Exam 13: Aggregate Demand and Aggregate Supply Analysis

When the price level rises from 110 to 115,the aggregate level of GDP supplied rises from $80 billion to $120 billion.This ________ relationship represents the ________ relationship between the quantity of real GDP firms are willing to supply and the price level.

What is potential GDP?

Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy.As a result,

Monetarism is a school of thought put forth by Milton Friedman.He argued that the economy would most likely

Which of the following is one explanation as to why the aggregate demand curve slopes downward?

According to the real business cycle model,

Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

A decrease in the price level will

The proponents of rational expectations and monetarism think that the Federal Reserve should adopt

German luxury car exports were hurt in 2009 as a result of the recession.How would this decrease in exports have affected Germany's aggregate demand curve?

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

Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

Workers and firms both expect that prices will be 3% higher next year than they are this year.As a result,

Starting from long-run equilibrium,use the basic aggregate demand and aggregate supply diagram to show what happens in both the long run and the short run when there is an increase in wealth.

What variables cause the short-run aggregate supply curve to shift? For each variable,identify whether an increase in that variable will cause the short-run aggregate supply curve to shift to the right or to the left.

When the aggregate demand curve and the short-run aggregate supply curve intersect,

When the economy enters a recession,your employer is unlikely to reduce your wages because ________ during a recession.

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,a decrease in the growth rate of domestic GDP relative to the growth rate of foreign GDP would be represented by a movement from

The long-run adjustment to a negative supply shock results in

The long-run aggregate supply curve will shift to the right if