Exam 6: Modelling Real Gdp and the Price Level in the Long Run

The aggregate demand curve plots

Figure 6-1 -In Figure 6-1,a movement from point B to point A can be explained by

The aggregate demand curve shifts to the left when

Compare and contrast the demand and supply side of inflation.Which is preferable?

An aggregate demand curve

In the long run,the level of production in the economy

When the real interest rate rises,

The full-employment and full adjustment level of real output of goods and services in the economy is represented by

Figure 6-1 -In Figure 6-1,a movement from point C to point B could be explained by

What is secular deflation? Explain fully.

Because we have full employment at the level of potential output,

A higher domestic price level should

If other factors are held constant,an increase in the price level

An indirect effect because price level increases cause borrowing to increase,which raises interest rates and reduces quantity demanded for goods and services is known as:

An individual holds $20 000 in an interest-earning checking account earning 10% interest,and the overall price level rises by 12%.Other things constant,we would expect

Holding nominal money balances constant,a decrease in the price level

The aggregate demand curve shows that,if other factors are held constant,

Figure 6-1 -In Figure 6-1,a movement from point B to point C could be explained by

The aggregate production function

Describe what happens in the economy when there is an increase in the level of the factors of production (the endowment)in the short run and long run.