Elements of Macroeconomics: Homework #6
Name:____________________
Section:____________________
Due 10/28 or 10/29 in assigned Section
[Part A] Short Questions (20 points, 2 points each)
Fill in the blanks
1. Demand curves, for specific goods, are downward sloping.
2. A fall in the overall price level is associated with higher output because of the wealth effect and
the interest rate effect.
3. A decrease in interest rates shifts the aggregate demand curve to the right.
4. An increase in household’ expectations of their future incomes shifts the aggregate demand
curve to the right because consumption spending increases.
5. The long-run aggregate supply curve shows the relationship in the long run between the price
level and the quantity of real GDP supplied.
6. In the long run, the level of real GDP is determined by the number of workers, the level of
technology, and the capital stock.
7. Prices and wages are said to be sticky when they do not respond quickly to changes in demand
or supply.
8. The static long-run macroeconomic equilibrium is achieved at the intersection of three curves;
the aggregate demand curve, the short-run aggregate supply curve, and the long-run aggregate
supply curve.
9. The short-run Phillips curve represents the short-run relationship between the inflation rate and
the unemployment rate.
10. The natural rate of unemployment is sometimes referred to as the non-accelerating inflation
rate of unemployment or NAIRU.
