Exam 24: Aggregate Demand and Aggregate Supply Analysis

Figure 24-3 -Refer to Figure 24-3.Suppose the economy is at point A.If investment spending increases in the economy,where will the eventual long-run equilibrium be?

The short-run aggregate supply curve has a(n)________ slope because as prices of ________ rise,prices of ________ rise more slowly.

Figure 24-4 -Refer to Figure 24-4.Given the economy is at point A in year 1,what will happen to the unemployment rate in year 2?

When potential GDP increases,long-run aggregate supply also increases.

The short-run aggregate supply curve is vertical.

Figure 24-1 -Refer to Figure 24-1.Ceteris paribus,a decrease in households' expectations of their future income would be represented by a movement from

Interest rates in the economy have risen.How will this affect aggregate demand and equilibrium in the short run?

The recession of 2007-2009 began in ________,with the end of the economic expansion that had begun in ________.

Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy.As a result

A negative supply shock in the short run causes

The long-run aggregate supply curve will shift to the right if

The main result of the monetarist model is that

What is a supply shock,and why might a supply shock lead to stagflation?

President Bush lowered income taxes for individuals in 2001.Explain how lower income taxes affect the aggregate demand curve.

In the dynamic aggregate demand and aggregate supply model,what is the result of aggregate demand increasing faster than potential real GDP?

The aggregate demand curve shows the relationship between the ________ and ________.

Using the aggregate supply and demand model,illustrate what happens in the long run when the economy suffers a supply shock.Begin your analysis by assuming the economy has suffered the supply shock in the short run,but has not yet adjusted to it in the long run.

Workers expect inflation to fall from 4% to 1% next year.As a result,this should

Stagflation occurs when short-run aggregate supply decreases.

On average,in the recessions since 1950,it has taken ________ for real GDP to return to its cyclical peak.