Category: The Aggregate Demand Aggregate Supply Model

A. fail to respond to the adverse supply shock and allow the economy to adjust on its own.
B. respond to the adverse supply shock by decreasing aggregate demand which lower prices
C. respond to the adverse supply shock by decreasing short run aggregate supply
D. respond to the adverse supply shock by increasing aggregate demand, which further raises prices

A. None of these answers
B. A depression is a mild recession
C. A variety of spending income, and output measures can be used to measure economic fluctuation because most macroeconomic quantitties tend to fluctuate together
D. A recession is when output rises above the natural rate of output

A. sticky-wage theory of the short-run aggregate supply curve
B. classical dichotomy theory of the short-run aggregate supply curve
C. misperceptions theory of the short-run aggregate supply curve
D. sticky-price theory of the short run aggregate supply curve

A. All of these answers shift the long-run aggregate supply curve
B. An increase in the available capital
C. An increase in the available labour
D. An increase in price expectations

A. Output falls; prices are unchanged from the initial value
B. Price fall; output is unchanged from its initial value
C. Output and the price level are unchanged from their initial values
D. Prices rise; output is unchanged from its initial value

A. rising prices and rising output
B. rising prices and falling output
C. falling prices and falling output
D. falling prices and rising output

A. shift the short-run aggregate supply curve to the left
B. shift the aggregate demand curve to the right
C. shift the short-run aggregate supply curve to the right
D. shift the aggregate demand curve to the left

A. When the economy is at the natural rate of unemployment
B. When the economy is at the natural rate of investment
C. When the economy is at the natural rate of aggregate demand
D. When there is no no unemployment

A. lower prices increase money holdings decrease lending interest rates rise, and investment spending falls
B. lower prices increase the value of money holding and consumer spending increases
C. lower prices decrease the value of money holdings and consumers spending decreases
D. lower prices reduce money holdings increase lending interest rates fall, and investment spending increase

A. Prices to rise and output to rise
B. Price to fall and output to remain unchanged
C. Prices to fall and output to fall
D. prices to rise and output to remain unchanged