If aggregate supply decreases, then inflation _______________ and unemployment _______________. a)increases; increases b) increases; decreases  c) decreases; increases  d) decreases; decreases  e) decreases; stays the same

If the price level rises and the money wage rate  rises by the same percentage, what happens to the quantity of real GDP supplied? Along which aggregate supply curve does the economy move?

Which of the following would shift aggregate demand to the right? 1) The value of the dollar increases. 2) There is a decline in consumer confidence. 3) Stock market values increase by 20%. 4) College graduates are having a difficult time finding jobs. 5) A fall in the price level increases the value of real wealth.

For the Canadian economy, what is the least important of the three reasons for the downward slope of the aggregate-demand curve? a. wealth effect b. interest-rate effect c. exchange-rate effect d. real-wage effect

Demand–pull inflation occurs when  increases until equilibrium output exceeds the full employment level.

Which is the correct order once the AD or SRAS has shifted to start the inflation process? a. Prices increase in the shortage markets. b. Shortages develop in some markets. c. Prices throughout the economy rise. 

Which of the following is likely to occur if an increase in legal immigrants significantly reduces the wages of workers, ceteris paribus? A. Aggregate supply will decrease (shift left). B. Aggregate supply will increase (shift right). C. Aggregate demand will increase (shift right). D. Aggregate demand will decrease (shift left).

Deflation is particularly bad for an economy in recession for all of the following reasons EXCEPT a-with deflation people spend less  expecting prices to be lower in the future b- the rising prices makes goods more expensive c- with deflation the value of assets declines while the value of loans does not - this lowers wealth and further depresses spending

What effects would each of the following have on aggregate demand or       aggregate supply?  Justify your answer. In each case use a diagram to show the expected effects on the equilibrium price level and real output level in the economy.  Assume that all other things remain constant and prices are inflexible downward.  (a) A reduction in interest rates at each price level   (b) A sizable increase in labor productivity.   (c) The nation’s currency appreciates against its major trading partners  .

Is the equilibrium at full employment, inflation or recession? Price level Aggregate Demand Aggregate Potential GDP Supply 50 $700 $100 100 $600 $200 150 $450 $450 200 $300 $480 250 $220 $500 300 $150 $510 $510 350 $100 $512