Aggregate Demand an Aggregate supply

The classical dichotomy and monetary neutrality are represented graphically by

a vertical long-run aggregate supply curve.

During recessions declines in investment account for about

2/3 of the decline in real GDP

The initial impact of the repeal of an investment tax credit is to shift

Aggregation demand left.

The recession of the 1970's are often attributed to

An increase in oil prices

John maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions

True

An increase in the money supply causes output to rise in the long run

False

as the price level falls

People will wan to buy fewer bonds so the interest rate falls.

As the price level falls,

The exchange rate rises so net exports rise.

In 2009 congress passed legislation providing states with funds to build roads and bridges. It also instituted a tax cuts. Which of these shifts aggregate demand right.

both the increased funding for states and the tax cuts.

When the dollar depreciates, U.S.

exports increase, while imports decrease

People will buy more if the price level

falls because falling prices increase the real value of a dollar.

The economic boom of the early 1940's resulted mostly from

increased government expenditures.

The misperceptions theory of the short-run aggregate supply curve says that if the price level is higher than people expected, then some firms believe that the relative prices of what they produce has

increased, so they increase production.

which part of real GDP fluctuates most over the course of the business cycle?

investment expenditures.

An increase in the money supply shifts the long-run aggregate supply cure to the right.

False

If businesses in general decide that they have overbuilt and so now have too much capital, their response to this would initially shift

aggregate demand left.

when the price level falls

Households want to lend more, so the interest rate falls, making the quantity of goods and services demanded rise.

the position of the long-run aggregate supply curve

Is determined by the things that determine output in the classical model.

The long-run aggregate supply curve

Is vertical, indicates monetary neutrality in the long rung, and is a graphical representation of the classical dichotomy.

the aggregate demand and aggregate supply model helps us to understand both short-run economic fluctuations and how the economy moves from the short to the long run.

True

which of the following is correct

When real GDP falls, the rate of unemployment rises.

Which of the following shifts the short-run aggregate supply curve to the right

a decrease in the expected price level.

Which of the following did the Fed do during the recession of 2008-2009

lowered the federal fund rate and purchased securities and loans.

Which of the following can explain the upward slope of the short-run aggregate supply curve

nominal wages are slow to adjust to chaning economic conditions.

As the price level rises

people will wan to buy fewer bonds, so the interest rate rises.

The quantity of aggregate goods and service demanded rises when the

price level falls, because the interest rate falls.

A relatively mild period of falling incomes and rising unemployment is called a

recession

During recessions

sales and profits fall

Other things the same, an increase in the expected price level shifts

short-run aggregate supply left.