Chapter 12 part 1&2
an increase in personal income tax rates will cause
decrease (shift left) in aggregate demand
the real-balances effect on aggregate demand suggests that a
lower price level will increase the real value of many financial assets and therefore cause an increase in spending
the fall in the prices of inputs will shift the aggregate
supply cure rightward
A fall in the prices of inputs will shift the aggregate
supply curve rightward
The economy experiences a decrease in the price level and an increase in real domestic output. Which is a likely explanation?
Business costs and wage rates have decreased
A decrease in business taxes will tend to
Increase aggregate demand and increase aggregate supply
the following factors explain the inverse relationship between the price level and the total demand for output, except
a substitution effect
which of the following events would most likely reduce aggregate demand
an increase in real interest rates
which of the following effects best explains the downward slopes of the aggregate demand curve
an interest-rate effect
the short-run aggregate supply curve
becomes steep at output levels above the full-employment output
In the mid-1970s, changes in oil prices greatly affected U.S. inflation. When oil prices rose, the U.S. would experience
cost-push inflation and falling output
cost-push inflation is characterized by a
decrease in aggregate supply and no change in aggregate demand
The U.S. economy was able to achieve full employment with relative price level stability between 1996 and 2000 because aggregate
demand increased and aggregate supply increased
the U.S. economy was able to achieve full employment with relative price level stability between 1996 and 2000 because aggregate
demand increased and aggregate supply increased
Demand-pull inflation is illustrated in the short run aggregate supply-aggregate demand model as a shift of the aggregate
demand to the right
if the price of crude oil decreases, then this would most likely
increase aggregate supply in the U.S.
If Congress passed new laws significantly increasing the regulation of business, this action would tend to
increase per-unit production costs and shift the aggregate supply curve to the left
if congress passed new laws significantly increasing the regulation of business, this action would tend to
increase per-unit production costs and shift the aggregate supply curve to the left
an expected increase in the prices of consumer goods in the near future will
increase(shift right) in aggregate demand now
the aggregate demand curve shows the
inverse relationship between the price level and the quantity of real GDP purchased
an aggregate supply curve represents the relationship between the
price level and the production of real domestic output
when the general price level in our economy increases, the following effects occur excpet
the purchasing power of people's savings will increase
which would be considered to be one of the factors that shift the aggregate supply curve in the short run? a change in
government spending
a decrease in business taxes will tend to
increase aggregate demand and increase aggregate supply
an increase in productivity will
increase aggregate supply
If the price of crude oil decreases, then this would most likely
increase aggregate supply in the U.S.
the foreign purchases effect on aggregate demand suggests that a
rise in our domestic price level will increase our imports and reduce our exports, thereby reducing the net exports component of aggregate demand
a decrease in aggregate supply means
the real domestic output would decrease and the price level would rise
the long-run aggregate supply curve
vertical
an increase in aggregate demand is most likely to be caused by
a decrease in the tax rates on household income
the immediate-short-run aggregate supply curve
horizontal
the interest rate effect on aggregate demand indicates that
decrease in the price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending
demand-pull inflation is illustrated in the short run aggregate supply-aggregate demand model as a shift of the aggregate
demand to the right