Exam 15: Modern Macroeconomics: From the Short Run to the Long Run

Assuming an upward-sloping short-run aggregate supply curve, an increase in the money supply results in ________ in output and ________ in prices in the short run.

Figure 15.3 -Refer to Figure 15.3 If this economy is initially in a recession, the change in price level which would bring the economy back to full employment would lead to a change in money demand, which is reflected by the movement from

Figure 15.5 -Refer to Figure 15.5. If the unemployment rate is above the natural rate, the effect on the money market is represented by movement from point ________ to point ________.

"Crowding in" refers to

If GDP is above potential output, then we expect to see

Figure 15.3 -Explain why money is neutral in the long run.

In the long run, a decrease in the money supply

The Federal Reserve can use monetary policy to

If GDP is ________ potential output, adjustment to the long-run equilibrium requires that output rises and prices ________.

Investment is "crowded out" by an increase in government spending when

When employees demand higher wages as a result of price increases which were caused by higher wages being paid by companies, it is called

Suppose the unemployment rate is ________ the natural rate. We would expect to see GDP ________ potential output, falling wages, and falling prices.