Chapter 12 Smartbook
Investment spending refers to:
adding to physical capital
Consumer wealth is defined as the total value of
assets minus the total value of liabilities
A change in one of the determinants of aggregate supply causes ___ the aggregate supply curve.
a shift of
Cyclical unemployment and recession often arise from ___ in aggregate demand.
decrease, decline, drop, fall
In the long-run, output prices and input prices are ___.
flexible
Suppose an economy is operating at its full-employment output. An increase in aggregate demand with constant aggregate supply will result in actual GDP being ___ than potential GDP.
higher
When are input and output prices fixed?
in the immediate short run
What is a major factor in per-unit production costs and therefore a key determinant of aggregate supply?
input prices
The aggregate demand curve will shift to the ___ when there is a reduction in government purchases.
left
The short-run is the period in which
output prices are flexible but input prices are fixed or highly inflexible
The short-run is the period in which:
output prices are flexible but input prices are fixed or highly inflexible.
Aggregate supply is represented as a schedule or curve showing the relationship between a nation's ___ level (index) and the amount of real domestic output that firms in the economy produce.
price
Total output divided by total inputs is the formula for
productivity
Total output divided by total inputs is the formula for:
productivity
The ___ is when a higher price level reduces the purchasing power of the public's accumulated savings balances.
real-balances effect
An input price is a(n) ___ while an output price makes up the price level.
resource
Which aggregate supply curve is used in order to understand business cycles and macroeconomic policy?
the short-run curve
The total dollar value of all assets owned by consumers in the economy less the dollar value of their liabilities is called consumer ___.
wealth
Investment spending refers to purchases of which of the following? Bonds Mutual funds Capital goods Stocks
Capital goods
Which of the following are determinants of aggregate demand? Change in input prices Change in consumer wealth Change in investment spending Change in government regulations
Change in consumer wealth Change in investment spending
The determinants of aggregate supply are variables that:
cause the aggregate supply curve to shift
Which of the following are determinants of aggregate demand? Change in investment spending Change in input prices Change in consumer wealth Change in government regulations
Change in investment spending Change in consumer wealth
Cyclical unemployment and recession often arise from ___ in aggregate demand.
decreases
Investment spending depends on the real ___ rate and the expected return from ___.
interest, investment
The equilibrium price level and equilibrium output is determined by the ___.
intersection of the aggregate demand curve and the aggregate supply curve
A leftward shift in the aggregate ___ curve leads to cost-push inflation.
supply
The two changes of the legal-institutional environment that will shift the aggregate supply curve are ___.
taxes and government regulation
The two changes of the legal-institutional environment that will shift the aggregate supply curve are ___.
taxes and government regulations
The intersection of the aggregate demand and aggregate supply curves determines ___.
the equilibrium price level and equilibrium real GDP
The intersection of the aggregate demand and aggregate supply curves determines ___.
the equilibrium price level and equilibrium real GDP.
Productivity can be illustrated in the formula:
total output divided by total input
Productivity can be illustrated in the formula ___.
total output divided by total inputs
The short-run aggregate supply curve is more useful than the curves for other time horizons because real-world economies ___.
typically change price levels and output levels simultaneously
The short-run aggregate supply curve is more useful than the curves for other time horizons because real-world economies ___.
typically change price levels and output levels simultaneously.
Which of the following were characteristic of economic conditions in the United States during the 1990s: very low inflation decreased productivity full employment strong growth low aggregate demand
very low inflation, full employment, strong growth
Suppose an economy is operating at its full-employment output. An increase in aggregate demand with constant aggregate supply will result in actual GDP being ___ than potential GDP.
more, greater, higher, larger
What is one result of a decrease in aggregate demand?
recession
In the immediate short run for aggregate supply, both input and output prices ___.
remain fixed
An input price is a(n) ___ price while an output price makes up the price level.
resource
An increase in exports relative to imports 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
An increase in government spending is likely to ___.
shift the aggregate demand curve to the right
What will a rise in net exports do?
Shift the aggregate demand curve to the right.
True or false: Changes in taxes, subsidies, and the extent of regulations may alter per-unit production costs and shift the aggregate supply curve.
True
True or false: Emphasis is given to short-run aggregate supply because this is the version of aggregate supply that can explain changes in output and prices.
True
When does the long run begin?
When the short-run ends
How is the real-balances effect defined?
A higher price level reduces the purchasing power of the public's accumulated savings balances.
A decrease in aggregate supply, assuming constant aggregate demand, will result in ___ inflation.
cost-push
What happened to the US economy in the 1990s? Inflation grew by 5% annually. GDP grew by 4% annually. Output fell by 5% annually. Unemployment fell to 4%.
GDP grew by 4% annually. Unemployment fell to 4%.
Investment spending refers to
adding to physical capital
What is shown by a schedule or curve showing the total quantity of goods and services that would be supplied at various price levels?
aggregate supply
Consumer wealth is defined as the total value of:
assets minus the total value of liabilities
Aggregate ___ is a schedule or curve that shows the amount of real GDP that buyers collectively desire to purchase at each possible price level.
demand
An increase in aggregate demand, assuming constant aggregate supply, will result in ___ inflation.
demand-pull
In the short run, output prices are ___ and ___ prices are ___.
flexible; input; sticky
What will a rise in net exports do?
shift the aggregate demand curve to the right
