Exam 15: Aggregate Demand and Aggregate Supply

If aggregate demand shifts right, then eventually price level expectations rise. This increase in price level expectations causes the aggregate demand curve to shift to the left back to its original position.

Figure 33-12. -Refer to Figure 33-12. Identify periods 1 and 2.

Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage. They may infer that the reward to working is

During a recession the economy experiences

The aggregate supply curve is upward sloping in

Figure 33-4 -Refer to Figure 33-4. In the short run, a favorable shift in aggregate supply would move the economy from

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

Figure 33-14. Refer to Figure 33-14. Identify which long run aggregate-supply curves) would be consistent with long-run equilibrium.

Menu costs help explain

Figure 33-7. -Refer to Figure 33-7. Suppose the economy starts at Y. If there is a fall in aggregate demand, then the economy moves to

Suppose a fall in stock prices makes people feel poorer. The decrease in wealth would induce people to

Suppose a shift in aggregate demand creates an economic contraction. If policymakers can respond with sufficient speed and precision, they can offset the initial shift by shifting

Which of the following will reduce the price level and real output in the short run?

Which of the following fall during a recession?

As the price level falls

Pessimism Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time. -Refer to Pessimism. In the short run what happens to the price level and real GDP?

In the last half of 1999, the U.S. unemployment rate was about 4 percent. Historical experience suggests that this is

Refer to Political Instability Abroad. What would the change in the interest rate created by foreigners wanting to buy more U.S. assets do to investment spending in the U.S.?

Aggregate demand shifts left if

Other things the same, when the price level falls, interest rates