Exam 20: Aggregate Demand and Aggregate Supply: Part B

Although wages,incomes,and interest rates are most often discussed in nominal terms,what matters most are their real values.

Other things the same,a decrease in the price level makes the interest rate decrease,which leads to a depreciation of the dollar in the market for foreign-currency exchange.

If aggregate demand and aggregate supply both shift right,we can be sure that the price level is higher in the short run.

The downward slope of the aggregate demand curve is based on logic that as the price level rises,consumption,investment,and net exports all fall.

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

According to classical macroeconomic theory,changes in the money supply change real GDP but not the price level.

The term ​business cycle​ implies that economic fluctuations follow a regular,predictable pattern.

An increase in the money supply causes output to rise in the long run.

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

Most economists believe that classical theory describes the world in the short run but not in the long run.

Other things the same,technological progress raises the price level.

If aggregate demand shifts right,then eventually price level expectations rise.This increase in price level expectations causes the aggregate demand curve to shift to the left back to its original position.

A change in the money supply changes only nominal variables in the long run.

The aggregate-demand curve shows the quantity of domestic goods and services that households,firms,the government,and customers abroad want to buy at each price level.

The exchange-rate effect is the idea that a higher U.S.price level causes the value of the dollar to increase in foreign exchange markets,and this effect contributes to the downward slope of the aggregate-demand curve.

The recession of 2008-2009 was associated with a fall in housing prices which shifted aggregate demand to the left.

An increase in the money supply shifts the long-run aggregate supply curve to the right.

The logic of the exchange-rate effect begins with a change in the price level changing the interest rate.

The recession of 2008-2009 was in many ways the worst macroeconomic event in more than half a century.

An increase in the money supply causes the interest rate to fall,investment spending to rise,and aggregate demand to shift right.