Exam 33: Aggregate Demand and Aggregate Supply

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

The discovery of a large amount of previously-undiscovered oil in the U.S. would shift

Refer to Political Instability Abroad. What would happen to the dollar?

Refer to Financial Crisis. How is the new long-run equilibrium different from the original one?

Which of the following would cause prices and real GDP to rise in the short run?

The sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if

Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4. A decrease in taxes would move the economy from C to

Who wrote the 1936 book titled The General Theory of Employment, Interest, and Money?

Which of the following did not happen during the onset of the Great Depression?

We can explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time.

If speculators lost confidence in foreign economies and so wanted to buy more U.S. bonds

Suppose a country offers a new investment tax credit. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

The average price level is measured by

Figure 33-8. -Refer to Figure 33-8. Suppose the economy starts at Z. If changes occur that move the economy to a new short run equilibrium of P1 and Y1 , then it must be the case that

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

Other things the same, as the price level decreases it induces greater spending on

Keynes explained that recessions and depressions occur because of

What variables besides real GDP tend to decline during recessions? Given the definition of real GDP, argue that declines in these variables are to be expected.

The exchange-rate effect is the idea that a higher U.S. price level causes the value of the dollar to increase in foreign exchange markets, and this effect contributes to the downward slope of the aggregate-demand curve.

Figure 33-12. -Refer to Figure 33-12. Identify periods 1 and 2.