Chapter 12 Macroeconomics HW

The short-run aggregate supply curve is flatter at outputs below the full-employment output. This is because below full-employment, there are

both A and B.

The table gives information about the relationship between input quantities and real domestic output in a hypothetical economy. Suppose that the price of each input decreased from $5 to $3. The per-unit cost of production in the economy would

decrease by 40 percent, and the aggregate supply curve would shift to the right.

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

3.

The short-run begins

after the immediate short run ends.

Refer to the diagrams, in which AD1 and AS1 are the "before" curves and AD2 and AS2 are the "after" curves. Other things equal, an increase in investment spending is depicted by

c.

The aggregate demand curve is

downward-sloping because of the interest-rate, real-balances, and foreign purchases effects.

In the accompanying table for a particular country, C is consumption expenditures, Ig is gross investment expenditures, G is government expenditures, X is exports, and M is imports. All figures are in billions of dollars. A decline in the international value of the dollar would

increase the values in column X, decrease the values in column M, and increase aggregate demand.

When deriving the aggregate demand (AD) curve from the aggregate-expenditures model, an increase in U.S. product prices would cause an increase in

interest rates and lower investment expenditures.

The aggregate supply curve (short-run) is upsloping because

per-unit production costs rise as the economy moves toward and beyond its full-employment real output.

The accompanying graph depicts an economy in the

short-run.

Refer to the graph. Which of the following factors does not explain a movement along the AD curve?

the expenditure multiplier effect

The economy experiences an increase in the price level and an increase in real domestic output. Which of the following is a likely explanation?

Net exports have increased.

The aggregate-expenditures model and the aggregate demand curve can be reconciled because, other things equal, in the aggregate-expenditures model,

the level of aggregate-expenditures and therefore the level of real GDP vary inversely with the price level.

Refer to the diagrams, in which AD1 and AS1 are the "before" curves and AD2 and AS2 are the "after" curves. Other things equal, a decline in net exports caused by a change in incomes abroad is depicted by

A.

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.