Exam 8: Modelling Real Gdp and the Price Level in the Short Run

If the Canadian dollar becomes stronger in international foreign exchange markets,imported goods become cheaper.One result of this is that

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Question 1

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Figure 8-1 -According to Figure 8-1,________ in aggregate demand between real GDP levels Q₁ and Q₀ would most likely result in some inflation.

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Question 2

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Suppose real GDP is equal to potential GDP.Explain what happens if the aggregate demand curve shifts either rightward or leftward.

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Question 3

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If real GDP is equal to potential GDP and the AD curve shifts rightward,it will intersect the AS curve at a point where real GDP exceeds potential GDP.This results in an inflationary gap.The money wage rate rises,which shifts the AS curve leftward.Eventually real GDP returns to potential GDP.
If real GDP is equal to potential GDP and the AD curve shifts leftward,it will intersect the AS curve at a point where real GDP is less than potential GDP.This results in a deflationary gap.The money wage rate falls,which shifts the AS curve rightward.Eventually real GDP returns to potential GDP.

The positive relationship between the short-run aggregate supply function and the price level suggests that,in the short run,

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Question 4

The long-run aggregate supply curve is vertical at $5 billion but the short-run aggregate supply curve intersects the aggregate demand curve at $6 billion.From this,we know that

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Question 5

Which of the following would cause the long-run aggregate supply curve to shift to the right?

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Question 6

Economic growth takes place

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Question 7

Distinguish between the short-run and long-run aggregate supply curves.

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Question 8

A short run equilibrium occurs at the intersection of the ________ and the aggregate demand curve.

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Question 9

The positive relationship between the short-run aggregate supply function and the ________ suggests that,in the short run,firms produce more output as the price levels rises.

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Question 10

The short-run aggregate supply curve represents the relationship between

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Question 11

The main difference between an individual supply curve and the aggregate supply curve is that

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Question 12

Explain with the aid of diagrams the effect of a policy or action that would result in an inflationary and recessionary gap.Show the result graphically and explain the short-run and long-run adjustments that will take place in each case.

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Question 13

A decrease in long-run aggregate supply could be caused by

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Question 14

A short run equilibrium occurs at the intersection of the short-run aggregate supply curve and the

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Question 15

In the short run,a decrease in the price level induces firms to contract production because

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Question 16

As the ________ increases,the short-run aggregate supply curve becomes increasingly steep.

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Question 17

With respect to slope,the short-run aggregate supply function is normally

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Question 18

As the price level ________,the short-run aggregate supply curve begins to level out.

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Question 19

Consider an open economy in which the aggregate supply curve slopes upward in the short-run.Firms in this nation do not import raw materials from abroad,but foreign residents purchase much of the nations output.What is the most likely short-run effect on this nations economy if there is a significant downturn in economic activity in other nations around the world.

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Question 20

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If the Canadian dollar becomes stronger in international foreign exchange markets,imported goods become cheaper.One result of this is that

Figure 8-1 -According to Figure 8-1,________ in aggregate demand between real GDP levels Q₁ and Q₀ would most likely result in some inflation.

Suppose real GDP is equal to potential GDP.Explain what happens if the aggregate demand curve shifts either rightward or leftward.

The positive relationship between the short-run aggregate supply function and the price level suggests that,in the short run,

The long-run aggregate supply curve is vertical at $5 billion but the short-run aggregate supply curve intersects the aggregate demand curve at $6 billion.From this,we know that

Which of the following would cause the long-run aggregate supply curve to shift to the right?

Economic growth takes place

Distinguish between the short-run and long-run aggregate supply curves.

A short run equilibrium occurs at the intersection of the ________ and the aggregate demand curve.

The positive relationship between the short-run aggregate supply function and the ________ suggests that,in the short run,firms produce more output as the price levels rises.

The short-run aggregate supply curve represents the relationship between

The main difference between an individual supply curve and the aggregate supply curve is that

Explain with the aid of diagrams the effect of a policy or action that would result in an inflationary and recessionary gap.Show the result graphically and explain the short-run and long-run adjustments that will take place in each case.

A decrease in long-run aggregate supply could be caused by

A short run equilibrium occurs at the intersection of the short-run aggregate supply curve and the

In the short run,a decrease in the price level induces firms to contract production because

As the ________ increases,the short-run aggregate supply curve becomes increasingly steep.

With respect to slope,the short-run aggregate supply function is normally

As the price level ________,the short-run aggregate supply curve begins to level out.

The Nature of Economics

Production Possibilities and Economic Systems

Demand and Supply

Introduction to Macroeconomics

Measuring the Economys Performance

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

Consumption, investment, and the Multiplier

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

Money Creation and Deposit Insurance

The Bank of Canada and Monetary Policy

Issues in Stabilization Policy

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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