Deck 33: Essay

Question 1

What curve shows the quantity of goods and services that households,firms,the government,and customers abroad want to buy at each price level?

Answer 1

The wealth effect,the interest-rate effect,and the exchange-rate effect.

Question 2

Suppose a recession overseas reduces a country's exports.Which curve(s)in the aggregate demand and aggregate supply model would be affected,and which way would it (they)shift?

Answer 2

The short run and long run aggregate supply curves shift to the right

Question 3

Figure 33-12.
Refer to Figure 33-12.Identify periods 1 and 2.

Answer 3

The aggregate demand curve

Question 4

Briefly state the three key facts about economic fluctuations.

Question 5

Identify the direction of the change during a recession in each of the following: consumption expenditures,investment expenditures,and unemployment.

Question 6

Suppose technology advances within a nation.Which curves in the aggregate demand and aggregate supply model would be affected,and which way would they shift?

Question 7

Explain how a recession differs from a depression.

Question 8

Suppose a boom in stock market prices helps make people feel wealthier.Using the model of aggregate demand and aggregate supply,identify the curves that are affected,and which way these curves would shift.

Question 9

Figure 33-12.
Refer to Figure 33-12.Explain how the aggregate demand and aggregate supply model changed during periods 1 and 2.

Question 10

Suppose a country offers a new investment tax credit.Which curve(s)in the aggregate demand and aggregate supply model would be affected,and which way would it (they)shift?

Question 11

Name two macroeconomic variables that decline when an economy goes into recession,and name one macroeconomic variable that rises.

Question 12

The wealth effect helps explain what feature in the aggregate demand and aggregate supply model?

Question 13

List the three reasons for why the aggregate-demand curve slopes downward.

Question 14

Suppose the government raises taxes.Which curves in the aggregate demand and aggregate supply model would be affected,and which way would they shift?

Question 15

Suppose a nation experiences increased immigration from abroad.Which curves in the aggregate demand and aggregate supply model would be affected,and which way would they shift?

Question 16

The sticky-price theory helps explain what feature of the aggregate demand and aggregate supply model?

Question 17

List the three alternative explanations for the upward slope of the short run aggregate supply curve.

Question 18

What curve shows the quantity of goods and services that firms choose to produce and sell at each price level?

Question 19

The exchange-rate effect helps explain what feature in the aggregate demand and aggregate supply model?

Question 20

Suppose speculators lost confidence in foreign economies and bought more U.S.bonds.How would this affect net exports in the U.S. ,and which way would this cause the aggregate demand curve to shift?

Question 21

Other things the same,what happens to the price level and quantity of output when an adverse shift in the short run aggregate supply curve occurs?

Question 22

Suppose the expected price level increases.Which curves in the aggregate demand and aggregate supply model would be affected,and which way would they shift?

Question 23

A recession with inflation is know by what term?

Question 24

Other things the same,what happens to the price level and the quantity of output when the short run aggregate supply curve shifts to the right?

Question 25

Write the mathematical expression that summarizes the three alternative explanations for the upward slope of the short run aggregate supply curve.

Question 26

Other things the same,what happens in the short run to the price level and quantity of output when the aggregate demand curve shifts to the left?

Question 27

Misperceptions theory helps explain what feature of the aggregate demand and aggregate supply model?

Question 28

Suppose people anticipate an increase in the expected price level.Which curve(s)in the aggregate demand and aggregate supply model would be affected,and which way would it (they)shift?

Question 29

A decrease in what variable will raise the quantity of goods and services supplied,and shift only the short run aggregate supply curve to the right?

Question 30

Explain the short-run effects on output and the price level from a decrease in the aggregate-demand curve.

Question 31

Figure 33-13.
Refer to Figure 33-13.Identify the price and output levels consistent with long-run equilibrium.

Question 32

Suppose a country experiences a change in weather patterns that makes farming more difficult.Which curve(s)in the aggregate demand and aggregate supply model would be affected,and which way would it (they)shift?

Question 33

Figure 33-14.
Refer to Figure 33-14.Identify which long run aggregate-supply curve(s)would be consistent with long-run equilibrium.

Question 34

Figure 33-16.
Refer to Figure 33-16.Suppose the economy starts at P₃ and Y₂.If there is a decrease in government purchases,identify the price and output levels that the economy would move to in the short run.

Question 35

Figure 33-15.
Refer to Figure 33-15.Suppose the economy begins at point A.Decreases in what four variables could result in a movement to point D?

Question 36

Other things the same,what happens in the long run to the price level and quantity of output after a contraction in aggregate demand?

Question 37

Suppose a country experiences an increase in its capital stock.Which curve(s)in the aggregate demand and aggregate supply model would be affected,and which way would it (they)shift?

Question 38

Identify the variables that could cause shifts in both the short-run and long-run aggregate-supply curves.

Question 39

Changes in what four variables will shift the long run aggregate supply curve?

Question 40

Explain how a change in the expected price level would shift the short-run and long-run aggregate-supply curves.

Question 41

Who said about classical economic theory: "the long run is a misleading guide to current affairs.In the long run we are all dead"?

Question 42

In the aggregate demand and aggregate supply model,the point where the aggregate demand curve crosses the long run aggregate supply curve,and the expected price level equals the actual price level,is known as what?

Question 43

Using the aggregate demand and aggregate supply model,a decrease of what curve is by itself consistent with the changes in prices and output that occurred during the onset of the Great Depression?

Question 44

Illustrate the classical analysis of growth and inflation with aggregate demand and long-run aggregate supply curves.

Question 45

Make a list of things that would shift the aggregate demand curve to the right.

Question 46

Figure 33-17.
Refer to Figure 33-17.Suppose the economy starts at P₃ and Y₂.Explain how government purchases would need to change to move the economy to P₂ and Y₁.What about taxes?

Question 47

Using the aggregate demand and aggregate supply model,an increase in what curve is by itself consistent with the changes in prices and output that occurred during World War II?

Question 48

Who wrote the 1936 book titled The General Theory of Employment,Interest,and Money?

Question 49

During periods of stagflation,what happens to output and prices in the economy?

Question 50

Explain how an increase in the price level changes interest rates.How does this change in interest rates lead to changes in investment and net exports?

Question 51

Who is credited for the original development of the model of aggregate demand and aggregate supply?

Question 52

The long-run trend in real GDP is upward.How is this possible given business cycles? What explains the upward trend?

Question 53

What variables besides real GDP tend to decline during recessions? Given the definition of real GDP,argue that declines in these variables are to be expected.

Question 54

Make a list of expenditures whose sum equals GDP.

Question 55

Use sticky-wage theory to explain why an increase in the expected price level shifts the aggregate supply curve.

Question 56

Make a list of things that would shift the long-run aggregate supply curve to the right.

Question 57

Compare changes in the price level for a recession resulting from a shift in aggregate demand to that of a recession resulting from a shift in short run aggregate supply.

Question 58

Explain the effect on output and price level from an increase in the short-run aggregate-supply curve.

Question 59

What do most economists believe concerning the relation between the price level and real output?