Exam 24: Aggregate Demand and Aggregate Supply Analysis

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

When the economy enters into a recession, your employer is ________ to reduce your wages because ________.

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

Which of the following could explain why there is an increase in potential GDP but the equilibrium level of GDP falls?

A decrease in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?

Explain how the aggregate demand and aggregate supply model can be made more dynamic.

Figure 24-2 -Refer to Figure 24-2. Ceteris paribus, a decrease in productivity would be represented by a movement from

At a long-run macroeconomic equilibrium, real GDP is always equal to potential GDP.

Proponents of the real business cycle model argue that the short-run aggregate supply curve is

Figure 24-1 -Refer to Figure 24-1. Ceteris paribus, a decrease in government spending would be represented by a movement from

An increase in exports decreases aggregate demand.

Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico. This subsequently drove up natural gas, gasoline, and heating oil prices. As a result, this should

Workers expect inflation to fall from 4% to 1% next year. As a result, this should

The long-run aggregate supply curve will shift to the right if

Declines in spending on residential construction are often due to increases in interest rates. The collapse in residential construction prior to and during the recession of 2007-2009 was due more to ________ than to higher interest rates.

An increase in the price level will

Figure 24-1 -Refer to Figure 24-1. Ceteris paribus, a decrease in the price level would be represented by a movement from

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.

Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP. Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

Which of the following models relies on emphasizing the importance of sticky wages and prices?