Exam 14: Aggregate Demand and Aggregate Supply

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.How does the new long-run equilibrium differ from the original one?

What are the effects of a decrease in the price level?

Which term refers to a short period of falling incomes and rising unemployment?

How does Canadian aggregate demand change if the dollar appreciates or other countries experience recessions?

Which of the following shifts the short-run aggregate supply to the left?

Suppose the economy is initially in long-run equilibrium.Which statement best describes the state of the economy after an increase in aggregate demand?

Suppose that there has been bad weather resulting in a temporary decrease in the availability of oil and the economy has reached its new short-run equilibrium.What happens as the economy moves from this short-run equilibrium to long-run equilibrium?

According to the aggregate demand and aggregate supply model,in the long run what is the impact of an increase in the money supply?

Which of the following would cause stagflation?

Use the sticky-wage theory to explain why an increase in the expected price level shifts the aggregate-supply curve.

Which of the following is NOT a reason for the Bank of Canada and the government to keep a close watch on the housing market?

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

Why is the long-run aggregate-supply curve vertical?

The explanations for the slopes of the aggregate-demand and aggregate-supply curves are the same as the explanations for the slope of demand and supply curves for specific goods and services.

An aggregate-supply curve is described by the equation Y=80 + 0.5P.The expected price level is 100.How much is the long-run level of output?

The long-run trend in real GDP is upward.How is this possible given business cycles? What explains the upward trend?

Which statement best describes what happens when the price level rises?