Exam 15: Aggregate Demand and Aggregate Supply

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

During recessions investment

Historically, as recessions have ended the unemployment rate declined

Financial Crisis Suppose that banks are less able to raise funds and so lend less. Consequently, because people and households are less able to borrow, they spend less at any given price level than they would otherwise. The crisis is persistent so lending should remain depressed for some time. -Refer to Financial Crisis. Suppose the economy reaches long-run equilibrium without the Fed responding. Now suppose the financial crisis ends and the ability of banks to lend returns to normal. In which case is the price level lower compared to its value prior to the crisis?

The classical dichotomy and monetary neutrality are represented graphically by

Financial Crisis Suppose that banks are less able to raise funds and so lend less. Consequently, because people and households are less able to borrow, they spend less at any given price level than they would otherwise. The crisis is persistent so lending should remain depressed for some time. -Refer to Financial Crisis. What happens to the price level and real GDP in the short run?

Which of the following is correct?

When the price level increases, the real value of people's money holdings

The quantity of money has no real impact on things people really care about like whether or not they have a job. Most economists would agree that this statement is appropriate concerning

If aggregate demand shifts right, then eventually price level expectations rise. The increase in price level expectations causes the short-run aggregate-supply curve to shift to the left.

Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp increase in the supply of labor, a major new discovery of oil, and new environmental regulations that raise the cost of electricity production. In the short run

Which of the following shifts the long-run aggregate supply curve to the left?

Figure 33-17. Refer to Figure 33-17. Suppose the economy starts at P3 and Y2. Explain how government purchases would need to change to move the economy to P2 and Y1. What about taxes?

Figure 33-4 -Refer to Figure 33-4. If the economy starts at A and moves to D in the short run, the economy

An increase in the interest rate causes investment to

When the dollar depreciates, U.S.

Of the following theories, which is consistent with a vertical long-run aggregate supply curve?

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U.S. Which pair of GDP growth rates and unemployment rates is realistic?

The long-run aggregate supply curve shifts right if

Although wages, incomes, and interest rates are most often discussed in nominal terms, what matters most are their real values.