Exam 12: The Production Function Approach to Understanding Growth

Starting from a long-run equilibrium,immediate or eventual increases in the rate of inflation may be the result of any of the following EXCEPT

If,for any given inflation rate,the Bank of Canada raises interest rates less than normal,this is called a monetary _________ and the aggregate demand (ADI)curve shifts to the __________.

The tendency for inflation to change relatively slowly from year to year in industrial countries is called

-Based on the diagram above,starting from a long-run equilibrium at point C,a downward inflation shock that decreases inflation from To 11ec9ae2_bd79_1ce7_a39a_a9c7bc0c6307_TB34225555_11 1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________,if left to self-correcting tendencies.

Which of the following is NOT a limitation of the aggregate demand-inflation adjustment model?

An increase in expected future income will

All else being equal,a decrease in the rate of inflation ________ planned spending and ________ short-run equilibrium output.

Which combination of factors would most likely shift the ADI curve to the right?

An increase in aggregate demand is most likely to be caused by a decrease in

An anti-inflationary monetary policy results in

Suppose that,in an economy,ADI = 800 + 0.9Y - 20,000r,and the central bank acts according to the following monetary policy rule: If inflation is 2%,the central bank will set a real interest rate of ________%,and short-run equilibrium output will be equal to _________.

The Bank of Canada's response to changes in inflation is more complex than identified in the ADI-IA model because

The long-run self-correcting mechanism that eliminates an expansionary output gap (Y > Y*)in the economy assumes that

In a self-correcting model of the economy,expansionary gaps are eventually eliminated by

A vertical line showing the economy's potential output is called the

A current high rate of inflation will tend to promote a

The aggregate demand (ADI)curve shifts when there are changes in

The 2000-2001 slowdown in Canada was the result of

-The economy pictured in the diagram above is in short-run equilibrium with the combination of inflation and output indicated by point ________.The long-run equilibrium combination of inflation and output for this economy is indicated by point ________.

Starting from long-run equilibrium,the long-run impact(s)of an increase in autonomous consumption,compared to the original equilibrium,would be