Chapter 12 part 1&2

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an increase in personal income tax rates will cause

decrease (shift left) in aggregate demand

the real-balances effect on aggregate demand suggests that a

lower price level will increase the real value of many financial assets and therefore cause an increase in spending

the fall in the prices of inputs will shift the aggregate

supply cure rightward

A fall in the prices of inputs will shift the aggregate

supply curve rightward

The economy experiences a decrease in the price level and an increase in real domestic output. Which is a likely explanation?

Business costs and wage rates have decreased

A decrease in business taxes will tend to

Increase aggregate demand and increase aggregate supply

the following factors explain the inverse relationship between the price level and the total demand for output, except

a substitution effect

which of the following events would most likely reduce aggregate demand

an increase in real interest rates

which of the following effects best explains the downward slopes of the aggregate demand curve

an interest-rate effect

the short-run aggregate supply curve

becomes steep at output levels above the full-employment output

In the mid-1970s, changes in oil prices greatly affected U.S. inflation. When oil prices rose, the U.S. would experience

cost-push inflation and falling output

cost-push inflation is characterized by a

decrease in aggregate supply and no change in aggregate demand

The U.S. economy was able to achieve full employment with relative price level stability between 1996 and 2000 because aggregate

demand increased and aggregate supply increased

the U.S. economy was able to achieve full employment with relative price level stability between 1996 and 2000 because aggregate

demand increased and aggregate supply increased

Demand-pull inflation is illustrated in the short run aggregate supply-aggregate demand model as a shift of the aggregate

demand to the right

if the price of crude oil decreases, then this would most likely

increase aggregate supply in the U.S.

If Congress passed new laws significantly increasing the regulation of business, this action would tend to

increase per-unit production costs and shift the aggregate supply curve to the left

if congress passed new laws significantly increasing the regulation of business, this action would tend to

increase per-unit production costs and shift the aggregate supply curve to the left

an expected increase in the prices of consumer goods in the near future will

increase(shift right) in aggregate demand now

the aggregate demand curve shows the

inverse relationship between the price level and the quantity of real GDP purchased

an aggregate supply curve represents the relationship between the

price level and the production of real domestic output

when the general price level in our economy increases, the following effects occur excpet

the purchasing power of people's savings will increase

which would be considered to be one of the factors that shift the aggregate supply curve in the short run? a change in

government spending

a decrease in business taxes will tend to

increase aggregate demand and increase aggregate supply

an increase in productivity will

increase aggregate supply

If the price of crude oil decreases, then this would most likely

increase aggregate supply in the U.S.

the foreign purchases effect on aggregate demand suggests that a

rise in our domestic price level will increase our imports and reduce our exports, thereby reducing the net exports component of aggregate demand

a decrease in aggregate supply means

the real domestic output would decrease and the price level would rise

the long-run aggregate supply curve

vertical

an increase in aggregate demand is most likely to be caused by

a decrease in the tax rates on household income

the immediate-short-run aggregate supply curve

horizontal

the interest rate effect on aggregate demand indicates that

decrease in the price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending

demand-pull inflation is illustrated in the short run aggregate supply-aggregate demand model as a shift of the aggregate

demand to the right


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