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