Exam 13: Policy Effects and Costs Shocks in the Asad Model

The Fed will raise the interest rate by the greatest amount when the economy is on the ________ part of the AS curve and there is ________.

In a binding situation,there is ________ crowding out of planned investment when government spending increases.

Refer to the information provided in Figure 13.4 below to answer the questions that follow. Figure 13.4 -Refer to Figure 13.4.If the economy is currently at the intersection of AS and AD,stagflation would be caused by

Inflation due to a decrease in aggregate demand is called demand-pull inflation.

If a decrease in the Z factors resulted in a very large change in the price level and a very small change in aggregate output,

An increase in AD will primarily increase the price level when the economy is on the steep part of the AS curve.

Refer to the information provided in Figure 13.1 below to answer the questions that follow. Figure 13.1 -Refer to Figure 13.1.Suppose the economy is at Point A,a decrease in the price level can cause a movement to Point

In a binding situation,changes in government spending do not shift the AD curve.

An economic condition characterized by high unemployment and excessive inflation is called

When the AD curve is relatively flat,the Fed

If the Fed has a strong preference for stable prices relative to output,the ________ curve is relatively ________.

Expansionary economic policies are things the government can do to decrease aggregate demand or aggregate supply.

Refer to the information provided in Figure 13.2 below to answer the questions that follow. Figure 13.2 -Refer to Figure 13.2.Firms respond to an increase in government spending by mostly raising their prices when the aggregate demand curve shifts from

Economic policies are ineffective concerning quantities of output directly when

Refer to the information provided in Figure 13.2 below to answer the questions that follow. Figure 13.2 -Refer to Figure 13.2.In response to a decrease in net taxes,the Fed would increase the interest rate by the least amount when the aggregate demand curve shifts from

Refer to the information provided in Figure 13.1 below to answer the questions that follow. Figure 13.1 -Refer to Figure 13.1.Suppose the economy is at Point A,a decrease in taxes can cause a movement to Point

If wages adjust fully to price increases,fiscal policy will have no effect on output in the long run.

A sudden increase in the price of oil causes a ________ inflation and ________ output.

Refer to the information provided in Figure 13.2 below to answer the questions that follow. Figure 13.2 -Refer to Figure 13.2.The tax multiplier is smallest (in absolute value)when the aggregate demand curve shifts from

Supply-side inflation is caused by increases in aggregate supply.