Exam 15: Aggregate Demand and Aggregate Supply

Figure 15-2. -Refer to Optimism. In the short run what happens to the price level and real GDP?

Which of the following shifts both the short-run and long-run aggregate supply right?

The price level rises in the short run if

When taxes increase, consumption

According to classical macroeconomic theory, changes in the money supply affect

Other things the same, as the price level falls,

Other things the same, continued increases in the money supply lead to

During recessions which type of spending falls?

Figure 15-2. -Refer to Financial Crisis. In the long run, if the Fed does not respond, the change in price expectations created by the crisis shifts

Imagine the U.S. economy is in long-run equilibrium. Then suppose the value of the U.S. dollar increases. At the same time, people in the U.S. revise their expectations so that the expected price level falls. We would expect that in the short-run

When looking at a graph of aggregate demand, which of the following is correct?

If the dollar appreciates, perhaps because of speculation or government policy, then U.S. net exports

Figure 15-2. -Refer to Optimism. What happens to the expected price level and what's the result for wage bargaining?

According to classical macroeconomic theory, changes in the money supply change nominal but not real variables.

The aggregate demand and aggregate supply model helps us to understand both short-run economic fluctuations and how the economy moves from the short to the long run.

When the price level falls

When output rises, unemployment falls.

Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to

Other things the same, continued technological progress and continued increases in the money supply would unambiguously lead to

The sticky-price theory implies that