question
The AD-AS model consist of the:
answer
AD, SRAS, and LRAS curves
question
Politicians and especially the general public worry about recessions because of:
answer
high unemployment
question
In the graph of the AD-AS model, what is measured on the vertical axis?
answer
The inflation rate
question
In the graph of the AD-AS model, what is measured on the horizontal axis?
answer
Real GDP growth
question
The aggregate demand curve shows all the combinations of ____ that are consistent with a specified rate of spending growth.
answer
Inflation and real GDP growth rates
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The aggregate demand curve shows the relationship between real GDP growth and the:
answer
Actual inflation rate
question
The aggregate demand curve is:
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Downward sloping
question
Holding everything else constant, an increase in the growth rate of the money supply will cause the aggregate demand curve to:
answer
Shift outward
question
The primary purpose of the AD-AS model is to explain:
answer
Business fluctuations
question
The economy's aggregate demand curve shows all combinations of ____ that are consistent with a specified rate of spending growth.
answer
Inflations and real GDP growth
question
A real shock causes:
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A shift of the long-run aggregate supply curve.
question
The "Solow" growth rate is the rate of economic growth that occurs when:
answer
Prices and wages are flexible
question
The position of the long-run aggregate supply curve shows the economy's:
answer
Potential growth rate given by the real factors of production
question
In a diagram with the inflation rate on the vertical axis and the real growth rate on the horizontal axis. the long-run aggregate supply curve is:
answer
A vertical line at the Solow growth rate
question
The long-run aggregate supply curve is:
answer
A verticale line
question
An increase in inflation will cause the long-run aggregate supply curve to:
answer
Not shift at all
question
Which of the following most likely causes a shift of the long-run aggregate supply curve to the right?
answer
An increase in crop production due to more rainfall.
question
A negative real shock causes:
answer
A higher inflation rate and a lower real growth rate.
question
Which of the following does NOT contribute to an economy's long-run potential growth rate?
answer
The average rate of inflation
question
A negative real shock leads to:
answer
An increase in the inflation rate but a decrease in the real GDP growth rate.
question
Which of the following is NOT a shock that could shift the long-run aggregate supply curve?
answer
Demand shock
question
Wich institution usually has the most influences over aggregate demand in the US?
answer
The Federal Reserve
question
The Federal Reserve can influence the economy by shifting:
answer
The AD curve
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