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The AD curve shows the relationship between
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Suppose a lower aggregate price level increases the purchasing power of assets in an economy which causes consumers to spend more. This is known as
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ECON 202

Macroeconomics Final Exam: Practice Questions

QuestionAnswer
The AD curve shows the relationship between the aggregate price level and the quantity of aggregate output demanded.
Suppose a lower aggregate price level increases the purchasing power of assets in an economy which causes consumers to spend more. This is known as The wealth effect and it represents a movement along a fixed AD curve
A rise in the interest rate caused by a change in monetary policy will reduce investment spending and shift the AD curve to the left.
News of a better-than-expected job market next year will likely _________ consumer spending now and shift the AD curve to the _________. Increase, right
Which of the following best explains the upward slope of the short-run aggregate supply curve? production costs are largely fixed in the short run, so when prices of final output rise, firms produce more.
All else constant, an increase in oil price causes producers to decrease output. This will be represented as _____________ in the AD-AS graph. a leftward shift of the SRAS curve
Suppose the economy is currently at its long-run equilibrium. Then the government passes policies to cut taxes and increase military spending. This is a ______ demand shock and will lead to a(n) ________ gap in the short run. positive, inflationary
A decrease in aggregate demand will ______ output in the short run, but as the economy corrects itself, nominal wages will _____ and output will _____ to its long run level. decrease, fall, rise
A negative supply shock results in ________. Over time when the economy self corrects, the _________ curve shifts to the __________ to restore a long-run equilibrium. rising prices and rising unemployment, SRAS, right
Created by: reganbobo15
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