Exam 12: Aggregate Demand and Aggregate Supply

A decrease in per unit production costs will shift the aggregate supply curve leftward.

The foreign trade effect suggests that a decrease in the Canadian price level relative to other countries will:

-Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P₂ and that the economy initially is operating at its full-employment level of output Q_f.In terms of this diagram,the long-run aggregate supply curve:

Is the downward price inflexibility applicable to today's economy? Why or why not?

Suppose that nominal wages fall and productivity rises in a particular economy.Other things equal,the aggregate:

Other things equal,the short-run aggregate supply curve shifts positions when:

The interest rate effect indicates that a(n):

Collective bargaining agreements that prohibit wage cuts for the duration of the contract contribute to:

Other things being equal,if world oil prices increased by 70 percent then the most likely effect would be to:

A fall in real interest rates will reduce aggregate demand.

-Which of the above diagrams best portrays the effects of a substantial reduction in government spending?

The interest-rate effect is one of the determinants of aggregate demand.

In terms of aggregate supply,the difference between the long run and the short run is that in the long run:

The factors which affect the amounts that consumers,businesses,government,and foreigners wish to purchase at each price level are the:

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

In terms of aggregate supply,the short run is a period in which:

Explain the relationship between the aggregate expenditures model in graph (A)below and the aggregate demand model in graph (B)below.In other words,explain how points 1,2,and 3 are related to points 1',2',and 3'.

If the dollar price of foreign currencies falls (that is,the dollar appreciates),we would expect:

Other things equal,appreciation of the dollar:

Refer to the diagram below.If the initial aggregate demand and supply curves are AD₀ and AS₀,the equilibrium price level and level of real domestic output will be: