Exam 24: Aggregate Demand and Supply Analysis

Explain through the component parts of aggregate demand why the aggregate demand curve slopes down with respect to the inflation rate.Be sure to discuss two channels through which changes in inflation rates affect demand.

Figure 24-1 -In Figure 24.1 above,an equilibrium output greater than Yn is ________ attainable in the ________-run.

Explain and demonstrate graphically the effects of a negative supply shock.What happens to the economy if no action is taken? What happens if monetary and or fiscal policy is used to reduce unemployment?

If workers demand and receive higher real wages,the cost of production ________ and the short-run aggregate supply curve shifts ________.

The aggregate demand curve has the usual downward slope,since a higher price level reduces the real money supply,________ interest rates,and ________ the equilibrium level of aggregate output,everything else held constant.

Suppose the Canadian economy is producing at the natural rate of output.A depreciation of the Canadian dollar will cause ________ in real GDP in the short run and ________ in the inflation rate in the long run,everything else held constant.(Assume the depreciation causes no effects in the supply side of the economy.)

The aggregate demand curve is downward sloping because a decrease in the price level increases the ________ money supply which ________ interest rates and increases the equilibrium level of aggregate output,everything else held constant.

An anomoumous monetary policy that reduces real interest rates will ________ the inflation rate ________.

The total quantity of an economy's final goods and services demanded at different inflation rates is ________.

Everything else held constant,a decrease in net taxes ________ aggregate ________.

Why is the aggregate demand curve downward sloping?

The long-run aggregate supply curve shifts to the right when there is ________.

Suppose the economy is producing at the natural rate of output.Assuming a fixed natural rate of output and everything else held constant,the development of a new,more productive technology will cause ________ in the unemployment rate and ________ in the aggregate price level in the long run.

The aggregate demand curve is the total quantity of an economy's ________.

In deriving the aggregate demand curve a ________ price level ________ the money supply in real terms,raises interest rates,and ________ the equilibrium level of aggregate output.

An unfavourable supply shock causes ________ to ________.

Suppose the economy is producing at the natural rate of output.A decrease in consumer and business confidence will cause ________ in real GDP in the long run and ________ in the inflation rate in the long run,everything else held constant.

Suppose the Canadian economy is producing at the natural rate of output.A depreciation of the Canadian dollar will cause ________ in real GDP in the short run and ________ in the inflation rate in the short run,everything else held constant.(Assume the depreciation causes no effects in the supply side of the economy.)

Everything else held constant,a balanced budget increase in government spending (that is,an increase in government spending that is matched by an identical increase in net taxes)will ________.

According to aggregate demand and supply analysis,the negative demand shock of 2000-2004 had the effect of ________.