Ch 12 SB

Investment spending depends on the real ________ rate and the expected return from ________ . (Enter only one word per blank.)

Blank 1: interest Blank 2: investment

Select all that apply Which of the following are determinants of aggregate demand? Multiple select question. Change in input prices Change in investment spending Change in consumer wealth Change in government regulations

Change in investment spending Change in consumer wealth

A decrease in aggregate supply, assuming constant aggregate demand, will result in _______ inflation Multiple choice question. cost-push demand-push demand-pull cost-pull

cost-push

The two changes of the legal-institutional environment that will shift the aggregate supply curve are ______. Multiple choice question. subsidies and prices of imported resources input prices and productivity taxes and productivity taxes and government regulations

taxes and government regulations

the intersection of the aggregate demand and aggregate supply curves determines ______. Multiple choice question. the equilibrium price level and equilibrium real interest rate the equilibrium real interest rate and equilibrium real GDP the equilibrium price level and equilibrium real GDP

the equilibrium price level and equilibrium real GDP

When does the long run begin? Multiple choice question. Before the short-run begins When the very-short-run ends When the short-run ends Before the very short run begins

When the short-run ends

What is one result of a decrease in aggregate demand? Multiple choice question. Recession Potential output is less than actual output Full employment Higher expected returns on investment

input prices

In the immediate short run ______. Multiple choice question. input prices are fixed and output prices can vary output prices are fixed and output prices can vary input prices and output prices can vary input prices and output prices are fixed

input prices and output prices are fixed

The equilibrium price level and equilibrium output is determined by the ______. Multiple choice question. intersection of the inflation rate and per-unit production cost intersection of the aggregate demand curve and the aggregate supply curve point at which aggregate supply exceeds aggregate demand point at which aggregate demand exceeds aggregate supply

intersection of the aggregate demand curve and the aggregate supply curve

The aggregate demand curve will shift to the ____________ when there is a reduction in government purchases.

left

Suppose an economy is operating at its full-employment output. An increase in aggregate demand with constant aggregate supply will result in actual GDP being ______ than potential GDP.

more

The total dollar value of all assets owned by consumers in the economy less the dollar value of their liabilities is called consumer ________.

wealth

In the long-run, output prices and input prices are ______. Multiple choice question. unstable fixed self-correcting flexible

· flexible

The short-run aggregate supply curve is more useful than the curves for other time horizons because real-world economies ______. Multiple choice question. must change output levels before they change price levels typically change price levels and output levels simultaneously seldom change output levels or price levels must change price levels before they change output levels

· typically change price levels and output levels simultaneously

Aggregate supply is represented as a schedule or curve showing the relationship between a nation's ______level (index) and the amount of real domestic output that firms in the economy produce.

price

Total output divided by total inputs is the formula for ______.

productivity

An input price is a(n) ______ price while an output price makes up the price level. Multiple choice question. fixed intermediate implicit resource

resource

An increase in exports relative to imports will shift the aggregate demand (AD) curve to the ____.

right

Changes in consumer spending, investment, government spending and net export spending will: Multiple choice question. cause movement along the aggregate supply curve shift the aggregate supply curve shift the aggregate demand curve cause movement along the aggregate demand curve

shift the aggregate demand curve cause movemen

How is the real-balances effect defined? Multiple choice question. A higher price level reduces the purchasing power of the public's accumulated savings balances. A higher price level increases the purchasing power of the public's accumulated savings balances. A higher price level reduces the quantity of US goods demanded as net exports. A higher price level increases the demand for money and increases the interest rate.

A higher price level reduces the purchasing power of the public's accumulated savings balances.

What is shown by a schedule or curve showing the total quantity of goods and services that would be supplied at various price levels? Multiple choice question. Net exports Exchange rate Aggregate demand Aggregate supply

Aggregate supply

An increase in government spending is likely to _____. Multiple choice question. move the aggregate supply curve to the left have no effect on the aggregate demand curve shift the aggregate demand curve to the right shift the aggregate demand curve to the left

shift the aggregate demand curve to the right

What happened to the U.S. economy in the 1990s? Multiple select question. Unemployment fell to 4%. GDP grew by 4% annually. Inflation grew by 5% annually. Output fell by 5% annually.

Multiple select question. Unemployment fell to 4%. GDP grew by 4% annually.

Which of the following are the four components or determinants of aggregate demand? Multiple select question. Net export spending Resource prices Investment spending Government spending Productivity Consumer spending

Net export spending Investment spending Government spending Consumer spending

What will a rise in net exports do? Multiple choice question. Shift the aggregate demand curve to the left Shift the aggregate supply curve to the right Shift the aggregate supply curve to the left Shift the aggregate demand curve to the right

Shift the aggregate demand curve to the right

Select all the following that were characteristic of economic conditions in the United States during the 1990s. Multiple select question. Very low inflation Decreased productivity Full employment Strong growth Low aggregate demand

Very low inflation Full employment Strong growth

Investment spending refers to ______. Multiple choice question. adding to physical capital buying stocks and bonds adding to a 401K buying foreign bonds

adding to physical capital

A schedule or curve that shows the amount of a nation's output (real GDP) that buyers collectively desire to purchase at each possible price level is called Multiple choice question. aggregate demand. aggregate supply. demand. aggregate GDP.

aggregate demand.

Consumer wealth is defined as the total value of ______. Multiple choice question. total assets all investments plus the money in the bank all investments plus the money in the bank minus debt assets minus the total value of liabilities

assets minus the total value of liabilities

Aggregate _____ is a schedule or curve that shows the amount of real GDP that buyers collectively desire to purchase at each possible price level.

demand

An increase in aggregate demand, assuming constant aggregate supply, will result in ______ inflation. Multiple choice question. demand-pull naturally-induced quantitative cost-push

demand-pull

In the short run, output prices are ______ and ______ prices are ______. Multiple choice question. low; export; unpredictable flexible; input; sticky stable; import; high sticky; input; flexible

flexible; input; sticky