Exam 13: Aggregate Demand and Aggregate Supply Analysis

Figure 13-2 -Refer to Figure 13-2.Ceteris paribus,a decrease in the capital stock would be represented by a movement from

New Keynesian macroeconomic theory emphasizes the role of "sticky" prices in the economy.

When potential GDP increases,short-run aggregate supply also increases,but long-run aggregate supply does not change.

The level of long-run aggregate supply is affected by all of the following except

Which of the following would cause the short-run aggregate supply curve to shift to the right?

Using an aggregate demand graph,illustrate the impact of an increase in the price level on aggregate demand.

The short-run aggregate supply curve is vertical.

All of the following are assumptions made by the dynamic model of aggregate demand and aggregate supply except

Which of the following will shift the aggregate demand curve to the left,ceteris paribus?

The long-run aggregate supply curve is vertical.

Article Summary According to the International Energy Agency (IEA), increased oil production resulting from U.S. shale oil has invigorated the North American oil industry and has created a global supply shock. The shale oil and gas industry has generated tens of billions of dollars in revenues and hundreds of thousands of new jobs, and could result in the United States changing from being the world's largest oil importer to a net exporter within a few years. An IEA forecast predicts that because of shale oil, the United States will become the world's largest oil producer by 2017, with supply growing by 3.9 million barrels per day from 2012-2018. Source: Denise Roland, and AFP, "US shale energy creates global oil 'supply shock'," Telegraph, May 14, 2013. -Refer to the Article Summary.The supply shock mentioned in the article summary may well result in a decrease in the price of oil.When the price of oil falls unexpectedly,the equilibrium price level ________ and the unemployment rate ________ in the short run.

A rapid increase in the price of oil will tend to

Workers and firms both expect that prices will be 2.5% higher next year than they are this year.As a result,

Changes in ________ do not affect the level of aggregate supply in the long run.

If the U.S.dollar decreases in value relative to other currencies,how does this affect the aggregate demand curve?

Explain how each of the following events would affect the short-run aggregate supply curve. a.A decrease in the price level b.A decrease in what the price level is expected to be in the future c.A price level that is currently lower than expected d.An unexpected decrease in the price of an important raw material e.A decrease in the labor force

Inflation will

If technological change occurs in the economy,

Which of the following models has as its central idea that workers and firms have rational expectations?

Explain how each of the following events would affect the aggregate demand curve. a.Lower interest rates b.A decrease in net exports c.A decrease in the price level d.Slower income growth in other countries e.A decrease in imports