ECON 202 Word Scramble
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| Question | Answer |
| 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 |
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