If potential GDP is greater than actual GDP ...

a negative GDP gap is present (under PPF)

Which is probably one of the reasons why the current expansion has lasted so long?

Trump and the Congress passed a tax cut early in his term.

Which is a determinant of AD?

a change in government spending

The expansion which began in 2009 ...

is now the longest recorded in American history

As the price level in the economy declines...

the quantity of real GDP demanded goes up

Over the course of American history business cycles have been

getting milder, expansions longer and contractions briefer

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Aggregate Demand

18 termsStudBud Administration459 plays

High school or college level introduction to aggregate demand

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Questions 18

Answers

1
The AS/AD model has what on the Y axis?
real GDP
price level
quantity
price
2
Aggregate demand measures the demand for all goods and services in the economy
False
True
3
An increase in AD is seen when the AD curve
moves to the right
moves to the left
moves the same direction as SRAS
stays the same
4
The stock market falls in value
AD moves right
AD moves left
5
European incomes fall relative to those in the United States
AD right
AD left
6
Like regular demand, the aggregate demand curve is...
downsloping
upward sloping
7
If potential GDP is greater than actual GDP ...
A positive GDP gap is present (right of PPF)
the economy is meeting expectations
we are on our PPF
a negative GDP gap is present (under PPF)
8
The government cuts payroll taxes (social security taxes)
AD right
AD left
9
Which is probably one of the reasons why the current expansion has lasted so long?
The Federal Reserve increased interest rates several times in recent years
Trump and the Congress passed a tax cut early in his term.
Businesses tend to be worse at controlling inventory than in previous years
Income inequality is near record levels
10
The U.S. dollar depreciates
AD right
AD left
11
Which is a determinant of AD?
a change in government spending
productivity
changes in capital
input costs
12
The Fed lowers interest rates
AD right
AD left
13
The expansion which began in 2009 ...
Is a relatively short one compared to historical averages
is now the longest recorded in American history
has seen the yearly GDP growth rate exceed historical norms
has been of an average length
14
As the price level in the economy declines...
the quantity of real GDP demanded goes up
AD shifts right
15
Total household debt rises
AD left
AD right
16
Which is a reason AD slopes downward?
substitution effect
law of diminishing marginal utility
income effect
interest rate effect
17
SRAS is
upward sloping
vertical
horizontal
downsloping
18
Over the course of American history business cycles have been
worse in recent years compared to the late 19th and early 20th centuries
getting more intense; contractions are deeper
roughly of the same duration
getting milder, expansions longer and contractions briefer

Aggregate Demand Flashcards | StudBud