Chapter 11 Practice

Chapter 11 Practice - Resource prices...

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Chapter 11: Repetition & Practice
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Aggregate Demand What are the components of aggregate demand? Why is the demand for imported products not counted into the U.S. AD? After all, it‘s a demand expressed by US citizens? Which effects explain the inverse relationship between the price level and the aggregate demand?
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Aggregate Demand Real balance effect Interest rate effect International trade effect These effects explain movements along the AD curve
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Aggregate Demand When is there a change in aggregate demand? What are determinants of AD? Expectations Aggregate wealth Government policy Foreign income and prices
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Aggregate Supply Why does the aggregate supply curve exhibit a positive slope, i.e. why does the aggregate output supplied increases if the price level increases? What assumption is crucial for the short-run AS to have a positive slope?
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Aggregate Supply
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Aggregate Supply What are determinants of aggregate supply, i.e. what may cause a shift in the AS curve?
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Unformatted text preview: Resource prices Productivity/Technology Changes in the supply of resources Changes in AS and AD Changes in AS and AD Changes in AS and AD What is the difference between demand-pull and cost-push inflation? The Self-Correction Mechanism of an Economy What is an economys potential GDP? Is it possible to have a GDP above potential GDP? The Self-Correction Mechanism of an Economy The Self-Correction Mechanism of an Economy The Self-Correction Mechanism of an Economy Short-run effects of an increase in AD? Long-run effects? Short-run effects of a decrease in AD? Long-run effects? The Self-Correction Mechanism of an Economy Why is the long-run aggregate supply (LRAS) perfectly inelastic while the short-run AS is elastic? In other words: Why can a change in the price level change aggregate supply in the short-run, ut not in the long-run? Are there any changes that might lead to changes in the LRAS?...
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Chapter 11 Practice - Resource prices...

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