Exam 13: Aggregate Demand and Aggregate Supply

As economic growth rises, literacy rates tend to fall.

When the price of cotton has risen 12 percent, the misperception effect could lead cotton producers to increase their output when they otherwise would not, if overall prices:

Generally there is an inverse relationship between the level of savings and the level of long-term economic growth.

Included in the investment category of GDP under the expenditure approach is the purchase of parcels of land for the purposes of realizing capital gains when real estate values rise.

Real GDP accurately measures both the quantity and quality of goods and services.

As the price level increases, the quantity of RGDP demanded ____, and when the price level decreases, the quantity of RGDP demanded in the economy ____.

The SRAS is ____; the LRAS is ____.

Which of the following are likely to increase investment and as a result, aggregate demand?

The LRAS curve is ____ with real output levels that ____.

The expenditure category of GDP that fluctuates the most over time is investment.

Identify four changes in the economy that would cause the aggregate demand curve to decrease (shift to the left).

In developing countries, the opportunity cost of an education is relatively low compared to the cost in a highly developed country.

Discuss the difference between an increase in the aggregate demand curve and an increase in the quantity of real GDP demanded.Include discussion of how the price level relates to each event.

National income includes wages and salaries, interest and rent, but not corporate profits.

When the price level rises as a result of a decrease in aggregate supply, it is called cost-push inflation.

Along the long-run aggregate supply curve, the level of RGDP supplied ____ with increases in the price level.

If, due to rising demand, the price of cotton rose 15 percent while the prices of other goods and services rose an average of 10 percent,

When the price level falls, households and firms reduce their holdings of money, and shift their money into interest earning assets, which will increase the supply of loanable funds, leading to a lower interest rate and an increase in borrowing and an increase in RGDP demanded.

Why do wage increases along with increases of other input prices impact the short-run aggregate supply but not the long-run aggregate supply, unless they reflect permanent reductions in the supply of those inputs?

Gross domestic product is the value of all final goods and services produced within a country during a given period of time.