Macroeconomics Ch. 33

The position of the long-run aggregate supply curve

is determined by resource usage and technology.

The long-run aggregate supply curve shifts right if

All of the above are correct.

Which of the following is included in the aggregate demand for goods and services?

All of the above are correct.

An increase in the expected price level shifts the

The short-run but not the long-run aggregate supply curve left.

Refer to Figure 33-7. Suppose the economy starts at Y. If aggregate demand increases from AD2 to AD3, then the economy moves to

V.

Refer to Figure 33-7. If the economy starts at Y, then a recession occurs at

W.

Refer to Figure 33-3. The natural rate of output occurs at

Y2.

Refer to Figure 33-7. Suppose the economy starts at Y. If there is a fall in aggregate demand, then the economy moves to

Z in the long run.

​Which of the following shifts long-run aggregate supply left?

a decrease in either natural resources or the human capital stock.

The Stock Market Boom of 2015 Imagine that in 2015 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time.Refer to Stock Market Boom 2015. Which curve shifts first and in which direction?

aggregate demand shifts right

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

aggregate demand to the right.

Which of the following would cause stagflation?

aggregate supply shifts left

An increase in the money supply

and an investment tax credit both cause aggregate demand to shift right.

If countries that imported goods and services from the United States went into recession, we would expect that U.S. net exports would

fall, making aggregate demand shift left.

During a recession the economy experiences

falling employment and income

Many macroeconomic variables

fluctuate together and by different amounts.

​Imagine the U.S. economy is in long-run equilibrium. Then suppose the aggregate demand increases. We would expect that in the long-run the price level would

increase.

Refer to Figure 33-4. If the economy is at A and there is a fall in aggregate demand, in the short run the economy

moves to D.

If there are floods or droughts or a decrease in the availability of raw materials

output falls in the short run.

The aggregate-demand curve shows the

quantity of domestically produced goods and services that households, firms, the government, and customers abroad want to buy at each price level.

The model of aggregate demand and aggregate supply explains the relationship between

real GDP and the price level.

Stagflation exists when prices

rise and unemployment rises.

If the price level falls, the real value of a dollar

rises, so people will want to buy more.

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

short-run aggregate supply left.

Most economists use the aggregate demand and aggregate supply model primarily to analyze

short-run fluctuations in the economy.

Suppose the economy is in long-run equilibrium. In a short span of time, there is a large influx of skilled immigrants, a major new discovery of oil, and a major new technological advance in electricity production. In the short run, we would expect

the price level to fall and real GDP to rise.

Which of the following is not a determinant of the long-run level of real GDP?

the price level.

When the Fed buys bonds

the supply of money increases and so aggregate demand shifts right.

Refer to Figure 33-4. If the economy starts at A and there is a fall in aggregate demand, the economy moves

to C in the long run.

The aggregate supply curve is

vertical in the long run and slopes upward in the short run.