Exam 15: Aggregate Demand and Aggregate Supply Analysis

Refer to Figure 15.2 for the following questions. Figure 15.2 -In Figure 15.2,given the economy is at point A in year 1 and point B in year 2,what is the growth rate in potential GDP between those two years?

What is another term for 'potential GDP'?

Which of the following will not shift the short-run aggregate supply curve?

A(n)________ comes to an end with a business cycle ________.

The wide-spread recessions of 2007-2009 caused a reduction in German exports and reduction in net exports for Germany,shifting the German aggregate demand curve.Which of the following factors would also cause a reduction in Germany's net exports and shift Germany's aggregate demand curve?

Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy.As a result,the

If the Australian dollar increases in value relative to other currencies,how does this affect the aggregate demand curve,ceteris paribus?

What does the short-run aggregate supply curve show?

An increase in government spending will result in an increase in the price level and an increase in real GDP in the long run.

In the dynamic aggregate demand and aggregate supply model,the rate of inflation will decrease if

Technological change can reduce the inflationary effects of total spending rising over time.

The aggregate demand curve shows the relationship between the price level and the quantity of real GDP demanded by households and firms,excluding government spending.

The rate of inflation does not necessarily increase during the expansion phase of the business cycle.

Spending on the national defence force is categorised as government purchases.How do increases in spending on defence affect the aggregate demand curve?

Monetarists believe that the quantity of money should be increased at a constant rate.

The dynamic aggregate demand and aggregate supply model illustrates that during most years,aggregate demand and long-run aggregate supply increase.

What happens if technological change occurs in the economy?

During economic contractions,the Reserve Bank of Australia often reduces interest rates.Explain how this policy affects the aggregate demand curve. _____________________________________________________________________________________________ _____________________________________________________________________________________________

What is the result of a decrease in the price level?

Why are the long-run effects of an increase in aggregate demand on price and output different from the short-run effects? _____________________________________________________________________________________________ _____________________________________________________________________________________________