Macroeconomics chapter 13

Which of the following most likely causes a shift of the long-run aggregate supply curve to the right?

an increase in crop production due to more rainfall

If V= 4%, P= 3%, and YR= 2%, then M must equal

1%

A hurricane that damages buildings and roadways along the Gulf Coast is considered a:

negative real shock.

In the AD-AS model, what happens to the economy in the short run when consumer spending decreases?

Inflation is lower, and the real growth rate is lower.

In the basic model that includes the AD and LRAS curves only, a shock that reduces the velocity of money by 2 percentage points causes:

a decrease of the inflation rate by 2 percentage points.

The primary purpose of the AD-AS model is to explain

business fluctuations

What factors triggered the Great Depression?

decreased consumer spending and tight monetary policy

An increase in _____ will shift the SRAS curve.

expected inflation, but not actual inflation

Sticky wages and prices:

increase the impact of positive shocks.

In the basic model that includes the AD and LRAS curves only, shocks to aggregate demand always cause changes in:

inflation only.

An unexpected increase in export growth is a:

positive AD shock.

A real shock is any shock that increases or decreases the growth rate of:

potential GDP.

The position of the long-run aggregate supply curve shows the economy's:

potential growth rate given by the real factors of production.

The Solow growth rate is the economy's:

potential growth rate.

Holding everything else constant, an increase in the growth rate of the money supply will cause the aggregate demand curve to:

shift outward.

Other things held constant, an increase in the velocity of money will cause the aggregate demand curve to:

shift outward.

Which of the following is a real shock that contributed to the economic contraction during the Great Depression?

widespread bank failures