Exam 24: Aggregate Demand and Aggregate Supply Analysis

Spending on the war in Afghanistan is essentially categorized as government purchases. How do increases in spending on the war in Afghanistan affect the aggregate demand curve?

When the price level in the United States rises relative to the price level of other countries, ________ will rise, ________ will fall, and ________ will fall.

The short-run aggregate supply curve has a(n) ________ slope because as prices of ________ rise, prices of ________ rise more slowly.

Figure 24-2 -Refer to Figure 24-2. Ceteris paribus, an increase in the price level would be represented by a movement from

Figure 24-1 -Refer to Figure 24-1. Ceteris paribus, an increase in the growth rate of domestic GDP relative to the growth rate of foreign GDP would be represented by a movement from

Briefly describe monetarism and the monetary growth rule.

If workers and firms have rational expectations, they form their expectations using

Deflation will

Studies have shown that

Figure 24-3 -Refer to Figure 24-3. Which of the points in the above graph are possible long-run equilibria?

Figure 24-2 -Refer to Figure 24-2. Ceteris paribus, a decrease in the price level would be represented by a movement from

Which of the following best describes the "wealth effect"?

The recession of 2007-2009 began in ________, with the end of the economic expansion that had begun in ________.

Figure 24-4 -Refer to Figure 24-4. Given the economy is at point A in year 1, what will happen to the unemployment rate in year 2?

Which of the following will shift the aggregate demand curve to the left, ceteris paribus?

Article Summary For reasons including overproduction in the United States, a decrease in global demand, and limited production cuts by OPEC, the price of oil continued to fall during 2017. The falling prices have led OPEC to institute further cuts in oil production, but this effort has been thwarted by OPEC member Libya, whose production increased to 855,000 barrels a day, roughly triple its daily output from the previous year. Libya has Africa's largest oil reserves, but political unrest and militia blockades have severely restricted output in recent years. Due to political instability, OPEC had excluded Libya, Nigeria, and Iran from its agreement to cut production in 2016, but now all three countries have increased production. According to Michael Lynch, president of Strategic Energy and Economic Research, "A lot of experts figured things were so unstable in Libya and politics were so opaque that they did not want to factor in more supply from there. OPEC has been wounded. It gets back to the problem that OPEC has a lot of members in bad shape, making it difficult for them to call on everybody to make sacrifices equally. So they excluded those three and now it's come back to bite them." In late May, OPEC announced an extension to its cutback agreement, but in the month that followed, oil prices fell 16 percent. The same month, Libya announced plans to increase oil production to 1.5 million barrels a day by the end of 2018, and to 2.2 million barrels a day by 2023. -Refer to the Article Summary. The unexpected increase in the supply of oil mentioned in the article summary resulted in a decrease in the price of oil. After an unexpected decrease in the price of oil, the long-run adjustment ________ the price level and ________ the unemployment rate as they return to their original levels.

Explain why the long-run aggregate supply curve is vertical.

Figure 24-2 -Refer to Figure 24-2. Ceteris paribus, an increase in the labor force would be represented by a movement from

The real business cycle model focuses on how

When people became less concerned with the underlying value of their houses and instead focused on the expectations of the prices of their houses increasing, ________ occurred.