Exam 24: Aggregate Demand and Aggregate Supply Analysis

Spending on the war in Afghanistan is essentially categorized as government purchases. How do increases in spending on the war in Afghanistan affect the aggregate demand curve?

Suppose a developing country experiences a reduction in machinery and capital equipment as foreign entrepreneurs decrease the amount of investment in the economy. As a result,

On the long-run aggregate supply curve,

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

The invention of the integrated circuit by Jack Kilby of Texas Instruments gave rise to the information age. What did this technological change do the short-run supply curve?

Figure 24-4 -Refer to Figure 24-4. Given the economy is at point A in year 1, what is the inflation rate between year 1 and year 2?

A decrease in aggregate demand results in a(n) ________ in the ________.

The level of long-run aggregate supply is affected by all of the following except

Figure 24-3 -Refer to Figure 24-3. Suppose the economy is at point C. If government spending decreases in the economy, where will the eventual long-run equilibrium be?

In the long run,

When people became ________ concerned with the underlying value of their houses and became ________ with the expectations of the prices of their houses increasing, a housing bubble occurred.

Which of the following models advocate that the quantity of money should be increased at a constant rate?

Monetarism is a school of thought put forth by Milton Friedman. He argued that the economy would most likely

Spending on the war in Afghanistan is essentially categorized as government purchases. How do increases in spending on the war in Afghanistan affect the aggregate demand curve?

Which of the following could explain why there is an increase in potential GDP but the equilibrium level of GDP does not rise?

Use the dynamic model of aggregate demand and supply to illustrate a situation where the economy is growing but experiencing inflation in the long run.

The automatic mechanism ________ the price level in the case of ________ and ________ the price level in the case of ________.

Deflation will

Figure 24-1 -Refer to Figure 24-1. Ceteris paribus, an increase in interest rates would be represented by a movement from

Why does the short-run aggregate supply curve slope upward?