Exam 10: Aggregate Demand and Aggregate Supply

If the dollar price of foreign currencies falls (that is, the dollar appreciates), we would expect:

The economy experiences an increase in the price level and a decrease in real domestic output. Which is a likely explanation?

The recession that began in 2008 dispelled the idea of The Great Moderation.

-Refer to the above diagram. If the equilibrium price level is P₁, then:

An increase in investment spending can be expected to shift the:

-In the above figure AD₁ and AS₁ represent the original aggregate supply and demand curves and AD₂ and AS₂ show the new aggregate demand and supply curves. The changes in aggregate demand and supply in the above diagram produce:

The aggregate demand curve shows the:

Which would be considered to be one of the factors that shift the aggregate supply curve? A change in:

An increase in business taxes will shift the aggregate supply curve leftward.

The foreign trade effect suggests that a decrease in the Canadian price level relative to other countries will:

A rightward shift in the aggregate supply curve might best be explained by:

-Refer to the above diagrams. A decline in aggregate expenditures from AE₂ to AE₁ resulting from the wealth, interest rate, and foreign trade effects would be depicted as:

Refer to the diagram below. A shift in the aggregate demand curve from AD₁ to AD₀ might be caused by a(n):

In terms of aggregate supply, the difference between the long run and the short run is that in the long run:

The Great Moderation refers to:

-Refer to the above diagram. If aggregate supply is AS₁ and aggregate demand is AD₀, then:

All else equal, an increase in imports will shift the aggregate expenditures curve:

A decrease in aggregate demand is most likely to be caused by:

Which of the following is true of aggregate supply in the long run?

The following aggregate demand and supply schedules are for a hypothetical economy: -Refer to the above data. If the amount of real output demanded at each price level falls by $200, the equilibrium price level and equilibrium level of real domestic output will fall to: