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

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

The open economy effect and interest rate effect are two of the reasons why

Economic growth will be associated with a constant price level when

The aggregate demand curve shows the relationship between planned purchases of

The real-balance effect implies that when

A rise in the price level has a direct effect on spending because

Over time in a growing economy,the long run aggregate supply curve will

If the dollar appreciates and foreign goods become less expensive,the total planned expenditures on domestic goods and services will

A rightward shift of long-run aggregate supply without any change in aggregate demand

The shape of the aggregate demand curve does not tell us anything about how the total dollar value of spending will ultimately be divided between output and prices.For this we need

We draw the long-run aggregate supply curve as a vertical line to reflect the fact that

The real-balance effect shows that

When the U.S.price level falls,the open economy effect indicates that

Long-run equilibrium will occur at the price level at which

The full-employment level of GDP is

The aggregate demand curve differs from an individual demand curve in that

A fall in the price level

The curve in the above figure will shift to the right when

When the aggregate demand curve shifts ________ than the long-run aggregate supply shifts rightward,the result will be inflation.

What are three causes of supply-side inflation?