Exam 10: Real GDP and the Price Level in the Long Run

Which of the following statements is correct? I. When economists derive the aggregate demand curve, they are looking at the effect of the price level on one commodity only. II) Any non-price-level change that increases total planned real spending on domestic goods shifts the AD curve to the right.

All of the following explain the downward slope of the aggregate demand curve EXCEPT

The curve that displays total planned real spending on goods and services at each price level by households, businesses, the government, and foreign residents is called

According to the interest rate effect, an increase in the price level, if other factors are held constant, will lead to

What has caused persistent inflation in the United States?

-Refer to the above figure. Suppose the economy's initial equilibrium is represented by the intersection of LRAS1 and AD1. Suppose there is a persistent reduction in labor force participation, which reduces total planned production at any given price level. The resulting change in the economy's long-run equilibrium position would be represented by a

-In the above figure, a movement from point B to point C could be explained by

When investors buy more capital goods because the interest rates have fallen, the aggregate demand curve

In the aggregate demand/aggregate supply model, the vertical axis shows the values of ________ and the horizontal axis shows the values of ________.

The aggregate demand curve would shift to the right as a result of

Which of the following will occur when an economy's price level increases?

-Refer to the above figure. Suppose the economy's initial equilibrium is represented by the intersection of LRAS2 and AD2. Now there is an increase in labor productivity which increases total planned production at any given price level and aggregate demand remains stable. The resulting change in the economy's long-run equilibrium position would be represented by a

The total of all planned expenditures in the entire economy is the definition of

The long-run aggregate supply curve assumes that

The long-run aggregate supply will increase when

What is the interest rate effect of an increase in the price level?

When the price level is below the level at which the aggregate demand curve crosses the long run aggregate supply curve

The long-run aggregate supply curve is

Real GDP will increase over the long run if

Aggregate demand reflects