Aggregate demand/ Aggregate Supply

Which of the following equations represents Aggregate Demand

• GDP = X + I + C + (Y - Z)

• GDP = C + I + G + (X - N)

• GDP = C + I + X + (G - T)

• GDP = (1/MPS)*G + I + C

The short-run aggregate supply curve may shift to the right if:

• productivity increases

•   nominal wages increase.

•   personal income taxes decrease.

•   commodity prices rise.

The short run aggregate supply curve will:

• shift to the right if commodity prices increase.

•   shift to the left if there is an increase in productivity.

• shift to the left if nominal wages increase.

•   shift to the right if government spending increases.

Define the short-run aggregate supply curve (SRAS)

• The relationship between price level and real GDP in an economy

• The relationship between price and quantity in an economy

• Not the Long-Run Aggregate Supply Curve

• How much we supply before getting feedback

Why is the slope of the SRAS positively sloped?

• Sticky wages and prices

• the shadow market gets involved as prices go up

• Externalities

• greed

Change in SRAS: OPEC Successfully Increases Oil Prices

• Increase

• Decrease

• No Change

Why is the slope of the SRAS positively sloped?

• Sticky wages and prices

• the shadow market gets involved as prices go up

• Externalities

• greed

According to the interest rate effect, aggregate demand slopes downward (negatively) because

• lower prices increase money holdings, decrease lending, interest rates rise, and investment spending falls.

• lower prices increase the value of money holdings and consumer spending increases

• lower prices decrease the value of money holdings and consumer spending decreases.

• lower prices reduce money holdings, increase lending, interest rates fall, and investment spending increases.

According to the wealth effect, aggregate demand slopes downward (negatively) because

• lower prices increase the value of money holdings and consumer spending increases.

• lower prices decrease the value of money holdings and consumer spending decreases.

• lower prices reduce money holdings, increase lending, interest rates fall, and investment spending increases.

• lower prices increase money holdings, decrease lending, interest rates rise, and investment spending falls.

Suppose the price level falls but suppliers only notice that the price of their particular product has fallen. Thinking there has been a fall in the relative price of their product, they cut back on production. This is a demonstration of the

• misperceptions theory of the short-run aggregate supply curve.

• classical dichotomy theory of the short-run aggregate supply curve.

• sticky-price theory of the short-run aggregate supply curve.

• sticky-wage theory of the short-run aggregate supply curve.