Exam 8: Skating to Where the Puck Is Going: Aggregate Supply and Aggregate Demand

Figure 6.3.1 -Look at the macro production possibilities frontier in Figure 6.3.1. Which point(s) represent unemployed inputs?

The "Yes - Markets Self-Adjust" camp argues that in a recessionary gap, all of these market adjustments will happen except,

In explaining business cycles, the "Yes - Markets Self-Adjust" camp emphasizes supply shocks and the "No - Markets Fail Often" camp emphasizes demand shocks.

Higher oil prices result in rising average prices and increasing unemployment.

The "No - Markets Fail Often" camp believes that investors behave like herds of animals.

Rising input prices shift both SAS and LAS rightward.

The "No - Markets Fail Often" camp argues that adjustment problems in all markets fail to quickly restore the match between short-run aggregate supply and aggregate demand.

A negative aggregate demand shock results in

Supply plans to increase the quantity of inputs affect aggregate quantity supplied.

The "No - Markets Fail Often" camp argues that in a recessionary gap, all of the following will happen except,

In explaining business cycles, the "No - Markets Fail Often" camp believes government is part of the problem, not part of the solution.

The long run is a period of time longer than 1 year.

The short run is a period of time when some input prices do not change.

A positive supply shock from improving technology shifts

The Global Financial Crisis of 2008 was caused by

When GDP in R.O.W. decreases, Canadian aggregate demand increases.

Which is a negative demand shock?

Inputs decrease as you move down along the macro production possibilities frontier.

Rising average prices and lower unemployment most likely come from

Government investments to improve the quality of public infrastructure like roads, transit and sewers