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Which of the following enhance the expected returns on investment and thus increase aggregate demand?

new and improved technology

The short-run is the period in which ______.

output prices are flexible but input prices are fixed or highly inflexible

The interest-rate effect occurs when a higher price level decreases the demand for money, thereby increasing the interest rate, assuming a fixed money supply. True or False

false

Which of the following would be effects on the price of machinery when the cost of machinery components increases?

per-unit production prices for machinery would rise; the aggregate supply curve would shift to the left

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

price

New and improved technology, seen as investment spending by firms will lead to a(n) ___ in aggregate demand.

increase

the AD curve will shift to the right when consumers expect their future incomes to

increase

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

increased labor demand, increased production costs

What is a major factor in per-unit production costs and therefore a key determinant of aggregate supply?

input prices

In the short run ____

input prices are fixed and output prices can vary

One of the reasons that the short run aggregate supply curve is upsloping is because ____ prices are fixed while _____ prices are variable

input, output

Select all the choices that explain what happens with rising price levels.

purchasing power drops, people demand less output, real balances drop

If an economy is producing beyond its full employment output, nominal wages will start to increase, which causes the short-run aggregate supply curve to ______.

shift left

factors of change in AD

spending, expectations, interest rates, returns, national income abroad, exchange rates, taxes

Manufacturing firms expect steel prices to decrease significantly.

AS shift right

Technological changes enable workers to be more productive.

AS shift right

The complete disintegration of OPEC, causing oil prices to fall by one-half.

AS shift right

The spread of democracy around the world increases consumer confidence in the United States.

AD shift right

A 12 percent increase in nominal wages (with no change in productivity).

AS shift left

A hurricane destroys manufacturing plants

AS shift left

A new national tax on producers based on the value added between the costs of the inputs and the revenue received from their output.

AS shift left

A revolution in Iran results in a significant reduction in the world's supply of oil.

AS shift left

Employers are required to provide paid sick leave to part-time as well as full-time employees.

AS shift left

A new computer chip is developed that is faster and cheaper than previous chips.

AS shift right

A sizable increase in labor productivity (with no change in nominal wages).

AS shift right

A stock market crash reduces people's wealth.

AD shift left

Which of the following explain the reasons for the downward slope of the aggregate demand curve?

A higher price level decreases the purchasing power of the publics' accumulated savings balances.

How is the real-balances effect defined?

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

A widespread fear by consumers of an impending economic depression.

AD shift left

Consumers become more pessimistic about the economy.

AD shift left

A 10 percent across-the-board reduction in personal income tax rates

AD shift right

A major increase in spending for health care by the federal government.

AD shift right

A reduction in interest rates.

AD shift right

An increase in exports that exceeds an increase in imports (not due to tariffs).

AD shift right

Government spending increases.

AD shift right

The United States enters into an arms race with China, resulting in a significant increase in military spending.

AD shift right

The general expectation of coming rapid inflation.

AD shift right

Which of the following are true of an economy in its long-run equilibrium?

It achieves its potential output, Aggregate demand intersects both short-run and long-run aggregate supply at the same point.

In the long run, when the price level rises or falls, real output will do which of the following?

Stay the same, because nominal wages also rise or fall with the price level

When is equilibrium achieved in the short run?

When the downward-sloping aggregate demand curve intersects the upward-sloping aggregate supply curve

A decline in aggregate supply, assuming constant aggregate demand, will result in _______ in the quantity demanded for real GDP.

a decrease

Consumer wealth is defined as the total value of ______.

assets minus the total value of liabilities

In terms of aggregate supply and aggregate demand, the equilibrium price level is ______.

at the point of intersection of the aggregate demand and aggregate supply curves

A decline in expected returns will ______ investment and shift the aggregate demand curve to the ______.

decrease, left

factors of change in AS

domestic resource prices, prices of imported resources, productivity, business taxes, subsidies, regulations

When output falls below the economy's full-employment output level, which of the following adjustments will occur?

the demand for labor will decrease, nominal wages will decrease


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