Exam 22: Aggregate Demand and Aggregate Supply

Greater and more extensive government regulations of safety standards and environmental controls will have what effect on short-run and long-run aggregate supply?

A trade deficit means that net exports are positive.

According to the "misperception effect" explanation of short-run aggregate supply,firms increase output as the price level rises because they mistake the increase in overall prices for an increase in the relative price of their own output.

Point A suggests:

'An increase in the U.S.price level will:

Exhibit 22-3 In Exhibit 22-3,at point B an increase in AD would lead to:

Say's law dictates that:

The real wealth and the real interest rate effects are both causes of the downward slope of the aggregate demand curve.

Discuss some of the reasons behind downward stickiness of wages and prices.

If exports and imports both rose,but exports rose more than imports,

When the price level falls,households and firms reduce their holdings of money,leading to a lower interest rate and an increase in borrowing and an increase in RGDP demanded.

Discuss the difference between an increase in the aggregate demand curve and an increase in the quantity of real GDP demanded.Include discussion of how the price level relates to each event.

Exhibit 22-1 Refer to Exhibit 22-1.Which of the following would be illustrated by a shift in aggregate demand from AD₀ to AD₁?

In the long run,an increase in the price level:

A recession is generally caused by:

Imports are not included in GDP because they do not reflect output produced within the domestic economy.

Exhibit 22-2 In Exhibit 22-2,which curve represents short-run aggregate supply?

A change that shifted the long-run aggregate supply curve to the right would also shift the short-run aggregate supply curve to the right.

The interest rate effect helps explain why a lower price level will reduce the quantity of real goods and services demanded as an economy moves down along its aggregate demand curve.

Stagflation could be caused solely by a shift in the aggregate demand curve.