Exam 23: Aggregate Demand and Aggregate Supply

The Stock Market Boom of 2015 Imagine that in 2015 the economy is in long-run equilibrium.Then stock prices rise more than expected and stay high for some time. -Refer to Stock Market Boom 2015.What happens to the expected price level and what impact does this have on wage bargaining?

A change in the money supply changes only nominal variables in the long run.

If the price level falls,the real value of a dollar

An increase in the price level and a reduction in output would result from

Over the last fifty years both real GDP and prices have trended upward in most countries.Continuing real GDP growth and inflation can be explained by

Pessimism Suppose the economy is in long-run equilibrium.Then because of corporate scandal,international tensions,and loss of confidence in policymakers,people become pessimistic regarding the future and retain that level of pessimism for some time. -Refer to Pessimism.In the long run,the change in price expectations created by pessimism shifts

We can explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time.

In the early 1930s in the United States,there was a

In 1936,John Maynard Keynes published a book,The General Theory,which attempted to explain

Other things the same,if the price level falls,people

Make a list of expenditures whose sum equals GDP.

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

Which of the following is correct concerning recessions?

The aggregate quantity of goods and services demanded changes as the price level falls because

A relatively mild period of falling incomes and rising unemployment is called a(n)

Recession come at

Which of the following shifts aggregate demand to the right?

If output is above its natural rate,then according to sticky-wage theory

Other things the same,if the long-run aggregate supply curve shifts right,prices

In the context of the aggregate-demand curve,the interest-rate effect refers to the idea that,when the price level increases,