Exam 24: Aggregate Demand, Aggregate Supply, and Business Cycles

Starting from long-run equilibrium,a positive inflation shock results in a short-run equilibrium with ___ inflation and ____ output.

Changes in planned spending not caused by changes in output or the inflation rate will shift the:

Starting from potential output,if firms become less optimistic about the future and decide to decrease their investment in new capital,then this will generate a(n)_____ gap and inflation will _____.

The aggregate supply curve will shift downward in response to:

Suppose the economy is currently operating at potential output;a recessionary gap may be caused by each of the following EXCEPT:

Shifts in ______ can return the economy to long-run equilibrium.

Inflation inertia is the tendency for inflation to:

As the number or quality of available resources improves,______ shifts to the _____.

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

For a given inflation rate,if concerns about future weakness in the economy cause businesses to reduce their spending on new capital,then the ______ shifts _____.

An increase in the interest rate directly affects ______,but also has an indirect effect on ______ because of its effect on exchange rates.

Starting from potential output,if firms become more optimistic about the future and decide to increase their investment in new capital,then this will generate a(n)_____ gap and inflation will _____.

When actual output equals potential output there is ____ output gap and the rate of inflation will tend to ____.

Starting from long-run equilibrium,a large increase in government purchases will result in a(n)______ gap in the short-run and ____ inflation and ____ output in the long-run

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

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

The AD curve ______ because,holding all else constant,an increase in ______ causes C,I^P and NX to fall.

An increase in the aggregate demand for goods and services will result in an increase in the amount of output firms are willing to produce,and this increase in output will be accompanied by:

For a given inflation rate,if bright prospects for the future of the economy cause businesses to increase their spending on new capital,then the ______ shifts _____.

An economy with an expansionary gap will,in the absence of stabilization policy,eventually experience a(n)______ in the inflation rate,leading to a(n)______ in output.