Macro Chap 12

Graphically, demand-pull inflation is shown as a:

rightward shift of the AD curve along an upsloping AS curve.

Other things equal, an improvement in productivity will

shift the aggregate supply curve to the right

The aggregate demand curve

shows the amount of real output that will be purchased at each possible price level.

In the above 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:

the increased availability of entrepreneurial talent.

The shape of the immediate-short-run aggregate supply curve implies that:

total output depends on the volume of spending

Which of the following is incorrect

When the price level increases, real balances increase, businesses and households find themselves wealthier and therefore increase their spendin

Which one of the following would not shift the aggregate demand curve?

a change in the price level

Other things equal, if the national incomes of the major trading partners of the United States were to rise, the U.S.:

aggregate demand curve would shift to the right.

In the above 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 above diagram produce:

an expansion of real output and a stable price level

The short-run aggregate supply curve represents circumstances where

input prices are fixed, but output prices are flexible

. If personal taxes were decreased and resource productivity increased simultaneously, the equilibrium:

output would necessarily rise.

The interest-rate effect suggests that

an increase in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending.

. In the above diagram, the economy's immediate-short-run aggregate supply curve is shown by line:

3

. Prices and wages tend to be:

. flexible upward, but inflexible downwar

The determinants of aggregate supply:

. include resource prices and resource productivity

If the price level increases in the United States relative to foreign countries, then American consumers will purchase more foreign goods and fewer U.S. goods. This statement describes:

. the foreign purchases effect

. In the above diagram, the economy's relevant aggregate demand and immediate-short-run aggregate supply curves, respectively, are lines

4 & 3

An economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the

D. multiplier effect