Exam 24: Aggregate Demand and Supply Analysis

The financial crisis that began in August 2007 initially had ________ effect on China but caused exports to fall by ________ percent.

Suppose the economy is producing below the natural rate of output and the government is suffering from large budget deficits.To deal with the deficit problem,suppose the government takes a policy action to reduce the size of the deficits.This policy action will cause ________ in the unemployment rate in the short run and ________ in the aggregate price level in the short run,everything else held constant.

Suppose the economy is producing at the natural rate of output and the government passes legislation that severely restricts a company's ability to reduce production costs via outsourcing.Everything else held constant,this policy action will cause ________ in the unemployment rate in the short run and ________ in the aggregate price level in the short run.

The fact that an economy always returns to the natural rate level of output is known as ________.

Everything else held constant,which of the following does not cause aggregate demand to increase?

As of 2009,China's economy had recovered from the global recession that began in 2008.Use aggregate demand and aggregate supply analysis to explain why,and to explain the likely consequences for China of an increase in the growth rate of the global economy.

Everything else held constant,when output is ________ the natural rate level,wages will begin to ________,increasing short-run aggregate supply.

The Lehman Brothers bankruptcy caused a ________ ________ shock.

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

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

Everything else held constant,an increase in the cost of production ________ aggregate ________.

The Chinese central bank is ________.

Everything else held constant,an increase in government spending will cause ________.

Everything else held constant,when financial frictions increase,the real cost of borrowing ________ so that planned investment spending ________ at any given inflation rate.

Figure 24-1 -In Figure 24.1 above,a ________ supply shock will shift the aggregate supply curve to AS2 and the economy will return to the long run equilibrium at point ________.

Which of the following increases aggregate supply in the short-run,everything else held constant?

By analyzing aggregate demand through its component parts,we can conclude that,everything else held constant,a decline in the inflation rate causes ________.

The long-run rate of unemployment to which an economy always gravitates is the ________.

Consider the following aggregate demand curve Y= 22-1p and a short-run aggregate supply curve given by: p=4+3(Y-10).Find the equilibrium output and inflation rate.

According to aggregate demand and supply analysis,the favorable supply shock of 1995-1999 had the effect of ________.