Warm up CHAP 12
The economy's long-run AS curve assumes that wages and other resource prices
eventually rise and fall to match upward or downward changes in the price level.
The determinants of aggregate demand
explain shifts in the aggregate demand curve.
Which one of the following would not shift the aggregate demand curve?
a change in the price level
The aggregate demand curve
shows the amount of real output that will be purchased at each possible price level.
What percentage of the average U.S. firm's costs is accounted for by wages and salaries?
75
In which of the following sets of circumstances can we confidently expect inflation?
Aggregate supply decreases and aggregate demand increases.
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.
Other things equal, if the U.S. dollar were to depreciate, the
aggregate supply curve would shift to the left
Which of the following would most likely reduce aggregate demand (shift the AD curve to the left)?
an appreciation of the U.S. dollar
The factors that affect the amounts that consumers, businesses, government, and foreigners wish to purchase at each price level are the
determinants of aggregate demand.
The aggregate demand curve is
downsloping because of the interest-rate, real-balances, and foreign purchases effects.
A decline in investment will shift the AD curve to the
left by a multiple of the change in investment.
An economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the
multiplier effect.
In the diagram, a shift from AS3 to AS2 might be caused by an increase in
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.