Exam 24: Aggregate Demand and Aggregate Supply Analysis

When the price level rises from 110 to 115,the aggregate level of GDP supplied rises from $80 billion to $120 billion.This ________ relationship represents the ________ relationship between the quantity of real GDP firms are willing to supply and the price level.

Figure 24-3 -Refer to Figure 24-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y₁ represents potential GDP.

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

An increase in aggregate demand causes an increase in ________ only in the short run,but causes an increase in ________ in both the short run and the long run.

New classical macroeconomic theory emphasizes the role of "sticky" prices in the economy.

Which of the following is not an assumption made by the dynamic model of aggregate demand and aggregate supply?

What variables cause the short-run aggregate supply curve to shift? For each variable,identify whether an increase in that variable will cause the short-run aggregate supply curve to shift to the right or to the left.

The proponents of ________ and ________ think that the Federal Reserve should adopt a constant monetary growth rule.

Figure 24-2 -Refer to Figure 24-2.Ceteris paribus,an increase in the expected price of an important natural resource would be represented by a movement from

Explain how "menu costs" affect the slope of the short-run aggregate supply curve.

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

Figure 24-3 -Refer to Figure 24-3.Suppose the economy is at point A.If the economy experiences a supply shock,where will the eventual short-run equilibrium be?

Workers expect inflation to rise from 3% to 5% next year.As a result,this should

When people became less concerned with the underlying value of their houses and instead focused on the expectations of the prices of their houses increasing,________ occurred.

An increase in imports increases aggregate demand.

A decrease in investment causes the price level to ________ in the short run and ________ in the long run.

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

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

Suppose the U.S.GDP growth rate is faster relative to other countries' GDP growth rates.This will

The real business cycle model focuses on how