Econ ch 12

$0.10.

An economy is employing 2 units of capital, 5 units of raw materials, and 8 units of labor to produce its total output of 640 units. Each unit of capital costs $10; each unit of raw materials, $4; and each unit of labor, $3. The per-unit cost of production in this economy is $0.10. $0.05. $1.00. $0.50.

the tax rates on household income.

An increase in aggregate demand would be most likely caused by a decrease in: the tax rates on household income. the wealth of consumers. consumer confidence. expected future prices.

leftward shift of the AS curve.

Graphically, cost-push inflation is shown as a leftward shift of the AD curve. rightward shift of the AS curve. leftward shift of the AS curve. rightward shift of the AD curve.

rightward shift of the AD curve along an upsloping AS curve

Graphically, demand-pull inflation is shown as a rightward shift of the AD curve along an upsloping AS curve leftward shift of the AS curve along a downsloping AD curve. rightward shift of the AD curve along a downsloping AS curve. leftward shift of the AS curve along an upsloping AD curve.

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 will tend to: increase per-unit production costs and shift the aggregate demand curve to the left. increase per-unit production costs and shift the aggregate demand curve to the right. increase per-unit production costs and shift the aggregate supply curve to the right. increase per-unit production costs and shift the aggregate supply curve to the left.

aggregate demand decreases.

If the dollar appreciates in value relative to foreign currencies: aggregate demand decreases. aggregate demand increases. the quantity of real domestic output demanded decreases. the quantity of real domestic output demanded increases.

3; 2; 1

In the diagram, the economy's immediate-short-run AS curve is line ______, its short-run AS curve is _____, and its long-run AS curve is line ______. 3; 2; 1 1; 2; 3 2; 3; 4 1; 2; 4

are the costs to firms of changing prices and communicating them to customers.

Menu costs increase during recession. are sunk costs and therefore should be disregarded. decrease during recession. are the costs to firms of changing prices and communicating them to customers.

increase both aggregate demand and aggregate supply.

Other things equal, a reduction in personal and business taxes can be expected to increase both aggregate demand and aggregate supply. increase aggregate demand and decrease aggregate supply. decrease both aggregate demand and aggregate supply. decrease aggregate demand and increase aggregate supply.

aggregate supply curve would shift to the left.

Other things equal, if the U.S. dollar were to depreciate, the aggregate supply curve would shift to the right. aggregate demand curve would remain fixed in place. aggregate demand curve would shift to the left. aggregate supply curve would shift to the left.

total input cost divided by units of output.

Per-unit production cost is total input cost divided by units of output. real output divided by inputs. units of output divided by total input cost. a determinant of aggregate demand.

increases from Q1 to Q2, while the price level rises.

Refer to the above diagram, when AD1 shifts to AD2, real output: increases from Q1 to Q2, while the price level rises. stays the same, while the price level rises. increases from Q1 to Q2, while the price level stays the same. increases from Q1 to Q3, while the price level declines.

A decrease in business taxes.

Refer to the above graph, which factor will shift AS1 to AS2? An increase in input prices. A decrease in business subsidies. A decrease in business taxes. An increase in real interest rates.

$600 billion.

Refer to the above graph, which shows an aggregate demand curve for a hypothetical economy. If the price level is 200, the quantity of real GDP demanded is: $500 billion. $800 billion. $600 billion. $700 billion.

$0.70.

Suppose that an economy produces 500 units of outputs. It takes 10 units of labor at $15 a unit and 4 units of capital at $50 a unit to produce this output. The per-unit cost of production is: $0.40. $0.70. $1.42. $1.24.

horizontal

The immediate-short-run aggregate supply curve is: horizontal vertical. upward sloping. downward sloping.

equilibrium level of real domestic output and prices.

The intersection of the aggregate demand and aggregate supply curves determines the: per-unit cost of production in the economy. equilibrium level of real domestic output and prices. shape of the aggregate supply curve. shape of the aggregate demand curve.

vertical, and a graph of the short-run aggregate supply curve is upsloping.

The long-run aggregate supply curve is: horizontal, and a graph of the short-run aggregate supply is upsloping. vertical, and a graph of the short-run aggregate supply curve is upsloping. downsloping, and a graph of the short-run aggregate supply is horizontal. upsloping, and a graph of the short-run aggregate supply is vertical.

direct relationship between the price level and real GDP produced.

The short-run aggregate supply curve shows the: direct relationship between the price level and real GDP purchased. inverse relationship between the price level and real GDP produced. direct relationship between the price level and real GDP produced. inverse relationship between the price level and real GDP purchased.

both input and output prices are fixed.

The slope of the immediate-short-run aggregate supply curve is based on the assumption that: input prices are flexible, but output prices are fixed. input prices are fixed, but output prices are flexible. neither input nor output prices are fixed. both input and output prices are fixed.

wages tend to be inflexible downward.

Wage contracts, menu costs, and the minimum wage are explanations for why: there is little support for the existence of a real-balances effect. competition results in price wars. wages tend to be inflexible downward. the aggregate demand curve slopes downward.

An increase in consumer wealth and a decrease in interest rates.

Which combination of factors would most likely increase aggregate demand? An increase in business taxes and a decrease in profit expectations. An increase in personal taxes and a decrease in government spending. An increase in household indebtedness and a decrease in foreign demand for products. An increase in consumer wealth and a decrease in interest rates.

an appreciation of the U.S. dollar

Which of the following would most likely reduce aggregate demand (shift the AD curve to the left)? a reduced amount of excess capacity an appreciation of the U.S. dollar increased consumer optimism regarding future economic conditions increased government spending on military equipment

an increase in the price level

Which of the following would not shift the aggregate supply curve? an increase in the price level a decline in business taxes a decline in the price of imported oil an increase in labor productivity

decrease in aggregate demand

A decrease in government spending on new public goods and services will cause a(n): increase in aggregate demand. decrease in aggregate demand. increase in the quantity of real domestic output demanded. decrease in the quantity of real domestic output demanded.