Exam 23: Aggregate Demand and Aggregate Supply

Suppose that during World War II the long-run aggregate supply curve shifted right. In order for price and output to have changed in the direction they did, what would have to have happened to aggregate demand?

The long-run trend in real GDP is upward. How is this possible given business cycles? What explains the upward trend?

Policymakers who control monetary and fiscal policy and want to offset the effects on output of an economic contraction caused by a shift in aggregate supply could use policy to shift

Which of the following shifts aggregate demand to the right?

Historical evidence for the U.S. economy indicates that

A recession with inflation is known by what term?

Investment is a

Other things the same, what happens to the price level and quantity of output when an adverse shift in the short run aggregate supply curve occurs?

Which of the following is correct?

Other things the same, an increase in the price level makes consumers feel

Other things the same, an increase in the expected price level shifts

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

Make a list of things that would shift the long-run aggregate supply curve to the right.

Which of the following would both shift aggregate demand right?

The classical model is the appropriate model for analysis of the economy in the

If aggregate demand shifts right, then eventually price level expectations rise. The increase in price level expectations causes the short-run aggregate-supply curve to shift to the left.

Which of the following would increase output in the short run?

When the price level falls the quantity of

Other things the same, when the government spends more, the initial effect is that

During recessions investment