Exam 14: Aggregate Demand and Aggregate Supply

If the government increased the money supply in response to a decrease in aggregate supply,unemployment would return towards its natural rate,but prices would rise even more.

Suppose the economy was in long-run equilibrium when a sudden decline in the stock market took place.What happens in the short run after the decline in the stock market?

Why is the aggregate-supply curve upward sloping in the short run?

Stagflation would result from the aggregate-supply curve shifting left.

Aggregate demand shifts to the left if the money supply decreases.

Scenario 14-2 The economy is in long-run equilibrium.Suddenly,due to corporate scandals,a recession experienced by a major trading partner,and the loss of confidence among policymakers,citizens become pessimistic concerning the future.They maintain this level of pessimism for a long time. -Refer to the Scenario 14-2.Which statement is consistent with the aggregate demand and aggregate supply theory?

Scenario 14-1 The economy is in long-run equilibrium.Suddenly,due to improved international relations,a boom experienced by a major trading partner,and the increased confidence of policymakers,citizens become more optimistic about the future and stay this way for a long time. -Refer to the Scenario 14-1.Initially,which curve shifts in which direction?

Which of the following does NOT determine the long-run level of real GDP?

Scenario 14-2 The economy is in long-run equilibrium.Suddenly,due to corporate scandals,a recession experienced by a major trading partner,and the loss of confidence among policymakers,citizens become pessimistic concerning the future.They maintain this level of pessimism for a long time. -Refer to the Scenario 14-2.In the long run,what does the change in price expectations caused by pessimism lead to?

Suppose a stock market boom makes people feel wealthier.What are the effects of this increase in wealth?

According to classical economic theory,which of the following do changes in the money supply affect?

Which of the following happens during recessions?

What does real GDP measure?

Which of the following shifts both the short-run and the long-run aggregate supply right?

If speculators bid up the value of the dollar in the market for foreign-currency exchange,aggregate demand will shift to the left.

Discuss what economists believe is different about the long and short run.

All explanations for the upward slope of the short-run aggregate-supply curve suppose that output supplied increases when the price level increases more than expected.

After a major flood destroyed a large residential area in Calgary,what might have happened?

What would make the price level decrease and real GDP increase?

What does a rise in the economy's overall level of prices tend to do?