Exam 12: The Aggregate-Demandaggregate-Supply Model

Suppose ATM costs increased because of additional security required to prevent electronic fraud.Explain how this would affect money demand, aggregate demand, output, and the price level in the short run and the long run.

The_____ believe that an economy will adjust on its own without any government policy interventions.

In the aggregate demand-aggregate supply model, everything else remaining unchanged, an increase in taxes causes ____to _____in the short run.

Aggregate supply tells us

Describe the arguement put forward by the Nobel laurete Robert E.Lucas about the flaws in the large structural macroeconomic models.

Investment spending on physical capital is about ______of aggregate demand.

In the aggregate demand-aggregate supply model, everything else remaining unchanged, a decrease in government spending shifts the ____curve to the_____ .

The nominal interest rate in an economy decreases when

A rise in the price level in an economy

With the price level on the vertical axis and output on the horizontal axis, the short-run aggregate-supply curve

With the price level measured on the vertical axis and output measured on the horizontal axis, the long-run aggregate-supply curve

Which of the following is an investment spending?

A rise in income will cause consumer spending to

The amount of output produced when the unemployment rate equals the natural rate of employment in an economy is called_____ output.

In the aggregate demand-aggregate supply model, everything else remaining unchanged, an increase in production costs shifts the _____curve to the _____.

The largest component of aggregate demand is

If an economy is in a recession, with output below its full-employment level, a(n)_____ return the economy to its long-run equilibrium, which would cause the price level to_____

The argument that a change in policy systematically alters the structure of econometric models is known as the

One of the reasons that led to the inconsistency of the large structural macroeconomic models was

Purchases of new houses are part of