TEST 3: Macroeconomics Chap. 12: AD-AS

Aggregate expenditures curve downward and the aggregate demand curve leftward

A decrease in consumer spending can be expected to shift the:

Supply to increase

A fall in labor costs will cause aggregate:

aggregate expenditures curve upward and the aggregate demand curve rightward.

An increase in net exports will shift the:

7 and 8

Answer the question based on the following list of items that are related to aggregate demand and/or aggregate supply. Refer to the list above. Changes in which combination of factors best explain why the aggregate supply curve would shift?

False

Minimum wage laws tend to make the price level more flexible rather than less flexible.

Lower price level will increase the real value of many financial assets and therefore cause an increase in spending

The real-balances effect on aggregate demand suggests that a:

D

Use the following diagrams for the U.S. economy to answer the following question. Which of the diagrams best portrays the effects of declines in the incomes of U.S. trading partners?

True

When the economy is experiencing demand-pull inflation, its real GDP tends to be rising.

leftward shift of the AS curve.

Graphically, cost-push inflation is shown as a:

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

Graphically, demand-pull inflation is shown as a:

Aggregate demand decreases because net exports decrease

If the dollar appreciates in value relative to foreign currencies:

the increase in productivity.

In the figure, AD1 and AS1 represent the original aggregate supply and demand curves and AD2 and AS2 show the new aggregate demand and supply curves. The change in aggregate supply from AS1 to AS2 could be caused by:

an expansion of real output and a stable price level

In the figure, AD1 and AS1 represent the original aggregate supply and demand curves and AD2 and AS2 show the new aggregate demand and supply curves. The changes in aggregate demand and supply in the diagram produce: