Macroeconomics: Week 8 Assessment
If the MPC is 0.6, the multiplier will be
2.5
In the diagram, a shift from AS3 to AS2 might be caused by an increase in
productivity
In the diagram, the economy's immediate-short-run aggregate supply curve is shown by line
3
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.
Which of the diagrams for the U.S. economy best portrays the effects of a dramatic increase in energy prices?
B
Which of the diagrams for the U.S. economy best portrays an improvement in expected rates of return on investment?
C
Refer to the diagram. If the initial aggregate demand and supply curves are AD0 and AS0, the equilibrium price level and level of real domestic output will be
F and C, respectively.
Which of the following is INCORRECT?
When the price level increases, real balances increase and businesses and households find themselves wealthier and therefore increase their spending.
Efficiency wages are
above-market wages that bring forth so much added work effort that per-unit production costs are lower than at market wages
Other things equal, if the national incomes of the major trading partners of the United States were to rise, the U.S.
aggregate demand curve would shift to the right.
Investment spending in the United States tends to be unstable because
all of the factors mentioned in other answers contribute to the instability
Which of the following would most likely reduce aggregate demand (shift the AD curve to the left?)
an appreciation of the U.S. dollar
The multiplier effect means that
an increase in investment can cause GDP to change by a larger amount.
Which of the following would most likely shift the aggregate demand curve to the right?
an increase in stock prices that increases consumer wealth
The investment demand curve will shift to the left as a result of
an increase in the excess production capacity available in industry.
Which of the following would NOT shift the aggregate supply curve?
an increase in the price level
The interest-rate effect suggests that
an increase in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending.
Which one of the following would increase per-unit production cost and therefore shift the aggregate supply curve to the left?
an increase in the price of imported resources
Given the expected rate of return on all possible investment opportunities in the economy,
an increase in the real rate of interest will reduce the level of investment.
Menu costs:
are the costs to firms of changing prices and communicating them to customers.
The immediate-short-run aggregate supply curve represents circumstances where
both input and output prices are fixed.
The investment demand curve will shift to the right as the result of
businesses becoming more optimistic about future business conditions.
Other things equal, a decrease in the real interest rate will
expand investment and shift the AD curve to the right.
Prices and wages tend to be
flexible upward but inflexible downward.
Refer to the diagram. Which of the following would shift the investment demand curve from ID1 to ID2?
higher expected rates of return on investment
Other things equal, a reduction in personal and business taxes can be expected to
increase both aggregate demand and aggregate supply.
In the diagram, a shift from AS2 to AS3 might be caused by a(n)
increase in business taxes and costly government regulation.
In the diagram, a shift from AS1 to AS3 might be caused by a(n)
increase in the prices of imported resources.
The short-run aggregate supply curve represents circumstances where
input prices are fixed, but output prices are flexible.
The economy's long-run aggregate supply curve
is vertical.
Graphically, cost-push inflation in shown as a
leftward shift of the AS curve.
Refer to the diagram. Which of the following would shift the investment demand curve from ID1 to ID3?
lower expected rate of return on investment
Other things equal, a decrease in the real interest rate will
move the economy downward along its existing investment demand curve.
An increase in input productivity will
reduce the equilibrium price level, assuming downward flexible prices.
Other things equal, a 10 percent decrease in corporate income taxes will
shift the investment demand curve to the right.
The investment demand curve will shift to the right as a result of
technological progress.
The equilibrium price level and level of real output occur where
the aggregate demand and supply curves intersect.
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.
If business taxes are reduced and the real interest rate increases,
the level of investment spending might either increase or decrease.
The investment demand curve portrays an inverse (negative) relationship between
the real interest rate and investment.
