The aggregate demand curve shows the relationship between
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the price level and the quantity of real GDP demanded by​ households, firms, and the government.
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The short run aggregate supply curve shows the relationship in the short run between
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the price level and the quantity of real GDP supplied by firms.
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The aggregate demand curve slopes downward for all of the following reasons​ except:
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A lower price level makes imports from other countries less​ expensive, and U.S. citizens buy more imports.
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Aggregate demand​ (AD) is comprised of expenditure components that​ include:
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government​ spending, consumption,​ investment, and net exports.
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The wealth effect refers to the fact that
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when the price level​ falls, the real value of household wealth​ rises, and so will consumption.
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The interest rate effect refers to the fact that a higher price level results in
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higher interest rates and lower investment.
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The​ international-trade effect refers to the fact that an increase in the price level will result in
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a decrease in exports and an increase in imports.
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The​ long-run aggregate supply curve is vertical because in the long​ run,
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changes in the price level do not affect potential​ GDP, as potential GDP depends on the size of the labor​ force, capital​ stock, and technology.
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The​ short-run aggregate supply curve slopes upward because of all of the following reasons except
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in the short​ run, an unexpected change in the price of an important resource can change the cost to firms.
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The SRAS curve will
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shift to the right if there is an
increase in the labor force or capital accumulation
an increase in productivity
a technological change
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The SRAS curve will
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shift to the left if there is an
increase in the expected price of an important natural resource
an increase in the adjustment of workers' and firms' prior underestimation of the price level
an increase in expected future prices
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Menu costs are
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the costs to firms of changing prices.
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If menu costs were​ eliminated,
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the​ short-run aggregate supply curve will be
upward sloping because of
wage price stickiness and slow wage adjustment by firms
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Which of the following statements is​ true?
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In the long​ run, changes in the price level do not affect the level of real GDP.
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Which of the following factors will cause the​ long-run aggregate supply curve to shift to the​ right?
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technological change
the accumulation of more machinery and equipment
an increase in the number of workers in the economy
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