Econ 260 CH 10 Study Plan

Many economists view the natural rate of unemployment as the level observed when real GDP is given by the position of the long-run aggregate supply curve. There can be positive unemployment in this situation because

The long-run aggregate supply curve is determined by

The​ long-run aggregate supply curve shifts outward when

The long-run aggregate supply curve

Year to year rightward shifts in long-run aggregate supply leads to

The long-run aggregate supply curve (LRAS) is equivalent to the full-employment level of real GDP.

The shape of the long-run aggregate supply curve (LRAS) is

Economic growth is represented by the long-run aggregate supply curve (LRAS) shifting

The long-run aggregate supply curve (LRAS) is _____ line determined by amounts of available resources such as labor and capital and by technology and resource productivity. The position of the LRAS gives the full-information and full-adjustment level of real GDP year.

The ____ rate of unemployment occurs at the long-run level of GDP per year given by the position of the LRAS.

If labor or capital increases from year to year or if the productivity of either of these resources rises from one year to the​ next, the LRAS shifts ______. In a growing economy, therefore, real GDP per year gradually ______ over time.

Suppose that there is a sudden rise in the price level. As a​ consequence, economywide planned spending on purchases of goods and services will _____.

Suppose that there is a sudden riserise in the price level. As a​ consequence, economywide planned spending on purchases of goods and services will

From the list​ below, match the letter of the outcome each of the following events produces upon the AD curve.

Deflation has occurred during the past year

Real GDP levels of all the nation's major trading partners have declined

There has been a decline in the foreign exchange value of the nation's currency

The price has increased this year

Total expenditures for domestically produced goods and services consist of

Which one of the following is not a component of total​ expenditures?

What determines the total value of annual U.S.​ GDP?

The total of all planned real expenditures in the economy is

The aggregate demand curve

The aggregate demand curve slopes downward because of the

According to the​ real-balance effect, an increase in the price level

According to the interest rate​ effect, an increase in the price level

Which of the following will generate an increase in aggregate​ demand?

The U.S. aggregate demand curve would shift to the left if

The aggregate demand curve would shift to the right as a result of

All of the following would cause the aggregate demand curve to shift except

In an open​ economy, the total value of GDP is based on the spending decisions of​ individuals, firms,​ governments, and foreign residents.

The components of GDP as calculated using the expenditure approach are identical to the components of aggregate demand.

The shape of the aggregate demand curve ​(AD​) is

A change in the price level has no effect on the real value of cash balances.

The idea that higher price levels in the United States result in foreign residents desiring to buy fewer​ U.S.-made goods and U.S. residents desiring to buy more​ foreign-made goods is referred to as the

The lower the price​ level, the greater the total planned spending on goods and services.

The aggregate demand curve is essentially the same as the demand curve for an individual product.

An increase in the price level shifts the aggregate demand curve ​(AD​) to the left.

Aggregate demand is the total of all planned _____ in the economy, and aggregate supply is the total of all planned ______ in the economy. The aggregate demand curve shows the various qualities of total planned ____ on final goods and services at various price levels; it is downward sloping.

There are three reasons why the aggregate demand curve is downward sloping. They are the ____ effect, the_____ effect, and the ______ effect.

The ____ effect occurs because price level changes alter the real value of cash​ balances, thereby causing people to desire to spend more or​ less, depending on whether the price level decreases or increases.

The ____ effect is caused by interest rate changes that mimic price level changes. At higher interest​ rates, people seek to buy ____ houses and cars, and at lower interest rates, they seek to buy _____.

The open economy effect occurs because of a shift away from expenditures on _____ goods and a shift toward expenditures on ____ goods when the domestic price level increases.

Suppose that the full employment level of nominal GDP rises in one year from ​$16.816.8 to ​$18.018.0 trillion. The​ long-run equilibrium price​ level, however, remains unchanged at 120120. By how much​ (in real​ dollars) has the​ long-run aggregate supply curve shifted to the right from one year to the​ next?

By how​ much, if​ any, has the aggregate demand curve shifted to the​ right?

