Chapter 29 example #87102

The real-balances, interest-rate, and foreign purchases effects all help explain: Select one: a. why the aggregate demand curve is downsloping. b. why the aggregate supply curve is upsloping. c. shifts in the aggregate demand curve. d. shifts in the aggregate supply curve.

The interest-rate effect suggests that: Select one: a. a decrease in the supply of money will increase interest rates and reduce interest-sensitive consumption and investment spending. b. an increase in the price level will increase the demand for money, reduce interest rates, and decrease consumption and investment spending. c. an increase in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending. d. an increase in the price level will decrease the demand for money, reduce interest rates, and increase consumption and investment spending.

The factors that affect the amounts that consumers, businesses, government, and foreigners wish to purchase at each price level are the: Select one: a. real-balances, interest-rate, and foreign purchases effects. b. determinants of aggregate supply. c. determinants of aggregate demand. d. sole determinants of the equilibrium price level and the equilibrium real output.

A decline in investment will shift the AD curve to the: Select one: a. left by a multiple of the change in investment. b. left by the same amount as the change in investment. c. right by the same amount as the change in investment. d. right by a multiple of the change in investment.

The immediate-short-run aggregate supply curve represents circumstances where: Select one: a. both input and output prices are fixed. b. both input and output prices are flexible. c. input prices are fixed, but output prices are flexible. d. input prices are flexible, but output prices are fixed.

The equilibrium price level and equilibrium level of real GDP occur at the intersection of the aggregate demand curve and the aggregate supply curve. Select one: True False

An increase in wealth from a substantial increase in stock prices will move the economy along a fixed aggregate demand curve. Select one: True False

The shape of the immediate-short-run aggregate supply curve implies that: Select one: a. total output depends on the volume of spending. b. increases in aggregate demand are inflationary. c. output prices are flexible, but input prices are not. d. government cannot bring an economy out of a recession by increasing spending.

The real-balances effect indicates that: Select one: a. an increase in the price level will increase the demand for money, increase interest rates, and reduce consumption and investment spending. b. a lower price level will decrease the real value of many financial assets and therefore reduce spending. c. a higher price level will increase the real value of many financial assets and therefore increase spending. d. a higher price level will decrease the real value of many financial assets and therefore reduce spending

An increase in business excise taxes will shift the aggregate supply curve leftward. Select one: True False

Suppose that nominal wages fall and productivity rises in a particular economy. Other things equal, the aggregate: Select one: a. demand curve will shift leftward. b. supply curve will shift rightward. c. supply curve will shift leftward. d. expenditures curve will shift downward.

The aggregate supply curve: Select one: a. is explained by the interest rate, real-balances, and foreign purchases effects. b. gets steeper as the economy moves from the top of the curve to the bottom of the curve. c. shows the various amounts of real output that businesses will produce at each price level. d. is downsloping because real purchasing power increases as the price level falls.

The aggregate supply curve (short-run) is upsloping because: Select one: a. wages and other resource prices match changes in the price level. b. the price level is flexible upward but inflexible downward. c. per-unit production costs rise as the economy moves toward and beyond its full-employment real output. d. wages and other resource prices are flexible upward but inflexible downward.

If aggregate demand decreases, and as a result, real output and employment decline but the price level remains unchanged, it is most likely that: Select one: a. the money supply has declined. b. the price level is inflexible downward and a recession has occurred. c. cost-push inflation has occurred. d. productivity has declined.

The interest-rate effect is one of the factors that explain why the aggregate demand curve is upward-sloping. Select one: True False

In an effort to avoid recession, the government implements a tax rebate program, effectively cutting taxes for households. We would expect this to: Select one: a. affect neither aggregate supply nor aggregate demand. b. increase aggregate demand. c. reduce aggregate demand. d. reduce aggregate supply.

Which one of the following would not shift the aggregate demand curve? Select one: a. a change in the price level b. depreciation of the international value of the dollar c. a decline in the interest rate at each possible price level d. an increase in personal income tax rates

The aggregate demand curve: Select one: a. is upsloping because a higher price level is necessary to make production profitable as production costs rise. b. is downsloping because production costs decline as real output increases. c. shows the amount of expenditures required to induce the production of each possible level of real output. d. shows the amount of real output that will be purchased at each possible price level

Which one of the following would increase per unit production cost and therefore shift the aggregate supply curve to the left? Select one: a. a reduction in business taxes b. production bottlenecks occurring when producers near full plant capacity c. an increase in the price of imported resources d. deregulation of industry

Other things equal, if the U.S. dollar were to depreciate, the: Select one: a. aggregate demand curve would remain unchanged. b. aggregate supply curve would shift to the left. c. aggregate supply curve would shift to the right. d. aggregate demand curve would shift to the left.

Other things equal, an improvement in productivity will: Select one: a. shift the aggregate demand curve to the left. b. shift the aggregate supply curve to the left. c. shift the aggregate supply curve to the right. d. increase the price level.

If aggregate demand increases and aggregate supply decreases, the price level: Select one: a. will decrease, but real output may increase, decrease, or remain unchanged. b. will increase, but real output may increase, decrease, or remain unchanged. c. and real output will both increase. d. and real output will both decrease.