Exam 11: The Determination of Aggregate Output, the Price Level, and the Interest Rate

11.3 The Final Equilibrium Refer to the information provided in Figure 11.6 below to answer the questions that follow. Figure 11.6 -Refer to Figure 11.6. Suppose the equilibrium output is initially $600 billion. An oil embargo would probably

Refer to the information provided in Figure 11.5 below to answer the questions that follow. Figure 11.5 -Refer to Figure 11.5. An increase in the Z factors shifts the ________ to the ________.

A decrease in the "Z" factors shifts the Fed rule to the right.

Other things equal, a decrease in government spending ________ the equilibrium interest rate and ________ equilibrium output.

The real wealth effect explains why the aggregate supply curve is horizontal in the long run.

Refer to the information provided in Figure 11.8 below to answer the questions that follow. Figure 11.8 -Refer to Figure 11.8. Suppose the economy is currently at Point A producing potential output Y₀. If the government increases spending, the economy moves to Point ________ in the short-run and to Point ________ in the long-run.

________ shifts the Fed rule to the right.

Related to the Economics in Practice on p. 221: In January 2014, a new Chair of the Board of Governors of the Federal Reserve System was confirmed. This person is

The aggregate supply curve is probably better thought of as a price/output response curve.

Refer to the information provided in Figure 11.2 below to answer the questions that follow. Figure 11.2 -Refer to Figure 11.2. At $900 billion, this economy

As the interest rate decreases, the planned aggregate expenditure curve shifts downward.

Refer to the information provided in Figure 11.5 below to answer the questions that follow. Figure 11.5 -Refer to Figure 11.5. A decrease in the Z factors shifts the ________ to the ________.

Refer to the information provided in Figure 11.4 below to answer the questions that follow. Figure 11.4 -Refer to Figure 11.4. Suppose the economy is at Point A, an increase in aggregate demand moves the economy to Point

11.5 The Long-Run AS Curve Refer to the information provided in Figure 11.7 below to answer the questions that follow. Figure 11.7 -Refer to Figure 11.7. $700 million is the level of aggregate output that can be sustained in the long run

A decrease in government spending shifts aggregate demand to the left.

The aggregate demand curve is the sum of all market demand curves in the economy.

Related to the Economics in Practice on p. 227: In the simple "Keynesian" view, if planned aggregate expenditure and aggregate demand exceed capacity output, there is

An increase in aggregate demand when the economy is operating at ________ is likely to result in an increase in the overall price level and ________ in output.

Refer to the information provided in Figure 11.1 below to answer the questions that follow. Figure 11.1 -Refer to Figure 11.1. This economy is most likely experiencing excess capacity at aggregate output levels

When the interest rate is low, planned investment is ________ so output is ________.