Exam 13: The Aggregate Demandaggregate Supply Model

A severe drought hits a country and reduces farm output by 50%. In the short run, this will __________ output and __________ employment.

The relationship between sticky input prices and flexible output prices explains:

Refer to the following figure to answer the next questions. -Based on the figure, a decrease in _________ could cause the economy to move from point A to point B.

Business-cycle theory focuses on time horizons of less than:

If the current short-run equilibrium level of output is less than full employment output, we can then expect that in the long run:

When U.S. goods become more expensive relative to foreign goods, exports will __________ and imports will __________.

If the economy is in a recession caused by lower aggregate demand, then in the absence of policy action, the price level will __________, output will __________, and employment will __________ in the long run.

An increase in aggregate demand is beneficial in the short run because __________, but harmful in the long run because __________.

Refer to the following figure to answer the next questions. -Based on the figure, which points represent short-run equilibrium?

The slope of the short-run aggregate supply curve can be explained by:

An economy has experienced a rightward shift of its long-run aggregate supply curve and is now producing on that new long-run aggregate supply curve. It is reasonable to expect that:

Refer to the following figure to answer the next questions. -Based on the figure, which of the following would cause the aggregate demand curve to shift from AD₂ to AD₁?

If the price level falls but workers are reluctant to accept a pay cut, this is an example of:

Which of the following is true about recessions in the United States?

The aggregate demand curve illustrates the:

A technological advance leads to a shift in:

Refer to the following figure to answer the next questions. -Based on the figure, an increase in _________ could cause the economy to move from point A to point D.

An increase in aggregate demand is harmful because:

When an economy experiences economic growth:

Suppose the government permanently reduces spending in an effort to reduce the budget deficit. In the new long-run equilibrium, output will __________ and the price level will __________.