Identify the combined shifts in​ long-run aggregate supply and aggregate demand that could unambiguously explain the simultaneous occurrences of an increase in equilibrium real GDP and increase in the equilibrium price level.

Identify the combined shifts in​ long-run aggregate supply and aggregate demand that could unambiguously explain the simultaneous occurrences of a decrease in equilibrium real GDP with no change in the equilibrium price level.

Identify the combined shifts in​ long-run aggregate supply and aggregate demand that could unambiguously explain the simultaneous occurrences of an increase in equilibrium real GDP with no change in the equilibrium price level.

Suppose that during a given​ year, the quantity of U.S. real GDP that can be produced in the long run falls from ​$13 trillion to ​12.5 ​trillion, measured in base-year dollars. During the​ year, no change occurs in the various factors that influence aggregate demand. As a​ result, the U.S.​ long-run equilibrium price level during this particular year will

In Ciudad​ Barrios, El​ Salvador, the latest payments from relatives working in the United States have finally arrived. When the credit unions open for​ business, up to 150 people are already waiting in line. After receiving the funds their relatives have transmitted to these​ institutions, customers go off to outdoor markets to stock up on food or clothing or to appliance stores to purchase new stereos or televisions. Similar scenes occur throughout the developing​ world, as each year migrants working in​ higher-income, developed nations send around​ $200 billion of their earnings back to their relatives in less developed nations. Evidence indicates that the​ relatives, such as those in Ciudad​ Barrios, typically spend nearly all of the funds on current consumption. Based on the above​ information, developing​ countries' income inflows transmitted by migrant workers are primarily affecting their​ economies' long-run aggregate _____ curves.

The equilibrium price levels in nations that are recipients of large inflows of funds from migrants will likely

​Long-run equilibrium in the economy will occur

The​ long-run equilibrium of an economy occurs

An increase in the U.S. price level can be caused by all of the following except

If economic growth causes the​ long-run aggregate supply curve to shift rightward over​ time, but the aggregate demand curve does not​ change, we expect

A persistent decline in the price level due to economic growth with stable aggregate demand is

In the long​ run, persistent deflation in a growing economy can occur if

An increase in the LRAS curve that is larger proportionately than an increase in the AD curve will lead to

If the actual price level increases beyond the​ long-run equilibrium price​ level, all of the following will tend to occur except

If the LRAS shifts to the right over time and during this time AD does not noticeably​ change, real GDP will​ ________ and the price level will​ ________.

When the economy is in​ long-run equilibrium, the price level adjusts to equate total planned real ______ by​ individuals, businesses, the​ government, and foreign​ (non-U.S.) residents with total planned ______ by firms.

Economic growth causes the​ long-run aggregate supply schedule to shift ______ over time. If the position of the aggregate demand curve does not​ change, the​ long-run equilibrium price level tends to _____, and there is secular deflation.

Inflation can be caused by

Consider this​ statement: "Persistent inflation in a growing economy is possible only if the aggregate demand curve shifts rightward over time at a faster pace than the rightward progression of the​ long-run aggregate supply​ curve." This statement is describing

​Supply-side inflation can be caused by a continual

Which of the following factors could cause the economy to experience​ supply-side inflation?

An increase in​ long-run aggregate supply cuases the price level to​ increase, and is therefore inflationary.

Persistent inflation in a growing economy is possible only if the aggregate demand curve shifts rightward over time at a faster pace than the rightward progression of the​ long-run aggregate supply curve.

Inflation can be caused by an increase in aggregate ____ or by a decrease in aggregate _____.

____-side inflation cannot account for persistent inflation in a growing​ economy, but ____-side inflation can occur even as real GDP increases.

Because the U.S. economy has grown in recent​ decades, the persistent inflation during those years has been caused by the aggregate demand curve shifting ____ at a faster pace than the​ long-run aggregate supply curve.

There are underutilized and untapped resources in Greenland. Some economists believe that unfreezing these resources will

​Greenland's glacial ice and small population have

​Greenland's glacial ice and small population