Exam 27: Aggregate Demand and Aggregate Supply

-Refer to Figure 15-8.Suppose that the economy is at the full-employment level of output of $6 trillion when a demand shock increases real GDP to $6.5 trillion.In the long run,we would expect the

According to the aggregate supply-aggregate demand model,an expansionary fiscal policy will,in the long run,

A decrease in the price level will reduce business confidence and cause a decrease in equilibrium GDP.

The AD-AS model implies that,in the long run,

-Refer to Figure 15-1.Assume the economy is in equilibrium at $7 trillion.If the changes in all three graphs were caused by the same event,what was that event?

If the unit cost of output for a computer is $2,000 and if firms' average markup is 10 percent,what is the total cost to the consumer?

If the Fed conducts an open market sale of bonds,which of the following will happen?

Because the Fed increased the money supply after the recession in the early 1990s,the

After a positive demand shock,what are the expected long-run adjustments?

Stagflation

-Refer to Figure 15-14.Suppose a supply shock moves the economy from point A to point B.In the long run,we would expect

-Refer to Figure 15-2.If the economy is initially at equilibrium at $7 trillion,what is the least likely cause of the shift of the aggregate expenditure line from AE₁ to AE₂,and the shift of the aggregate demand curve from AD₁ to AD₂?

In the short run,the price level

If output is below the full-employment level of output,we should expect wages to increase over time.

If the Fed conducts an open market purchase of bonds,which of the following will happen?

A positive supply shock causes stagflation in the short run.

Which of the following would shift the aggregate demand curve to the right?

If the unit cost of output for a car is $8000 and the price is $10,000,what is the firms' markup over cost?

In the short run,an increase in the money supply will

In the aggregate demand-aggregate supply model,an increase in the price level will