graded quiz chapter 9

_____ will most likely increase the economy's long-run aggregate supply.

Advances in technology

(Figure: Determining SRAS Shifts) Which statement is NOT correct?

An increase in aggregate demand would lead to deflation.

________ inflation occurs when a supply shock reduces aggregate supply.

Cost-push

Which of the following may be an explanation for the shift in aggregate demand from A to B?

Interest rates fall and boost investment

A solution to the simultaneous emergence of deflation and unemployment is to use policies that shift the:

aggregate demand curve to the right.

The curve that shows how much GDP is demanded at various price levels is called:

aggregate demand.

According to Keynes, what determines the level of employment and income?

aggregate expenditures

Suppose the government raises income taxes, so consumers have less take-home pay. This policy action will cause a(n):

decrease in aggregate demand.

A shift of the aggregate _______ curve to the ________ would cause inflation to rise and employment to increase. Question

demand; right

Which of the following is NOT a reason the aggregate demand curve is negatively sloped?

income effect

When the price of a given product declines, the consumer's spendable income rises because it takes less income to purchase the same quantity. This is called the:

income effect.

The shift in aggregate demand depicted may be due to a(n):

increase in income taxes.

Government spending on Social Security:

increases aggregate demand.

If the amount of regulation in an economy increases, the aggregate supply curve shifts _____ and output supplied will be _____.

left; reduced

High family debt:

reduces the tendency to consume.

Cost-push inflation occurs when:

rising resource costs reduce short-run aggregate supply.

The idea that new spending creates more new spending is known as:

the multiplier effect.

Cost-push inflation is a situation in which:

the short-run aggregate supply curve shifts leftward.

The collapse of home values that began in 2008 led to ____ in Americans' consumption and _____ in their saving rates.

a decrease; an increase

In macroeconomics, the long run is:

a period long enough that participants in the economy will have enough time to gain all relevant information and enough time to act correctly on that information.