Practice for Exam 3 – Flashcards
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All other things unchanged, an increase in government spending will
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shift the aggregate demand curve to the right.
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The rise and fall of real GDP over the course of the business cycle suggests that
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the economy may not always be in long-run equilibrium.
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The use central bank policies to influence the level of economic activity is called
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monetary policy.
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Suppose an economy's exports increase and its imports decrease. All other things unchanged, this results in
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an increase in net exports which will shift the aggregate demand curve to the right.
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Wage and price stickiness
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prevents the economy from producing its potential level of real GDP.
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Aggregate Demand curve represents
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how real GDP relates to price level [all final goods]. Is always downward sloping... Why?
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Which of the following will not cause a change in aggregate demand?
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An increase in an economy's price leve
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Aggregate Demand
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The relationship between the total quantity of goods and services demanded (from all the four sources of demand) and the price level, all other determinants of spending unchanged.
