Question 1

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

Accepted Answer

The answer of Illustrate the classical analysis of growth and...

Question 2

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

Accepted Answer

The answer of Make a list of things that would...

Question 3

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

Accepted Answer

The answer of Use sticky-wage theory to explain why an...

Question 4

Suppose that a decrease in the demand for goods and services pushes the economy into recession. What happens to the price level? If the government does nothing, what ensures that the economy still eventually gets back to the natural rate of output?

Accepted Answer

The answer of Suppose that a decrease in the demand...

Question 5

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

Accepted Answer

The answer of Make a list of things that would...

Question 6

Keynes thought that the behavior of the economy in the short run was influenced by what he called "animal spirits." By this he meant that business people sometimes felt good about the economy, and carried out lots of investment, and at other times felt bad about the economy, and so cut back on their investment spending. Explain how such fluctuations in investment would lead to fluctuations in real GDP and prices.

Accepted Answer

The answer of Keynes thought that the behavior of the...

Quiz 15: Aggregate Demand and Aggregate Supply

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

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

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

Suppose that a decrease in the demand for goods and services pushes the economy into recession. What happens to the price level? If the government does nothing, what ensures that the economy still eventually gets back to the natural rate of output?

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