1) An increase in aggregate demand raises real GDP with little or no inflation when the economy is operating below potential GDP and the short-run aggregate supply curve is relatively flat.
2) When equilibrium GDP equals potential GDP ($5,000 billion), an increase in exports shifts AD right and causes higher inflation, with little or no increase in real GDP.
3) If assets are inflation-indexed, there is no trade, and real interest rates do not change, the aggregate demand curve is vertical.
4) Shutting down nuclear plants raises energy costs, shifting SRAS left, resulting in higher prices and lower real GDP.
5) A 25% increase in nominal wages raises production costs, shifting SRAS left, causing inflation and lower real GDP. Labor earnings fall if prices rise more than wages or employment declines.
6) A 25% cut in nominal wages shifts SRAS right, increasing real GDP and lowering the price level, helping the economy recover from recession.
7) A flat aggregate supply curve implies real GDP is independent of the price level. A decrease in AD reduces GDP without changing prices.
8) Lower real interest rates increase investment, shifting AD right, raising real GDP with little inflation when the economy has excess capacity.
9) A severe drought shifts SRAS left, causing higher prices and lower real GDP (inflation and recession).
10) Aggregate demand can rise without inflation when aggregate supply also increases, due to growth in resources and productivity.