Exam 22: Aggregate Demand and Supply Analysis

Explain and demonstrate graphically the effects of a negative supply shock in both the short-run and long-run.

The Phillips curve indicates that when the labor market is ________,production costs will ________ and aggregate supply decreases.

According to the quantity theory of money,an increase in the money supply ________ aggregate ________,everything else held constant.

The long-run rate of unemployment to which an economy always gravitates is the

A reduction of aggregate demand may raise the natural rate of unemployment above the full employment level,meaning that the self-correcting mechanism will only be able to return the economy to the natural rate level of output and unemployment-not to the full employment levels.Such a view is consistent with

According to the quantity theory of money,a decrease in the money supply,________ aggregate ________,everything else held constant.

By analyzing aggregate demand via its component parts,we can conclude that changes in the money supply

The total quantity of an economy's final goods and services demanded at different price levels is

Suppose the economy is producing at the natural rate of output.An open market purchase of bonds by the Fed will cause ________ in real GDP the the short run and ________ in the aggregate price level in the short run,everything else held constant.

Suppose the U.S.economy is producing at the natural rate of output.A depreciation of the U.S.dollar will cause ________ in real GDP in the short run and ________ in the aggregate price level in the short run,everything else held constant.(Assume the depreciation causes no effects in the supply side of the economy.)

Everything else held constant,an increase in net taxes ________ aggregate ________.

One way to derive aggregate demand is by looking at its four component parts,which are:

Everything else held constant,a decrease in net taxes ________ aggregate ________.

The aggregate demand curve slopes downward because a decrease in the price level means ________ in the real money supply and therefore a ________ level of real spending.

The short-run aggregate supply curve is upward sloping because in the short run,costs of many factors that go into producing goods and services are ________,meaning that the price for a unit of output will ________ relative to input prices and the profit per unit will rise.

Suppose the economy is producing at the natural rate of output.An open market sale of bonds by the Fed will cause ________ in real GDP in the long run and ________ in the aggregate price level in the long run,everything else held constant.

Suppose the economy is producing at the natural rate of output and the government passes legislation that severely restricts a company's ability to reduce production costs via outsourcing.Everything else held constant,this policy action will cause ________ in the unemployment rate in the short run and ________ in the aggregate price level in the short run.

The aggregate demand curve is the total quantity of an economy's

Assuming the economy is starting at the natural rate of output and everything else held constant,the effect of ________ in aggregate ________ is a rise in both the price level and output in the short-run,but in the long-run the only effect is a rise in the price level.

The positively sloped short-run aggregate supply curve reflects the assumption that factor prices are