Exam 13: Aggregate Demand and Aggregate Supply Analysis

Suppose a recession occurs as a result of a supply shock,and instead of the economy naturally working its way back to equilibrium,the government uses policy to shift the aggregate demand curve to fight the recession.Using policy this way would

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,a decrease in the value of the domestic currency relative to foreign currencies would be represented by a movement from

Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

Suppose a developing country experiences a reduction in machinery and capital equipment as foreign entrepreneurs decrease the amount of investment in the economy.As a result,

Which of the following would cause the short-run aggregate supply curve to shift to the right?

The process of an economy adjusting from a recession back to potential GDP in the long run without any government intervention is known as

The automatic mechanism ________ the price level in the case of ________ and ________ the price level in the case of ________.

Which of the following could explain why there is an increase in potential GDP but the equilibrium level of GDP does not rise?

Just before,during,and after the recession of 2007-2009,net exports in the United States

When potential GDP increases,long-run aggregate supply also increases.

The long-run adjustment to a negative supply shock results in

What are sticky prices,and how can contracts make them "sticky"?

Suppose the U.S.GDP growth rate is slower relative to other countries' GDP growth rates.This will

According to ________,entrepreneurship does not contribute anything of value to production.

Figure 13-3 -Refer to Figure 13-3.Suppose the economy is at point A.If government spending increases in the economy,where will the eventual long-run equilibrium be?

Figure 13-2 -Refer to Figure 13-2.Ceteris paribus,an increase in workers and firms adjusting to having previously underestimated the price level would be represented by a movement from

Stagflation occurs when short-run aggregate supply decreases.

A decrease in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?

Use the dynamic model of aggregate demand and supply to illustrate a situation where aggregate demand and short-run aggregate supply are both increasing from year 1 to year 2,resulting in a higher price level and higher level of real GDP at macroeconomic equilibrium in year 2.

The ________ shows the relationship between the price level and quantity of real GDP demanded.