Exam 13: Aggregate Demand and Aggregate Supply Analysis

When the price of oil rises unexpectedly,the equilibrium price level ________ and the unemployment rate ________ in the short run.

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,an increase in personal income taxes would be represented by a movement from

Figure 13-2 -Refer to Figure 13-2.Ceteris paribus,a decrease in the expected price of an important natural resource would be represented by a movement from

Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

Workers expect inflation to fall from 4% to 1% next year.As a result,this should

Explain how the static aggregate demand and aggregate supply model gives us misleading results about the price level,particularly with respect to decreases in aggregate demand.Describe how the aggregate demand curve is different in the dynamic model as compared to the static model.Describe how potential GDP is different in the dynamic model as compared to the static model.

A decrease in disposable income will shift the aggregate demand curve to the left.

Which of the following is considered a negative supply shock?

Use the dynamic model of aggregate demand and supply to illustrate a situation where the economy is growing but experiencing inflation in the long run.

The impact of Hurricane Katrina on consumers in the economy was to make them very pessimistic about their future incomes.How does this increased pessimism affect the aggregate demand curve?

The business cycle ________ on FedEx since the company's inception over 40 years ago.

The invention of the integrated circuit by Jack Kilby of Texas Instruments gave rise to the information age.What did this technological change do the short-run supply curve?

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,a decrease in households' expectations of their future income would be represented by a movement from

A decrease in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?

Using aggregate demand and aggregate supply,explain what happens in the short run if the Federal Reserve raises interest rates in the economy.Be sure to detail what happens to aggregate demand,the price level,the level of GDP,and unemployment.Assume that the economy is at full employment before the interest rate increase.

FedEx plays such a large role in moving packages around the country that there is usually a close relationship between fluctuations in FedEx's business and fluctuations in GDP.Some economists refer to this relationship as the

Figure 13-2 -Refer to Figure 13-2.Ceteris paribus,an increase in workers and firms adjusting to having previously underestimated the price level would be represented by a movement from

Inflation is generally the result of total spending growing faster than total production.

The ________ shows the relationship between the price level and quantity of real GDP demanded.

At the beginning of the recession of 2007-2009,real GDP in the United States was ________ potential GDP,and in June 2009,real GDP was ________ potential GDP.