Exam 24: Aggregate Demand and Aggregate Supply Analysis

Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy.As a result,

The process of an economy adjusting from a recession back to potential GDP in the long run without any government intervention is known as

Figure 24-1 -Refer to Figure 24-1.Ceteris paribus,a decrease in firms' expectations of the future profitability of investment spending would be represented by a movement from

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

At the beginning of the recession of 2007-2009,real GDP in the United States was ________ potential GDP,and in June 2009,real GDP was ________ potential GDP.

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.

During the recession of 2007-2009 in the United States,________ relative to potential GDP.

A decrease in government spending will result in a decrease in the price level and a decrease in real GDP in the long run.

According to the real business cycle model,________ in aggregate demand ________ GDP.

As the recession persisted into 2009,the unemployment rate in the United States rose to ________,the highest rate since the recession of 2001-2002 and the second highest since the Great Depression.

Higher personal income taxes

Figure 24-3 -Refer to Figure 24-3.Which of the points in the above graph are possible long-run equilibria?

President Obama has discussed raising income taxes for individuals earning over $250,000 in income.Explain how these higher income taxes will affect the aggregate demand curve.

Workers and firms both expect that prices will be 2.5% higher next year than they are this year.As a result,

How do lower taxes affect aggregate demand?

If stricter immigration laws are imposed and many foreign workers in the United States are forced to go back to their home countries,

Monetarism is a school of thought put forth by ________,who argued that the economy would most likely be at potential GDP.

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

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

Using aggregate demand and aggregate supply,explain what happens in the short run if the Federal Reserve lowers interest rates in the economy? Be sure to detail what happens to aggregate demand,the price level,the level of GDP,and unemployment.Assume that the economy is at full employment before the interest rate decrease.