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

Sticky wages are one reason for the upward slope of the short-run aggregate supply curve.

If the economy is operating way below capacity, an increase in aggregate demand causes a big change in the ________ and small change in ________.

The change in ________ brought about by a change in real wealth that results from a change in the ________ is the real wealth effect.

If there is a decrease in the percentage of employees whose wages adjust automatically with changes in the price level, the aggregate supply curve will become

What determines the slope of the aggregate supply curve is

To increase the price level the government could adopt policies that

The long-run aggregate supply curve reflects the idea that in the long run, output is determined only by

Which of the following would cause the short-run aggregate supply curve to shift to the right?

Related to the Economics in Practice on p. 221: In January 2014, ________ was confirmed as Chair of the Board of Governors of the Federal Reserve System.

The aggregate demand curve

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 price level shifts the ________ to the ________.

If production costs increase, the price level will rise.

In the long run

Whenever the aggregate supply curve intercepts the aggregate demand curve, the economy is producing full employment output.

The slope of the ________ is negative and the slope of the ________ is positive.

Refer to the information provided in Figure 11.5 below to answer the questions that follow. Figure 11.5 -Refer to Figure 11.5. As a result of an increase in the price level, the equilibrium interest rate ________ and the equilibrium output level ________.

The aggregate demand curve slopes downward because at lower price levels the purchasing power of consumers' assets ________ , which ________ real wealth.

If ________ equilibrium output ________ , the price level rises.

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 reaches capacity at

Refer to the information provided in Figure 11.2 below to answer the questions that follow. Figure 11.2 -Refer to Figure 11.2. Between the output levels of $300 billion and $600 billion, the relationship between the price level and output is