ECO mod 5 quiz

If the dollar appreciates relative to foreign currencies, then

Foreign buyers will find U.S. goods become more expensive

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

Input prices have increased

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

Interest rates and wage rates have decreased

The version of aggregate supply that allows for changes in both product prices and resource prices is the

Long run

Which of the following is a true statement?

a decline in aggregate demand will primarily affect real output and employment if prices are inflexible

The slope of the immediate-short-run aggregate supply curve is based on the assumption that

both input and output prices are fixed.

The fear of unwanted price wars may explain why many firms are reluctant to

reduce prices when a decline in aggregate demand occurs.

Graphically, demand-pull inflation is shown as a

rightward shift of the AD curve along an upsloping AS curve.

Graphically, the full-employment, low-inflation, rapid-growth economy of the last half of the 1990s is depicted by a

rightward shift of the aggregate demand curve & a rightward shift of the aggregate supply curve

Other things equal, an improvement in productivity will

shift the aggregate supply curve to the right.

If aggregate demand decreases, and, as a result, real output and employment decline but the price level remains unchanged, it is most likely that

the price level is inflexible downward and a recession has occurred.

The real-balances, interest-rate, and foreign purchases effects all help explain

why the aggregate demand curve is downsloping

An increase in investment and government spending can be expected to shift the

Aggregate expenditures curve upward and the aggregate demand curve leftward.