Refer to the diagrams, in which AD1 and AS1 are the "before" curves and AD2 and AS2 are the "after" curves. Other things equal, a decline in productivity is depicted by:
answer
panel (B) only
question
Refer to the diagram. If the aggregate supply curve shifted from AS0 to AS1 and the aggregate demand curve remains at AD0, we could say that:
answer
aggregate supply has decreased, equilibrium output has decreased, and the price level has increased
question
Refer to the diagrams, in which AD1 and AS1 are the "before" curves and AD2 and AS2 are the "after" curves. Growth, full-employment, and price stability are depicted by:
answer
panel (C) only.
question
The foreign purchases effect suggests that a decrease in the U.S. price level relative to other countries will:
answer
increase U.S. exports and decrease U.S. imports.
question
In the diagram, the economy's long-run aggregate supply curve is shown by line:
answer
1
question
Refer to the diagram. If the initial aggregate demand and supply curves are AD0 and AS0, the equilibrium price level and level of real domestic output will be:
answer
F and C, respectively.
question
Other things equal, if the national incomes of the major trading partners of the United States were to rise, the U.S.:
answer
aggregate demand curve would shift to the right.
question
Refer to the diagrams, in which AD1 and AS1 are the "before" curves and AD2 and AS2 are the "after" curves. Other things equal, inflation is absent in:
answer
panels (A) and (C).
question
Refer to the diagrams, in which AD1 and AS1 are the "before" curves and AD2 and AS2 are the "after" curves. A recession is depicted by:
answer
panels (A) and (B).
question
In which of the following sets of circumstances can we confidently expect inflation?
answer
Aggregate supply decreases and aggregate demand increases.
question
In the figure, AD1 and AS1 represent the original aggregate supply and demand curves and AD2 and AS2 show the new aggregate demand and supply curves. The change in aggregate supply from AS1 to AS2 could be caused by:
answer
the increase in productivity.
question
In the diagram, a shift from AS3 to AS2 might be caused by an increase in:
answer
productivity.
question
The aggregate supply curve (short run):
answer
is steeper above the full-employment output than below it.
question
Which of the following would most likely shift the aggregate demand curve to the right?
answer
An increase in stock prices that increases consumer wealth.
question
The aggregate demand curve is:
answer
downsloping because of the interest-rate, real-balances, and foreign purchases effects.
question
In the diagram, the economy's short-run AS curve is line ___ and its long-run AS curve is line ___.
answer
2;1
question
If investment decreases by $20 billion and the economy's MPC is .5, the aggregate demand curve will shift:
answer
leftward by $40 billion at each price level
question
A decline in investment will shift the AD curve to the:
answer
left by a multiple of the change in investment.
question
In the diagram, a shift from AS2 to AS3 might be caused by a(n):
answer
increase in business taxes and costly government regulation.
question
In an effort to avoid recession, the government implements a tax rebate program, effectively cutting taxes for households. We would expect this to
answer
increase aggregate demand.
question
The economy's long-run aggregate supply curve:
answer
is vertical.
question
If investment increases by $10 billion and the economy's MPC is .8, the aggregate demand curve will shift:
answer
rightward by $50 billion at each price level.
question
In the diagram, a shift from AS1 to AS3 might be caused by a(n):
answer
increase in the prices of imported resources.
question
The real-balances effect indicates that:
answer
a higher price level will decrease the real value of many financial assets and therefore reduce spending.
question
Graphically, demand-pull inflation is shown as a:
answer
rightward shift of the AD curve along an upsloping AS curve.
question
The interest-rate effect suggests that:
answer
an increase in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending.
question
Other things equal, a reduction in personal and business taxes can be expected to:
answer
increase both aggregate demand and aggregate supply.
question
The foreign purchases effect:
answer
moves the economy along a fixed aggregate demand curve.
question
Graphically, the full-employment, low-inflation, rapid-growth economy of the last half of the 1990s is depicted by a:
answer
rightward shift of the aggregate demand curve and a rightward shift of the aggregate supply curve.
question
Suppose that nominal wages fall and productivity rises in a particular economy. Other things equal, the aggregate:
answer
supply curve will shift rightward.
question
Refer to the diagrams, in which AD1 and AS1 are the "before" curves and AD2 and AS2 are the "after" curves. Cost-push inflation is depicted by:
answer
panel (B) only.
question
Which one of the following would not shift the aggregate demand curve?
answer
A change in the price level.
question
An economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the:
answer
multiplier effect.
question
The aggregate supply curve (short run):
answer
slopes upward and to the right.
question
Which of the following would not shift the aggregate supply curve?
answer
An increase in the price level
question
Other things equal, if the U.S. dollar were to depreciate, the:
answer
aggregate supply curve would shift to the left.
question
The aggregate demand curve:
answer
shows the amount of real output that will be purchased at each possible price level.
question
Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4. Answer the following question on the basis of this information.
Refer to the information. Given an increase in input price from $4 to $6, we would expect the aggregate:
answer
supply curve to shift to the left.
question
Which of the following would most likely reduce aggregate demand (shift the AD curve to the left)?
answer
An appreciation of the U.S. dollar.
question
Refer to the diagram. Other things equal, a shift of the aggregate supply curve from AS0 to AS1 might be caused by a(n):
answer
increase in government regulation.
question
Graphically, cost-push inflation is shown as a:
answer
leftward shift of the AS curve.
question
Productivity measures:
answer
real output per unit of input.
question
Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4. Answer the following question on the basis of this information.
