Chapter 13 The Aggregate Demand–Aggregate SupplyModel

Chapter 13

The Aggregate Demand–Aggregate SupplyModel

Concept Map

      I.  Business Cycle

     II.  Aggregate Demand

          A.  Slope of the Aggregate Demand Curve

               1.  The Wealth Effect

               2.  The Interest Rate Effect

               3.  The International Trade Effect

          B.  Shifts of the Aggregate Demand Curve

    III.  Aggregate Supply

          A.  Long-Run Aggregate Supply

          B.  Short-Run Aggregate Supply

    IV.  Equilibrium in the Aggregate Demand–Aggregate Supply Model

          A.  Adjusting to Shifts in Long-Run Aggregate Supply

          B.  Adjusting to Shifts in Short-Run Aggregate Supply

          C.  Adjusting to Shifts in Aggregate Demand

MULTIPLE-CHOICE QUESTIONS

    1.  Which of the following is true about recessions in the United States?

         a.  They are more common today than in the past.

         b.  They are rarer today than in the past.

         c.  They occur predictably about every two years.

         d.  They occur predictably about every eight years.

         e.  They are often caused by changes in government policy.

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    2.  How many recessions have there been in the United States since 1982?

         a.  none

         b.  one

         c.  two

         d.  three

         e.  four

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    3.  The term ___________ is a popular way to describe the recession-expansion pattern followed by the economy.

         a.  business cycle

         b.  output cycle

         c.  inflation cycle

         d.  unemployment cycle

         e.  long-run cycle