Macro Exam (weeks 11 & 12)
Cost-Push inflation arises from:
A decrease in aggregate supply
The amount of real domestic output that will be purchased at each possible price level is best shown by the :
Aggregate demand curve
A shift in the aggregate demand curve would be caused by a change in:
An aggregate demand determinant
A decrease in government spending will cause a(n):
Decrease in aggregate demand
The intersection of the aggregate demand and aggregate supply curves determines the:
Equilibrium level of real domestic output and prices
Aggregate demand is a schedule which shows the various amounts of goods and services that only consumers and businesses desire to purchase at each possible price level
False
Cost-push inflation can be described as a rightward shift of the aggregate supply curve
False
The long-run aggregate supply curve slope is horizontal
False
When there is an increase in aggregate demand, there will be an increase in the price level but not in the level of output or employment
False
An increase in government spending will cause a(n):
Increase in aggregate demand
Demand-Pull inflation is associated with a(n):
Increase in aggregate demand
If congress raised taxes on businesses, this action would:
Increase per-unit production costs and thus decrease aggregate supply
The downward slope of the aggregate demand curve is best explained by the:
Interest rate, real balances, and foreign purchases effects
The vertical slope of the long-run aggregate supply curve is based on the assumption that:
Nominal wages and other resource costs do respond to price level changes
One reason why the aggregate supply curve might shift to the left is that:
Per-unit production costs have increased
The aggregate supply curve is the relationship between the:
Price level and the production of real domestic output
The labels for the axes of the aggregate demand graph should be:
Real domestic output on the horizontal axis and the price level on the vertical axis
The shape of the short-run aggregate supply curve basically depends on what happens to production costs and therefore to the prices which businesses must receive to cover costs and make a profit as real domestic output expands
True
The long-run aggregate supply curve is:
Vertical
A graph of the long-run aggregate supply curve is:
Vertical, and a graph of the short-run aggregate supply is upsloping