Econ Ch 12 HW
Refer to the graph. When output increases from Q1 and the price level decreases from P1, this change will
be caused by a shift in the aggregate supply curve from AS1 to AS3.
An increase in expected future income will:
increase aggregate demand
Refer to the diagram. Other things equal, a shift of the aggregate supply curve from AS0 to AS1 might be caused by an
increase in government regulation.
The aggregate supply curve (short-run)
slopes upward and to the right.
Deflation refers to a situation where
the price level falls; it could be caused by a shift of AD to the left.
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
Other things equal, an improvement in productivity will
shift the aggregate supply curve to the right.
Suppose that nominal wages fall and productivity rises in a particular economy. Other things equal, the aggregate:
supply curve will shift rightward.
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
Refer to the diagrams, in which AD1 and AS1 are the "before" curves and AD2 and AS2 are the "after" curves. A recession is depicted by
A and B
Refer to the diagrams, in which AD1 and AS1 are the "before" curves and AD2 and AS2 are the "after" curves. Other things equal, inflation is absent in
A and C
If the dollar appreciates in value relative to foreign currencies:
Aggregate demand decreases because net exports decrease
Which of the diagrams for the U.S. economy best portrays the effects of an increase in foreign spending on U.S. products?
C
Suppose that an economy produces 2,400 units of output, employing 60 units of input, and the price of the input is $30 per unit. If productivity increases such that 3,000 units are now produced with the quantity of inputs still equal to 60, then per-unit production costs would
Decrease and aggregate supply would increase
The interest-rate effect on aggregate demand indicates that a
Decrease in the price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending
Refer to the figure. If the price level is downwardly inflexible and the aggregate demand curve shifts from AD2 to AD1, the multiplier effect on real GDP will be a decrease from
Q2 to Q4
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. If the per-unit price of raw materials rises from $4 to $8 and all else remains constant, the aggregate:
The supply curve would shift to the left
An increase in aggregate demand is most likely to be caused by which of the following?
a decrease in the tax rates on household income
Refer to the diagram. If the aggregate supply curve shifted from AS0 to AS1 and the aggregate demand curve remains at AD0, we could say that
aggregate supply has decreased, equilibrium output has decreased, and the price level has increased.
Which of the following would not shift the aggregate supply curve?
an increase in the price level
The real-balance effect pertains to the effect of
price changes on aggregate demand, while the wealth effect refers to the impact of changes in wealth on aggregate demand.
In which of the following sets of circumstances can we confidently expect inflation?
Aggregate supply decreases and aggregate demand increases.
A change in which of the following factors would shift the aggregate supply curve?
Government regulation
The real-balances effect on aggregate demand suggests that a
Lower price level will increase the real value of many financial assets and therefore cause an increase in spending
If today, prospective car buyers expect a surge in the supply of cars on the market next week that will cause the price of cars to substantially decline, they will
Wait for the price of cars to go down before buying, shifting aggregate demand to the left