Chapter 12 Notes
which of the following best describe the effects of a depreciation of the U.S. dollar on production costs and aggregate supply (AS)?
- a shift of the AS curve leftward -U.S. firms obtain less foreign currency with each dollar -the dollar price of imported resources is higher -an increase in per-unit production costs from using imported resources -a decrease in imported resources
which of the following are main sources of productivity?
-better educated workforce -better trained workforce -improved forms of business enterprises -improved production technology
which of the following influence expected returns on investment projects?
-business taxes -expectations about future business conditions -degree of excess capacity -technology
which of the following are the four components or determinants of aggregate demand?
-consumer spending -government spending -net export spending -investment spending
which of the following explain the reason for the up-sloping aggregate supply curve?
-higher prices mean higher profits when input costs are fixed -input costs are fixed, but output costs are variable
which of the following result from a reduction in personal income tax rates on consumers?
-increasing consumer purchases at each possible price level -increased take-home income
which of the following are determinants of aggregate demand?
-investment spending -change in consume wealth
which of the following describe why wages are inflexible downward?
-large parts of the labor force work under contracts prohibiting wage cuts for the duration of the contract -wages and salaries of non-union workers are usually adjusted only once a year
an increase in the money supply will - the interest rate, - investment and - aggregate demand
-lower -increase -increase
an increase in real interest rates will - investment spending and - aggregate demand
-lower -reduce
identify factors other than the price level, that would cause net exports to change
-national income abroad -changes in exchange rates
a decrease in investment and subsequent shift of the aggregate demand curve to the left is due to:
a decline in firms' expected returns
which of the following will shift the aggregate supply (AS) curve for the domestic economy to the left?
a depreciation of the U.S. dollar
productivity is the measure of the relationship between:
a nation's level of real output and the amount of resources used to produce that output
a schedule or curve that shows the amount of a nation's output (real GDP) that buyers collectively desire to purchase at each possible price level is called:
aggregate demand
raising business taxes shifts the:
aggregate demand curve to the left
- - can be represented as a schedule or cube showing the relationship between the price level and the amount of real domestic output that firms within the economy produce
aggregate supply
a wage decrease shifts the:
aggregate supply curve to the right
the determinants of aggregate supply are variables that:
cause the aggregate supply curve to shift
menu costs of inflation are the:
costs associated with businesses changing prices
a decline in aggregate supply, assuming constant aggregate demand, will result in - in the quantity demanded for real GDP
decrease
a decline in the price level is called -
deflation
Aggregate - is a schedule or curve that shows the amount of real output that buyers collectively desire to purchase at each possible price level
demand
the "other things" that change and shift the aggregate demand curve are called the - of aggregate demand or aggregate demand shifters
determinants
the three times horizons that influence how quickly output and input prices can change are - short run, short-run and long-run
immediate
if firms are optimistic about the business outlook, investment will
increase
new and improved technology, seen as investment spending by firms will lead an - in aggregate demand
increase
a higher business tax will - per-unit costs and - short-run aggregate supply
increase; decrease
the foreign purchases effect occurs when the US price level - relative to foreign price levels and the quantity of US goods demanded as net exports decreases
increases
productivity can be illustrated by the formula: total output divided by total
inputs
when a higher price level increases the demand for money, which will drive up the price paid for its use, assuming a fixed money supply, it is called the:
interest-rate effect
the downward sloping aggregate demand curve indicates that there is an - relationship between the price level and real GDP
inverse
expectations about future business conditions, technology, degree of excess capacity and business taxes are all factors that influence:
investment spending
a tax increase will reduce consumption and shift the aggregate demand (AD) curve to the -
left
economists view investment spending on which of the following?
physical capital
aggregate supply is represented as a schedule or curve showing the relationship between the nation's - level (index) and the amount of real domestic output that firms in the economy produce.
price
the minimum wage imposes a legal - on the wages of the least skilled workers
price floor
an input price is a - price while an output price makes up the price level
resource
a tax cut will shift the aggregate demand (AD) curve to the
right
an increase in government purchased will shift the aggregate demand (AD) curve to the
right
changes in consumer spending, investment, government spending and net export spending will:
shift the aggregate demand curve
the intersection of the aggregate demand and aggregate supply curve determine:
the equilibrium price level and equilibrium real GDP
for any increase in aggregate demand, the resulting increase in real output will be smaller the greater the increase in -
the price level
