Identify the effects of an increase in the aggregate demand on the price level, output, and employment in short run and long run.

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Chapter 10, Problem 10CQ

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Identify the effects of an increase in the aggregate demand on the price level, output, and employment in short run and long run.

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Suppose a country’s population is growing due to immigration. In the long run, output will ________ due to ________. remain unaffected; price adjustment increase; an increase in short-run aggregate supply increase; an increase in long-run aggregate supply increase; an increase in both long-run and short-run aggregate supply increase; an increase in aggregate demand Which of the following would cause an upward movement along the aggregate demand curve? The value of the dollar increases. There is an increase in expected income. There is an increase in the expected price level. An increase in the price level increases the value of real wealth. An increase in housing prices increases the value of real wealth.

What is the effect of a rise in the U.S. price level when the prices in other countries do not change? A. U.S. aggregate demand increases because U.S. exports increase and U.S. imports decrease. B. The quantity of U.S. real GDP demanded decreases because U.S. exports decrease and U.S. imports increase. C. U.S. aggregate demand decreases because U.S. exports decrease and U.S. imports increase. D. The quantity of U.S. real GDP demanded increases because U.S. exports increase and U.S. imports decrease.

Suppose that the U.S. economy is at full employment when strong economic growth in Asia increases the demand for U.S.-produced goods and services. How the U.S. price level and real GDP will change in the short run?