Exam 13: Spending and Output in the Short Run

The self-correcting tendency of the economy means that falling inflation eventually eliminates:

The self-correcting property of the economy means that output gaps are eventually eliminated by:

Firms suddenly becoming pessimistic about future business prospects is an example of a ______ demand shock, which would shift the AD curve to the ______.

The AD curve can be shifted by:

A large decrease in oil prices is an example of:

To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:

If households and firms increase their expectation for the rate of inflation, the ______ curve will shift _____.

Changes in planned spending that shift the aggregate demand curve are those:

The two negative demand shocks that caused the Great Recession were:

Firms that face menu costs react to a sustained increase in demand by:

An example of an negative inflation shock is:

A positive demand shock will shift the ______ curve to the ______.

For a given inflation rate, if a stock market crash makes consumers less willing to spend, then the ______ shifts _____.

Graphically, short-run equilibrium occurs at the intersection of the aggregate demand curve and:

When the interest rate in the U.S. rises, U.S. financial assets:

A sudden increase in household wealth is an example of a ______ demand shock, which would shift the AD curve to the ______.

When actual output is less than potential output, there is ______ output gap and the inflation rate will ____.

When the inflation rate decreases, PAE ______, which in turn causes Y to ______ because of ______.

Starting from potential output, if consumer confidence decreases and consumers decide to spend less, then this will generate a(n) _____ gap and inflation will _____.

The self-correcting tendency of the economy means that rising inflation eventually eliminates: