Chapter 15 Aziza Macro 1040
During recessions
Workers are laid off, factories are idle, firms may find they are unable to sell all they produce. Answer: D all the above
which of the following shifts long run aggregate supply right
an increase another technology or the human capital stock
Wages tend to be sticky
because of contracts social norms and notion of fairness
Which of the following is included in the aggregate demand for goods and services
consumption demand, investment demand, net exports, D all the above
When the price level falls the quantity of
consumption goods demanded rises and the quantity of net exports demanded rises
When taxes increase, consumption
decrease as shown by a shift of the aggregate demand curve to the left
An increase in household saving causes consumption to
fall and aggregate demand to decrease
During a recession the economy experiences
falling employment and income
When the price level increases, the real value of people's money holdings
falls, so they buy less
In the context of the aggregate demand curve, the interest rate effects refers to the idea that, when the price level increases
households increase their holdings of money, in turn, interest rates increase which reduces spending on investment goods
The long run aggregate supply curve shifts right if
immigration from abroad increase, technology advances, the capital stock increases, D all the above
In the context of aggregate demand and aggregate supply, the wealth effect refers to the idea when the price level decrease, the real wealth of households
increase and as a result consumption spending increases. this effect contributes to the downward slope of the aggregate demand curve
Suppose a stock market boom makes people feel wealthier. The increase in wealth would cause people to desire
increased consumption, which shifts the aggregate demand curve right
Other things the same an increase in the price level induces people to hold
more money, so they lend less, and the interest rates rises
When the dollar appreciates, US
net exports fall, which decreases the aggregate quantity of goods and services demanded
when the dollar depreciates, US
net exports rise, which increases the aggregate quantity of goods and services demanded
According to classical macroeconomic theory, changes in money supply affect
nominal variables but not real variables
The aggregate quantity of goods and services demanded changes as the price level rises because
real wealth falls, interest rates rise, and the dollar appreciates
The sticky wage theory of the short run aggregate supply curve says that when the price level is lower than expected
relative to prices wages are lower and employment falls
If the price level falls, the real value of a dollar
rises, so people will want to buy more
If speculators lost confidence in foreign economies and so wanted to buy more US bonds
the dollar would appreciate, causing a shift to the left
The wealth effect, interest-rate effect, and exchange rate effect are all explanations for
the slope of the aggregate- demand curve
The saying, " Money is a veil" means
while nominal variables are the first thing we may observe about an economy, what important are the real variables and the forces that determine them
When the government spends more, the initial effect is that
Aggregate demand shifts right
Which of the following would both shift aggregate demand right
Taxes decrease and government expenditures increase
which of the following shifts aggregate demand to the right
The feds buys bonds in the open markets
When money supply increases
interest rates fall and so aggregate demand shifts right
