1. In the short run, ____________ wages are constant but ____________ move inversely

to changes in the _________________.

2. If inflation occurs in the short run, real wages will do what?

3. What are the 4 supply factors that can shift the PPC to the right?

4. If the PPC shifts to the right, what other curve also moves to the right?

5. If interest rates decrease, how will that affect investment and capital stock?

6. If interest rates increase, how will investment and capital stock be affected?

7. Changes to investment affect aggregate demand in the _________ run and, by

affecting capital stock, aggregate supply in the ____________ run.

8. Assuming the money supply remains constant, if the price level and real income

in the economy both increase, what will happen to the velocity of money?

9. If the velocity of money remains constant and the money supply increases, what

will happen to nominal GDP?

10. What is the quantity theory of money?

11. The crowding-out effect only occurs when what type of policy is implemented?

12. When the government cuts taxes or increases government spending, what

happens to the government's budget deficit?

13. If the government's budget deficit increases, what happens to the demand for

loanable funds and the real interest rate?