ECON 1102 Chapter Notes - Chapter 16: Laffer Curve, Phillips Curve, Aggregate Supply

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crimsonclam569

4 Apr 2016

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From the short run as to the long run as. Demand pull in ation occurs when an increase in aggregate demand pulls up the price level. In the short run, demand pull in ation drives up prices and output. In the long run, output is restored to gdp and only the price level is higher. Cost push in ation arises from factors that increase the cost of production at each price level. If the government attempts to maintain full employment, an in ationary spiral may occur. Otherwise, the recession will linger, with high unemployment and a loss of real output. Modern economies tend to experience positive rates of in ation due to: Economic growth causing rightward shifts of the as curve. Central banks then cause rightward shifts of the ad curve so that it proceeds just a little faster than the de ationary rightward shifts of the as curve.

Related Questions

Demand-pull inflation is caused by

A. Wage increases that are higher than productivity growth.

B. High levels of aggregate demand in the short run.

C. An increase in aggregate supply that pulls up both output and the price level.

D. Recession.

E. An increase in the costs of production, which pulls prices higher.

sapphirejackal278

1. If the price level doubles and the real output doesn't change, then nominal output also doubles.
2. Inflation makes it less difficult to interpret the information conveyed by prices.

3. Laissez-faire economists oppose government intervention in the market process.

4. Active demand management policies are based on the work of JohnMaynard Keynes.

5. In the AS/AD model, as the price level rises, the real value of assets increases, causing consumption to increase. This is one reason why the aggregate demand curve slopes down.

6. The short-run aggregate supply curve is upward sloping in part because increases in aggregate demand cause some firms to increase their price markups.

7. If productivity and wages both raises by 3 percent, then the short-run aggregate supply curve does not shift.

8. The long-run aggregate supply curve is vertical because all prices adjust in the long run.

9. If the economy is not in long-run equilibrium and other things are equal, then prices will eventually adjust to bring the economy to long-run equilibrium.

10. Most economists agree that it is possible for fiscal policy to fine-tune the economy.

bluewolf591

Explain whether each of the following statements is true or false, justifying your response.

The short-run aggregate supply (SAS) curve slopes upward because households spend more as their incomes increase.

The long-run aggregate supply curve can never shift.

Either a decrease in the nominal money supply by the Federal Reserve, all else held constant, or an increase in the price level, all else held constant, will shift the aggregate demand (AD) curve to the left.

The Keynesian portion of the short-run aggregate supply (SAS) curve would be relevant during a recessionary situation.

Stagflation occurs when the aggregate demand (AD) curve shifts out on the upward sloping portion of the short-run aggregate supply (SAS) curve.

skywalrus152

ECON 1102 Chapter Notes - Chapter 16: Laffer Curve, Phillips Curve, Aggregate Supply

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