chapter 13 econ

macroeconomic equilibrium occurs when

the aggregate quantity demanded is equal to the aggregate quantity supplied

in a demand-pull inflation, if the fed stops expanding the quantity of money,

the demand-pull inflation ends

changes in aggregate supply

Potential GDP changes, the money wage rate changes, and the money prices of other resources change

one of the influences that the world economy has on US aggregate demand comes from changes in

foreign income

increase in the money wage

raises costs and shifts the aggregate supply curve leftward

A fall in the real wage rate ________ firms' profits and leads to ________ in the quantity supplied.

raises; an increase

when the price level increases there is _____ movement along the aggregate demand curve because the buying power of money _____

an upward; decreases

a recessionary gap occurs when ____ so that real GDP is ____ potential gdp

aggregate demand decreases; less than

demand-pull inflation starts with

an increase in aggregate demand

the shift in potential real gdp and aggregate supply to the right can be a result of

an increase in the quantity of capital

Which of the following factors could start a demand-pull inflation

an increase in the quantity of money

Starting from a situation of full employment, an increase in aggregate demand creates ________ and ________ the price level

an inflationary gap; raises

If oil prices increase, then in the short run, real GDP will ________ and the price level will ________.

decrease; rise

Aggregate demand ________ and shifts the AD curve ________ when _______

decreases; leftward; foreign incomes decrease

stagflation is a combination of _____ real gdp and a _____ price level

decreasing; rising

which of the following shifts the aggregate supply curve rightward

increase in potential gdp

an increase in the price level ____ the aggregate quantity supplied and ____ the aggregate quantity demanded

increases; decreases

an increase in investment _____ aggregate demand, the aggregate demand curve shifts _____ and the the economy is in the ____ phase of a business cycle

increases; rightward; expansion

An increase in potential GDP ________ aggregate supply and ________

increases; shifts the AS curve rightward

as a result of OPEC ____, oil prices in 1973 and 1980, real gdp in the united states ______

increasing; decreased

If the economy is at macroeconomic equilibrium, then real GDP

might be equal to, greater than, or less than potential GDP

a change in the price level produces a ________ the aggregate demand curve

movement along

an inflationary gap is created when

real GDP is greater than potential GDP

If the price level increases from 110.0 to 115.0, the quantity of

real GDP supplied will increase.

if the quantity of real gdp supplied equals the quantity of real gdp demanded, then

real gdp might be greater than, equal to, or less than potential gdp

a rise in the real wage rate

reduces the firm's profit and vice versa

the aggregate supply curve shifts

rightward if the money wage rate falls

a fall in the price level brings a ______ in the real wage rate that _____ profits and can lead to ____

rise; reduces; firms going out of business

the aggregate supply curve shifts rightward when

the money wage rate falls

the aggregate supply curve shows the relationship between

the quantity of real GDP supplied and the price level

if the price level rises

the real wage rate falls