Ch 30 macro
In the diagram, a shift from AS2 to AS3 might be caused by an
Increase in business taxes and costy government regulation
In this diagram, a shift from AS1 to AS3 might be caused by an
Increase in the prices of imported resources
The foreign purchases effect
Moves the economy along a fixed aggregate demand curve
A decline in investment will shift the AD curve to the
left by a multiple of the change in investment.
If investment decreases by $20 billion and the economy's MPC is .5, the aggregate demand curve will shift
leftward by $40 billion at each price level.
A rightward shift in the aggregate supply curve is best explained by an increase in
productivity
In the diagram, a shift from AS3 to AS2 might be caused by an increase in
productivity
The aggregate demand curve
shows the amount of real output that will be purchased at each possible price level.
The aggregate supply curve
shows the various amounts of real output that businesses will produce at each price level.
Suppose that nominal wages fall and productivity rises in a particular economy. Other things equal, the aggregate:
supply curve will shift rightward.
Answer the question on the basis of the following information. 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. Refer to the information. The per-unit cost of production in this economy is
$0.10
Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4. Answer the following question on the basis of this information. The per-unit cost of production is the economy described is:
$2
Answer the quesiton on the basis of the following information about the relationship between input quantities and real domestic output in a hypothetical economy. Refer to the table. If the price of each input is $5, the per-unit cost of production in the economy is
$2.50
Suppose that technological advancements stimulate $20 billion in additional investment spending. If the MPC = .6, how much will the change in investment increase aggregate demand?
$50 billion
Answer the quesiton on the basis of the following information about the relationship between input quantities and real domestic output in a hypothetical economy. Refer to the table. The level of productivity in the economy
2
Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4. Answer the following question on the basis of this information. Refer to the information. The level of productivity is
2
In the diagram, the economy's immediate-short-run aggregate supply curve is shown by line
3
In the diagram, the economy's immediate-short-run AS curve is the ________, its short-run AS curve to ________, and the long-run AS curve is line ________.
3,2,1
Answer the question on the basis of the following information. 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. Refer to the information. If the per-unit price of raw materials rises from $4 to $8 and all else remains constant, the per-unit cost of production will rise by about
30 percent
In the diagram, the economy's relevant aggregate demand and immediate-short-run aggregate supply curves, respectively, are lines
4 and 3
What percentage of the average U.S. firm's costs are accounted for by wages and salaries
75
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 determinants of aggregate demand
Explain shifts in the aggregate demand curve
The immediate-short-run aggregate supply curve is
Horizontal
Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4. Answer the following question on the basis of this information. Refer to the information. All else being equal, if the price of each input increased from $4 to $6, productivity would
Remain unchanged
Answer the quesiton on the basis of the following information about the relationship between input quantities and real domestic output in a hypothetical economy. Refer to the table. Suppose that the price of each input increased from $5 to $8. The per-unit cost of production in the economy would
Rise by 60 percent and the aggregate supply curve would shift to the left
The aggregate supply curve (short run)
Slopes upward and to the right
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
Per-unit production cost is
Total input cost divided by units of output
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
Which one of the following would not shift the aggregate demand curve
a change in the price level
In the diagram, a shift from AS1 to AS2 might be caused by
a decrease in the prices of domestic resources.
The real-balances effect indicates that
a higher price level will decrease the real value of many financial assets and therefore reduce spending.
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.
Other things equal, if the U.S. dollar were to depreciate, the
aggregate supply curve would shift to the left.
Which of the following would most likely shift the aggregate demand curve to the right
an increase in stock prices that increases consumer wealth
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
The immediate-short-run aggregate supply curve represents circumstances where:
both input and output prices are fixed.
Other things equal, appreciation of the dollar
decreases aggregate demand in the United States and may increase aggregate supply by reducing the prices of imported resources.
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
The aggregate demand curve is
downsloping because of the interest-rate, real-balances, and foreign purchases effects.
Other things equal, a decrease in the real interest rate will
expand investment and shift the AD curve to the right.
The determinants of aggregate supply
include resource prices and resource productivity
The foreign purchases effect suggests that a decrease in the U.S. price level relative to other countries will:
increase U.S. exports and decrease U.S. imports.
The foreign purchases effect suggests that an increase in the U.S. price level relative to other countries will:
increase U.S. imports and decrease U.S. exports.
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
Other things equal, a reduction in personal and business taxes can be expected to
increase both aggregate demand and aggregate supply.
The aggregate supply curve (short run)
is steeper above the full-employment output than below it.
An economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the:
multiplier effect
The aggregate supply curve (short run) is upsloping because
per-unit production costs rise as the economy moves toward and beyond its full-employment real output.
Productivity measures
real output per unit of input
An increase in net exports will shift the AD curve to the
right by a multiple of the change in investment.
If investment increases by $10 billion and the economy's MPC is .8, the aggregate demand curve will shift:
rightward by $50 billion at each price level.
Other things equal, an improvement in productivity will
shift the aggregate supply curve to the right.
Answer the question on the basis of the following information. 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. Refer to the information. If the per-unit price of raw materials rises from $4 to $8 and all else remains constant, the aggregate:
supply curve would shift to the left
Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4. Answer the following question on the basis of this information. Refer to the information. Given an increase in input price from $4 to $6, we would expect the aggregate
the supply curve to shift to the left
The shape of the immediate-short-run aggregate supply curve implies that
total output depends on the volume of spending.
The real-balances, interest-rate, and foreign purchases effects all help explain
why the aggregate demand curve is downsloping.
