Macro Final
Which of the following shifts both the short-run and long-run aggregate supply right?
an increase in the capital stock
Which of the following shifts aggregate demand to the right?
an increase in the money supply, an increase in net exports due to something other than a change in domestic prices and an investment tax credit
Which of the following shifts the long-run aggregate supply curve to the right?
both an increase in the capital stock and technological improvements
Which of the following shifts aggregate demand to the right?
both an investment tax credit and a decrease in income tax rates
People had been expecting the price level to be 220 but it turns out to be 223. In response Green Leaf Paper Company increases the number of workers it employs. What could explain this?
both sticky price theory and sticky wage theory
Which of the following is included in the aggregate demand for goods and services?
consumption demand,investment demand and net exports
Other things the same, continued increases in technology lead to
continued increases in real GDP but not continued increases in the price level.
When interest rates fall
firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding.
When the money supply increases
interest rates fall and so aggregate demand shifts right.
Other things the same, the aggregate quantity of output supplied will decrease if the price level
is lower than expected so that firms believe the relative price of their output has decreased.
An increase in the expected price level shifts short-run aggregate supply to th
left, and an increase in the actual price level does not shift short-run aggregate supply.
Other things the same, a decrease in the price level motivates people to hold
less money, so they lend more, and the interest rate falls.
Other things the same, an increase in the price level makes consumers feel
less wealthy, so the quantity of goods and services demanded falls.
Other things the same, an increase in the price level makes the dollars people hold worth
less, so they can buy less.
The effects of a higher than expected price level are shown by
moving to the right along a given aggregate supply curve.
52) An increase in the price level and a reduction in output would result from
natural disasters such as hurricanes, floods, and droughts.
When the price level falls
people want to hold less money, the interest rate falls, and investment spending rises.
As the price level rises
people will want to buy fewer bonds, so the interest rate rises.
As the price level falls
people will want to buy more bonds, so the interest rate falls.
If the price level rises above what was expected and nominal wages are fixed, then
production become more profitable so firms will hire more workers.
The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,
production is more profitable and employment rises.
True or False? A decrease in the money supply causes the interest rate to rise so that investment falls.
quantity of output on the horizontal axis. Output is best measured by real GDP
The aggregate demand and aggregate supply graph has the
quantity of output on the horizontal axis. Output is best measured by real GDP.
The aggregate quantity of goods and services demanded changes as the price level rises because
real wealth falls, interest rates rise, and the dollar appreciates.
Which of the following is not a determinant of the long-run level of real GDP?
the price level
54) Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp decline in the stock market, a tax cut, an increase in the money supply and a decline in the value of the dollar. In the short run
the price level and real GDP will both rise, the price level and real GDP will both fall, and neither the price leave nor real GDP will change.
True or False? An increase in the expected price level shifts the short-run aggregate supply curve to the right.
False
True or False? If aggregate demand shifts right, then eventually price level expectations rise. This increase in price level expectations causes the aggregate demand curve to shift to the left back to its original position.
False
Which of the following shifts short-run, but not long-run aggregate supply right?
a decrease in the expected price level
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 shifts aggregate demand to the left?
a decrease in the money supply
Which of the following would cause prices and real GDP to rise in the short run?
aggregate demand shifts right
The price level rises in the short run if
aggregate demand shifts right or aggregate supply shifts left.
51) A decrease in the availability of an important major resource such as oil shifts
aggregate supply left.
53) Which of the following would raise the price level in both the short and long run?
an increase in government expenditures
49) Which of the following would increase output in the short run?
an increase in stock prices makes people feel wealthier, government spending increases, and firms chose to purchase more investment goods
Other things the same, if the long-run aggregate supply curve shifts right, prices
decrease and output increases.
Other things the same, if workers and firms expected prices to rise by 2 percent but instead they rise by 3 percent, then
employment and production rise.
Other things the same, an unexpected fall in the price level results in some firms having
higher than desired prices which depresses their sales.
Other things the same, if the price level rises by 2% and people were expecting it to rise by 5%, then some firms have
higher than desired prices which depresses their sales.
Suppose a stock market boom makes people feel wealthier. The increase in wealth would cause people to desire
increased consumption, which shifts the aggregate-demand curve right.
The long-run aggregate supply curve would shift right if immigration from abroad
increased or Congress abolished the minimum wage.
According to the misperceptions theory of aggregate supply, if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent, then the firm would believe that the relative price of what it produce had
increased, so it would increase production.
When taxes decrease, consumption
increases as shown by a shift of the aggregate demand curve to the right.
Other things the same, if the price level rises, then domestic interest rates
rise, so domestic residents will want to hold fewer foreign bonds.
Other things the same, when the price level rises, interest rates
rise, so firms decrease investment.
50) Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to
rise. This rise in price expectations shifts the short-run aggregate supply curve to the left.
If the price level falls, the real value of a dollar
rises, so people will want to buy more.
Aggregate demand shifts right if
taxes fall and shifts left is stock prices fall.
The long-run aggregate supply curve shifts right if
technology improves.