Macro 13.3

If the economy adjusts through the automatic​ mechanism, then a decline in aggregate demand causes

If the economy is initially at​ full-employment equilibrium, then an increase in aggregate demand causes​ _____________ in real GDP in the short run and​ ___________ in the price level in the long run.

Which of the following is usually the cause of​ stagflation?

In the short​ run, an increase in aggregate demand ________________ beyond potential GDP ​, whereas in the long​ run, an automatic mechanism brings ______________________ .

According to an article in the Economist​, ​"Four main types of spending drive​ GDP...." What are the four main types of spending and in what sense do they​ "drive" GDP? ​Source: ​ "Double-Dip Trouble," Economist​, April​ 28, 2012. The four components of aggregate demand are

These four categories of spending are represented in the GDP formula by

b. Match one or more of the four graphs to each of the following​ scenarios: i. The economy experiences a recession ii. The economy experiences​ short-term inflation iii. The economy experiences stagflation

What has contributed to the slow growth in employment in recent​ years?

Suppose that​ initially, the economy is in​ long-run macroeconomic equilibrium at point A. If there is increased pessimism about the future of the​ economy, the AD curve will shift from __________ The new​ short-run macroeconomic equilibrium occurs at _________ ​Long-run adjustment will shift the SRAS curve from _______________ as workers adjust to​ lower-than-expected prices. The new​ long-run macroeconomic equilibrium occurs at _____________

Use the graph on the right to answer the following questions. a. Which of points​ A, B,​ C, or D can represent a​ long-run equilibrium?

Suppose that initially the economy is at point A. Then aggregate demand increases from AD1 to AD2. The new​ short-run equilibrium will be at point __ The​ long-run equilibrium point will be at point __

Which of the following best explains how the economy will adjust from the​ short-run equilibrium point to the new​ long-run equilibrium​ point?

Which of the following would cause a decrease in real GDP​ and, if large​ enough, a​ recession?

Which of the following scenarios would lead to a reduction in real GDP and may even cause a​ recession?

Which of the following would cause an increase in the price level​ (i.e., a​ short-run inflation)?

Which of the following scenarios would lead to an increase in the price level​ (i.e., a​ short-run inflation)?