The per-unit cost of production in the economy described is:
answer
$2.
question
In the figure, AD1 and AS1 represent the original aggregate supply and demand curves and AD2 and AS2 show the new aggregate demand and supply curves. The changes in aggregate demand and supply in the diagram produce:
answer
an expansion of real output and a stable price level.
question
Other things equal, a decrease in the real interest rate will:
answer
expand investment and shift the AD curve to the right.
question
What percentage of the average U.S. firm's costs are accounted for by wages and salaries?
answer
75
question
The short-run aggregate supply curve represents circumstances where:
answer
input prices are fixed, but output prices are flexible.
question
Other things equal, an improvement in productivity will:
answer
shift the aggregate supply curve to the right.
question
Other things equal, appreciation of the dollar:
answer
decreases aggregate demand in the United States and may increase aggregate supply by reducing the prices of imported resources.
question
Refer to the diagrams, in which AD1 and AS1 are the "before" curves and AD2 and AS2 are the "after" curves. Other things equal, a decline in net exports caused by the foreign purchases effect of a price-level increase is depicted by the:
answer
move from point a to point b in panel (B).
question
Refer to the diagrams, in which AD1 and AS1 are the "before" curves and AD2 and AS2 are the "after" curves. Other things equal, a decline in net exports caused by a change in incomes abroad is depicted by:
answer
panel (A) only.
question
The aggregate supply curve:
answer
shows the various amounts of real output that businesses will produce at each price level.
question
The equilibrium price level and level of real output occur where:
answer
the aggregate demand and supply curves intersect.
question
Per-unit production cost is:
answer
total input cost divided by units of output.
question
In the diagram, a shift from AS1 to AS2 might be caused by:
answer
a decrease in the prices of domestic resources.
question
aggregate demand-aggregate supply (AD-AS) model
answer
the macroeconomic model that uses aggregate demand and aggregate supply to determine and explain the price level and the real domestic output (real GDP)
question
aggregate demand (AD)
answer
a schedule or curve that shows the total quantity of goods and services that would be demands (purchased) at various price levels
the tendency for increases in the price level to lower the real value (or purchasing power) of financial assets with fixed money value and, as a result, to reduce total spending and real output, and conversely for decreases in price level.
question
interest-rate effect
answer
the tendency for increases in the price level to increase the demand for money, raise interest rates, and, as a result, reduce total spending and real output in the economy (and the reverse for price-level decreases)
question
foreign purchases effect
answer
the inverse relationship between the net exports of an economy and its price level relative to foreign price levels
question
determinants of aggregate demand
answer
-change in consumer spending
- consumer wealth
- consumer expectations
- household borrowing
- taxes
-change in investment spending
- interest rates
- expected returns
- technology
- degree of excess capacity
- business taxes
-change in gov. spending
-change in net export spending
- national income abroad
- exchange rates
question
aggregate supply (AS)
answer
a schedule or curve showing the total quantity of goods and service that would be supplied (produced) at various price levels. this relationship varies depending on the time horizon and how quickly output prices and input prices can change
question
immediate-short-run aggregate supply curve
answer
an aggregate supply curve for which real output, but not the price level, changes when the aggregate supply curve that implies an inflexible price level
-horizontal line on AS curve
-input and output prices are fixed
question
short-run aggregate supply curve
answer
an aggregate supply curve relevant to a time period in which input prices (particularly nominal wages) do not change in response to changes in the price level
-curve looks kinda like a backwards C
-input is fixed but output varies
question
long-run aggregate supply curve
answer
the aggregate supply curve associated with a time period in which input prices (especially nominal wages) are fully responsive to changes in the price level
- vertical line on AS curve
-input and output prices vary
a measure of average output or real output per unit of input. Total output / total input. For example, productivity of labor is determined by dividing real output by hours of work
question
productivity formula
answer
total input / total input
question
equilibrium real output
answer
in the aggregate demand-aggregate supply (AD-AS) model, the price level at which aggregate demand equals aggregate supply; the price level at which the aggregate demand curve intersects the aggregate supply curve
question
changes in equilibrium
answer
-increases in AD: demand-pull inflation
-decreases in AD: recession and cyclical unemployment
- fear of price wars
- menu costs
- wage contracts
- moral, effort, and productivity
- minimum wage
-decreases in AS: cost-push inflation
-increases in AS: full employment with price-level stability
question
equilibrium price level
answer
the gross domestic product at which the total quanitty of final goods and final services purchased (aggregate expenditures) is equal to the total quantity of final goods services produced (the real domestic output); the real domestic output at which the aggregate demand curve intersects the aggregate supply curve
question
menu costs
answer
the reluctance of firms to cut prices during recessions (that they think will be short-lived) because of the costs of altering and communicating their price reductions; named after the cost associated with printing new menus at restaurants
question
efficiency wages
answer
an above-market (above-equilibrium) wage that minimizes wage costs per unit of output by encouraging greater effort or reducing turnover
Haven't found what you need?
Search for quizzes and test answers now
Quizzes.studymoose.com uses cookies. By continuing you agree to our cookie policy
