Aggregate Demand and Supply MC
A sharp rise in the real value of stock prices, which is independent of a change in the price level, would best be an example of
a change in real value of consumer wealth
A decrease in personal income tax rates will cause a(n)
increase (or shift right) in aggregate demand
An increase in expected future income will
increase aggregate demand
A decrease in business taxes will tend to
increase aggregate demand and increase aggregate supply
Congress's passage of new laws significantly increasing the regulation of business would tend to
increase per unit production costs and shift the aggregate supply curve to the left
If the price level decreases, then the aggregate expenditures schedule will shift and this translates into a
movement down along the aggregate demand curve
A decrease in personal income taxes would shift AD to the
right because C would increase
If government purchases increase by $10 billion and the economy's MPC is .8, the aggregate demand curve will shift
rightward by $50 billion at each price level
Graphically, the full employment, low inflation, rapid growth economy of the last half of the 1990s is depicted by a
rightward shift of the aggregate demand curve and a rightward shift of the aggregate supply curve
refer to 10: At the price level of 150 there will be a general
shortage in the economy and output demanded will decrease as the price level rises
Disinflation refers to a situation where
the rate of inflation falls, but the price level does not
A decrease in aggregate supply means
the real domestic output would decrease and the price level would rise
Refer to 17: If the quantity of real domestic output demanded increased by $1,000 at each price level, the new equilibrium price level and quantity of real domestic output would be
250 and 2500
The real balances effect on aggregate demand suggest that a
A lower price level will increase the real value of many financial assets and therefore cause an increase in spending
refer to 1: Which of the following factors will shift AD2 to AD1?
an increase in real interest rates
Which of the following effects best explains the downward slope of the aggregate demand curve?
an interest rate effect
An increase in the price level in the aggregate expenditures model would
decrease aggregate expenditures and shift the AD curve to the left
Cost push inflation is characterized by a(n)
decrease in aggregate supply and no change 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
The short run aggregate supply curve shows the
direct relationship between the price level and real GDP produced
The expenditures multiplier concept of the aggregate expenditures model
explains movement up or down the aggregate demand curve
The short run version of aggregate supply assumes that product prices are
flexible and resource prices are fixed