants had previously been afraid to work, now as a result of being able to work legally