The figure illustrates aggregate demand and aggregate supply in Sparta. All the following events will increase Sparta's real GDP in the short run except ________________.

an increase in factor prices
a decrease in taxes
an increase in investment
an increase in government purchases

Suppose the value of the pound increases from $US1.50 to $US1.60. As a result, U.K. exports will _______, U.K. imports will _______, and U.K. aggregate demand will _______.

decrease; increase; increase
decrease; increase; decrease
increase; increase; increase
increase; decrease; increase

People expect that the El Nino effect this year will cause drought in Australia in coming years. If most firms expect their profits will fall during the next five years, Australia's ______________________ this year.

aggregate demand will decrease
long-run aggregate supply will increase
aggregate demand will increase
short-run aggregate supply will increase

The figure illustrates aggregate demand and aggregate supply in Sparta. Sparta's price level will rise above 100 if ____________________.

it uses better technology
the capital stock increases
taxes increase
the quantity of money increases

A decrease in the quantity of capital shifts the LAS curve ________ and the SAS curve _________.

rightward; rightward
rightward; leftward
leftward; rightward
leftward; leftward

The Great Depression lasted many years and can be characterized as a ___________________.

full-employment equilibrium
inflationary gap
long-run equilibrium
recessionary gap

An economy currently has a recessionary gap. An increase in wages will _______ the recessionary gap and ______the price level.

decrease; decrease
increase; decrease
decrease; increase
increase; increase

The country of Mu has continuous strong economic growth and persistently steady price level. This situation is most likely the result of aggregate demand growing _____________________aggregate supply.

at the same pace as short-run
much faster than long-run
much slower than long-run
at much the same pace as long-run

The economy is initially at point c in the figure. An increase in ______________ will move the economy to __________ and then an increase in _______________ will move the economy to ______________.

the wage rate; point b; government purchases; point a
government purchases; point b; factor prices; point a
the wage rate; point d; taxes; point a
taxes; point d; government purchases; point a

If aggregate demand grows only slightly faster than potential GDP, then the economy will ___________________.

experience economic growth with low inflation
experience recession
experience economic growth with high inflation
be at a business-cycle peak