Exam 24: Aggregate Demand and Aggregate Supply Analysis

Stagflation occurs when aggregate supply and aggregate demand both increase.

Using an aggregate demand graph,illustrate the impact of an increase in the interest rate.

FedEx plays such a large role in moving packages around the country that there is usually a close relationship between fluctuations in FedEx's business and fluctuations in GDP.Some economists refer to this relationship as the

Figure 24-2 -Refer to Figure 24-2.Ceteris paribus,an increase in productivity would be represented by a movement from

The invention of the cotton gin ushered in the Industrial Revolution and began a long period of technological innovation.What did this technological change do the short-run supply curve?

The recession of 2007-2009 made many consumers pessimistic about their future incomes.How does this increased pessimism affect the aggregate demand curve?

The new classical model has as its central idea that

Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico which subsequently drove up natural gas,gasoline,and heating oil prices.Three years later,once the refining capacity was restored,these prices came back down.The restoration of refining capacity should

________ of unemployment during ________ make it easier for workers to ________ wages.

Figure 24-4 -Refer to Figure 24-4.Given the economy is at point A in year 1,what will happen to the unemployment rate in year 2?

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

The long-run aggregate supply curve shows the relationship between the ________ and ________.

In September of 2007,the Federal Reserve Board Open Market Committee voted to lower interest rates for the first time that year.Explain how lower interest rates affect the aggregate demand curve.

The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off

An increase in aggregate demand results in a(n)________ in the ________.

Proponents of the real business cycle model argue that the short-run aggregate supply curve is

Monetarists believe that the quantity of money should be increased at an increasing rate.

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

Figure 24-1 -Refer to Figure 24-1.Ceteris paribus,a decrease in the growth rate of domestic GDP relative to the growth rate of foreign GDP would be represented by a movement from

The long-run aggregate supply curve is vertical.