All flashcards
Flashcard 1: What is the short-run impact on price level when AD shifts left?
Answer: Price level falls. Leftward AD shift reduces demand, lowering price level.
Flashcard 2: What happens to the AD curve during a financial crisis?
Answer: AD shifts left. Financial crises reduce spending and investment confidence.
Flashcard 3: What shift occurs in AD if household wealth increases?
Answer: AD shifts right. Increased wealth boosts consumption and aggregate demand.
Flashcard 4: What is the effect on real GDP when AS increases in the short run?
Answer: Real GDP increases. Greater supply increases output at every price level.
Flashcard 5: What is the short-run impact on AS due to a natural disaster?
Answer: AS shifts left. Disasters damage productive capacity, reducing supply.
Flashcard 6: What is the short-run effect on price level if AS shifts left?
Answer: Price level rises. Leftward AS shift reduces supply, raising price level.
Flashcard 7: What happens to equilibrium real GDP if AS shifts right?
Answer: Real GDP increases. Rightward AS shift increases output at every price level.
Flashcard 8: What is the effect on AS of a decrease in labor costs?
Answer: AS shifts right. Lower labor costs reduce production costs, increasing supply.
Flashcard 9: What happens to AS when productivity improves?
Answer: AS shifts right. Higher productivity reduces per-unit costs, increasing supply.
Flashcard 10: What happens to AS in the short run when input prices rise?
Answer: AS shifts left. Higher input costs reduce profitability, decreasing supply.
Flashcard 11: What is the short-run impact on the price level when AD decreases?
Answer: Price level falls. Lower demand with fixed supply reduces equilibrium price.
Flashcard 12: What effect does an increase in government spending have on AD?
Answer: AD shifts right. Government spending is a direct component of aggregate demand.
Flashcard 13: What is the impact on price level if both AD and AS increase?
Answer: Indeterminate. Opposite effects on price make the net result uncertain.
Flashcard 14: What is the effect on AS if there is a reduction in regulation?
Answer: AS shifts right. Reduced regulation lowers costs, increasing supply.
Flashcard 15: What is the short-run effect on AS if there is an increase in business taxes?
Answer: AS shifts left. Higher business taxes increase costs, reducing supply.
Flashcard 16: What is the short-run effect on price level of a fall in oil prices?
Answer: Price level falls. Lower oil prices shift AS right, reducing price level.
Flashcard 17: What is the short-run effect on real GDP of a technological advancement?
Answer: Real GDP increases. Technology shifts AS right, increasing output at every price.
Flashcard 18: Identify the effect on real GDP if AS decreases.
Answer: Real GDP decreases. Lower supply at each price level reduces equilibrium output.
Flashcard 19: What is the effect on AD if there is an increase in net exports?
Answer: AD shifts right. Higher net exports directly increase aggregate demand.
Flashcard 20: Identify the effect on price level if AS decreases.
Answer: Price level rises. Reduced supply with fixed demand pushes prices higher.
Flashcard 21: What happens to AS if there is an improvement in technology?
Answer: AS shifts right. Technology improvements increase productivity and supply.
Flashcard 22: Identify the effect on real GDP if AD increases.
Answer: Real GDP increases. Higher demand leads to increased production and output.
Flashcard 23: What effect on AS might result from an increase in energy prices?
Answer: AS shifts left. Higher energy costs increase production costs, reducing supply.
Flashcard 24: Identify the effect on the equilibrium price level if AD increases.
Answer: Price level rises. Increased demand with fixed supply pushes prices higher.
Flashcard 25: What happens to AD when taxes increase?
Answer: AD shifts left. Higher taxes reduce disposable income, decreasing consumption.
Flashcard 26: What happens to AD when consumer confidence increases?
Answer: AD shifts right. Higher confidence increases consumption, boosting aggregate demand.
Flashcard 27: In the short run, how does a decrease in interest rates affect AD?
Answer: AD shifts right. Lower rates stimulate investment and consumption spending.
Flashcard 28: What is the effect on AD if consumer expectations become more optimistic?
Answer: AD shifts right. Optimism increases spending expectations and current demand.
Flashcard 29: What is the short-run effect on real GDP if both AD and AS decrease?
Answer: Real GDP decreases. Both curves shifting left reduces equilibrium output.
Flashcard 30: What is the impact on price level if both AD and AS increase?
Answer: Indeterminate. Opposite effects on price make the net result uncertain.