Macro 8

An increase in personal income taxes will cause a(n) ________.

decrease (or shift left) in aggregate demand

A decrease in government spending will cause a(n) ________.

decrease in aggregate demand

An increase in aggregate demand is most likely to be caused by a(n) ________.

decrease in the tax rates on household income

If the dollar appreciates in value relative to foreign currencies, aggregate demand ________.

decreases because net exports decrease

The U.S. economy was able to achieve full employment with relative price level stability between 1996 and 2000 because aggregate ________.

demand increased and aggregate supply increased

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

An increase in expected future income will ________.

increase aggregate demand

In an effort to avoid recession, the government implements a tax rebate program, effectively cutting taxes for households. We would expect this to ________.

increase aggregate demand

An increase in productivity will ________.

increase aggregate supply

The long-run aggregate supply curve is ________.

vertical

Which of the following effects best explains the downward slope of the aggregate demand curve?

An interest-rate effect

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

Net exports have increased.

If the national incomes of our trading partners increase, then our aggregate demand ________.

increases because net exports increase

Which would most likely shift the aggregate supply curve? A change in the prices of ________.

resources

An increase in production costs is most likely to shift the ________.

short-run aggregate supply curve to the left

The upward slope of the short-run aggregate supply curve is based on the assumption that ________.

wages and other resource prices do not respond to price level changes

If aggregate demand increases and aggregate supply decreases, the price level ________.

will increase, but real output may increase, decrease, or remain unchanged