Exam 13: Aggregate Demand and Aggregate Supply Analysis

Workers expect inflation to rise from 3% to 5% next year.As a result,this should

Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico.This subsequently drove up natural gas,gasoline,and heating oil prices.As a result,this should

The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off

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

Long-run macroeconomic equilibrium occurs when

Monetarists believe that the quantity of money should be increased at an increasing rate.

Which of the following could explain why there is an increase in potential GDP but the equilibrium level of GDP falls?

Figure 13-3 -Refer to Figure 13-3.Suppose the economy is at point A.If government spending increases in the economy,where will the eventual long-run equilibrium be?

An increase in exports decreases aggregate demand.

Explain the three reasons the aggregate demand curve slopes downward.

Which of the following is not an assumption made by the dynamic model of aggregate demand and aggregate supply?

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

The recession of 2007-2009 began in ________,with the end of the economic expansion that had begun in ________.

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

Full-employment GDP is also known as

When the price level in the United States falls relative to the price level of other countries,________ will fall,________ will rise,and ________ will rise.

When people became less concerned with the underlying value of their houses and instead focused on the expectations of the prices of their houses increasing,________ occurred.

If stricter immigration laws are imposed and many foreign workers in the United States are forced to go back to their home countries,

When the price level in the United States rises relative to the price level of other countries,________ will rise,________ will fall,and ________ will fall.

Use the dynamic model of aggregate demand and supply to illustrate a situation where aggregate demand and short-run aggregate supply are both increasing from year 1 to year 2,resulting in a higher price level and higher level of real GDP at macroeconomic equilibrium in year 2.