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15 Cards in this Set
- Front
- Back
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What does the aggregate supply and demand model hope to explain?
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the model explains the price level and real output
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What are the three reasons the aggregate demand curve slopes downward?
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the real balance effect, the interest rate effect and the foreign trade effect
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What happens to the demand, assuming fixed income, when:
a) the value of an item increases b)if the canadian price decreases relative to other countries? |
a)the price level increases and the demand or consumption decreases
b)the demand for exports increases |
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Which is no a determinant of the aggregate demand curve?
a)consumer spending b)input prices c)investment spending d)national income abroad |
b)
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what is the per unit production cost
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total input cost over the units of output
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which of the following is not a determinant of the supply curve?
a)domestic resource prices b)government regulation c)productivity d)real interest rates |
d)
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what is demand pull inflation?
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price level being pulled by an increase in aggregate demand
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what happens when Aggreate supply increases?
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full employment with price stability
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what happens to the GDP gap as the aggregate demand increases?
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it becomes positive where acutal GDP is greater than potential GDP
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What causes recession and cyclical unemployment?
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a decrease in aggregate demand
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Which is not a reason there is a negative GDP gap when the aggregate demand decreases?
a)menu costs b)price wars c)wage contracts d)household debts |
d)
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What is the long run?
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a period long enough for nominal wages and input prices to change in response to a change in price level
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What is the recessionary gap?
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the amount which the equilibrium GDP falls short of full employment GDP
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What happens when there is a decrease in price during the long run of an aggregate supply curve?
a)shifts right b)shifts down the cruve c)shifts left d)shift left and right |
b)
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which is not a assumption used to create the short run Aggregate supply curve?
a)based on the initial price level b)price level can move up or down c)the supply is constant d)the nominal wages are based on a fixed price level |
c
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