Macroeconomics- Ch. 12 Aggregate Demand and Aggregate Supply

Upward or downward

The economy's long-run AS curve assumes that wages and other resource prices eventually rise and fall to match [...]? or [...]? changes in the price level.

Vertical

The economy's long-run aggregate supply curve is...?

Horizontal

The immediate-short-run aggregate supply curve is...?

Increase

*An [...]? in net exports will shift the AD curve to the right by a multiple of the change in investment.

Depreciate

*Other things equal, if the U.S. dollar were to [...]?, the aggregate supply curve would shift to the left.

Not shift the aggregate demand curve.

Depreciation of the international value of the dollar, a decline in the interest rate at each possible price level, and an increase in personal income tax rates will shift the aggregate demand curve while a change in the price level will...?

Right

Other things equal, if the national incomes of the major trading partners of the United States were to rise, the U.S. aggregate demand curve would shift to the...?

Left

A decline in investment will shift the AD curve to the [...]? by a multiple of the change in investment.

Wage reductions may not be possible due to the minimum wage law.

*When aggregate demand declines, some firms may reduce employment rather than wages because...?

Wages and salaries

75 percent of the average U.S. firm's costs are accounted for by [...]? and [...]?

Multiplier effect

*An economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the...?

Lower

*Efficiency wages are above-market-wages that bring forth so much added work effort that per-unit production costs are [...]? than at market wages.

Foreign purchases effect

*If the price level increases in the United States relative to foreign countries, then American consumers will purchase more foreign goods and fewer U.S. goods. This statement describes the...? [Hint: It also suggests that a decrease in the U.S. price level relative to other countries will increase U.S. exports and decrease U.S. imports.]

Changing prices and communicating

*Menu costs are the costs to firms of [...]? and [...]? them to customers.

Improvement in productivity

*Other things equal, an [...]? will shift the aggregate supply curve to the right.

Real output per unit of input.

*Productivity measures...?

Prices and Productivity

*The determinants of aggregate supply include resource [...]? and resource [...]?.

Intersect

*The equilibrium price level and level of real output occur where the aggregate demand and supply curves...?

Fixed

*The immediate-short-run aggregate supply curve represents circumstances where both input and output prices are...?

Flexible

*The short-run aggregate supply curve represents circumstances where input prices are fixed, but output prices are...?

The aggregate demand curve

*What shows the amount of real output that will be purchased at each possible price level?