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

In the short-run it is possible for output to be affected by governmental policies.Define and explain the three types of output gaps.

Explain the problem of "sticky wages" and the implications for the long-run equilibrium.Can something be done to eliminate this problem?

If the price level kept increasing,the short-run aggregate supply curve would get ________ because there are limits to how long workers can work long hours and capital can go without proper maintenance.

Figure 8-2 -In Figure 8-2,again assume that B is the current long-run aggregate supply curve (LRAS)and E is the current short-run aggregate supply curve (SRAS).If a 90 day embargo of oil from the Middle East to Canada were announced,and if after that 90 day period oil prices were expected to return to normal pre-embargo prices,then you would expect

An increase in productivity

The short-run aggregate supply function plots planned production against ________.

If there are continual ________ in aggregate supply,the economy will experience cost-push inflation.

List the changes that cause an increase (decrease)in Aggregate Supply.Once completed,explain each in relation to their effect on the factors of production and the endowment.

Figure 8-4 -In Figure 8-4,the economy would most likely move from A D₁ to A D₂ because of

With respect to slope,________ function is normally positively sloped.

As the price level decreases,the short-run aggregate supply curve

Over the last twenty years,real GDP in the Canadian economy has increased and there has been inflation.This indicates that

If the money wage rate is constant and the price level rises,what happens to the real wage rate,firms' profits,and the quantity of real GDP supplied?

Explain in detail,with the aid of diagrams the two types of inflation tat exist in the short-run.

In an open economy,when the domestic price level rises,Canadian consumers want to

________ occurs when increases in aggregate demand are not matched by increases in aggregate supply.

If the Canadian dollar becomes weaker in international foreign exchange markets,________ goods become cheaper.One result of this is that net exports decrease.

As the price level decreases,the ________ begins to level out.

How can a country experience economic growth and stable prices?

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