Chapter 30 True/false macro
per-unit production costs is determined by dividing total input cost by units of output.
True
An increase in aggregate supply driven by productivity increases can offset the inflationary pressures from an increase in aggregate demand.
True
At the equilibrium price level, the real domestic output purchased is equal to the real domestic output produced.
True
A fall in the price level increases the real value of financial assets with fixed money value and, as a result, increases spending by the holders of these assets.
True
A rise in excess capacity, or unused existing capital goods, will reduce the demand for new capital goods and therefore reduce aggregate demand.
True
A significant decrease in aggregate demand can result in recession and cyclical unemployment.
True
Changes in aggregate demand involve a change in initial spending from one of the determinants and a multiplier effect on spending.
True
In the short-run, an increase in aggregate demand will increase both the price level and the real domestic output.
True
Productivity is a measure of real output per unit of input.
True
The aggregate supply curve is vertical in the long run at the full-employment level of output.
True
The immediate short-run aggregate supply curve is horizontal and the short-run aggregate supply curve is up-sloping.
True
A change in aggregate demand is caused by a change in the price level, other things equal.
False
A large decline in household borrowing will increase consumption spending and aggregate demand.
False
A movement along a fixed aggregate demand curve is the same as a shift in aggregate demand.
False
A rise in the price level of an economy (relative to foreign price levels) tends to increase that economy's exports to reduce its imports of goods and services.
False
Aggregate demand reflects a positive relationship between the price level and the amount of real output demanded.
False
An increase in aggregate demand is associated with cost-push inflation.
False
Appreciation of the dollar relative to foreign currencies will tend to increase net exports and aggregate demand.
False
Fear of price wars tends to make the price level more flexible rather than less flexible.
False
Given a fixed supply of money, a rise in the price level increases the demand for money in the economy and drives interest rates downward.
False
When the determinants of short-run aggregate supply change, they alter the per-unit production cost at each price level and thereby aggregate supply.
True
A decrease in aggregate supply decreases the equilibrium real domestic output and increases the price level, resulting in cost-push inflation.
True
The explanation as to why the aggregate demand curve slopes downward is the same as the explanation as to why the demand curve for a single product slopes downward.
False
The greater the increase in the price level that results from an increase in aggregate demand, the greater will be the increase in the equilibrium real GDP.
False
The real-balances effect is one of the determinants of aggregate demand.
False
