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
