Exam 14: Economic Growth, the Financial System and Business Cycles

Using the following table,calculate the unplanned change in inventories for each level of GDP,and explain what will happen to GDP.The numbers in the table are in billions of dollars.

The Australian federal government lowered personal income taxes numerous times throughout the 2000s.Explain how this policy affected the aggregate demand curve.

Explain how the economy moves back to full employment after a recession.

The basic (static)aggregate demand and aggregate supply model assumes that

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

Why is the long-run aggregate supply curve vertical?

Why does the short-run aggregate supply curve shift to the left in the long run,following an increase in aggregate demand?

When the price of oil rises unexpectedly,the price level ________ and the unemployment rate ________ in the short run.

In Japan from the 1990s to the late 2000s,interest rates fell to very low levels.However,this failed to stimulate consumption or investment spending.Use the aggregate expenditure model to explain what might have happened.

Because of a supply shock,in the short run

In the long run

If planned aggregate expenditure is less than total production