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5 Written Questions

5 Matching Questions

  1. demand, supply
  2. interest-rate effect
  3. aggregate supply
  4. productivity
  5. aggregate demand
  1. a The aggregate BLANK-aggregate BLANK model (AD-AS model) is a flexible-price model that enables analysis of simultaneous changes of real GDP and the price level.
  2. b A schedule or curve showing the total quantity of goods and services supplied (produced) at different price levels.
  3. c A measure of average output or real output per unit of input. For example, the productivity of labor is determined by dividing real output by hours of work.
  4. d The tendency for increases in the price level to increase the demand for money, raise interest rates, and, as a result, reduce total spending and real output in the economy (and the reverse for price-level decreases).
  5. e A schedule or curve that shows the total quantity of goods and services demanded (purchased) at different price levels.

5 Multiple Choice Questions

  1. The price level at which the aggregate demand curve intersects the aggregate supply curve.
  2. Leftward shifts of the aggregate supply curve reflect increases in per-unit production costs and cause BLANK-BLANK inflation, with accompanying negative GDP gaps.
  3. The BLANK BLANK curve shows the level of real output that the economy demands at each price level.
  4. The intersection of the aggregate demand and aggregate supply curves determines an economy's BLANK price level and real GDP. At the intersection, the quantity of real GDP demanded equals the quantity of real GDP supplied.
  5. Factors such as consumption spending, investment, government spending, and net exports that, if they change, shift the aggregate demand curve.

5 True/False Questions

  1. aggregate supply, flexibilityA schedule or curve showing the total quantity of goods and services supplied (produced) at different price levels.

          

  2. AD-AS modelThe reluctance of firms to cut prices during recessions (that they think will be short-lived) because of the costs of altering and communicating their price reductions; named after the cost associated with printing new menus at restaurants.

          

  3. equilibrium real outputThe gross domestic product at which the total quantity of final goods and services purchased (aggregate expenditures) is equal to the total quantity of final goods and services produced (the real domestic output); the real domestic output at which the aggregate demand curve intersects the aggregate supply curve.

          

  4. determinants of aggregate supplyFactors such as consumption spending, investment, government spending, and net exports that, if they change, shift the aggregate demand curve.

          

  5. efficiency wagesThe reluctance of firms to cut prices during recessions (that they think will be short-lived) because of the costs of altering and communicating their price reductions; named after the cost associated with printing new menus at restaurants.

          

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