Econ 202: Exam 2 Study Guide
When investment is less than planned investment, aggregate planned expenditure is ________ than actual aggregate expenditure and inventories are ________ than planned.
greater; less
In the short run, an increase in government expenditure on goods and services ________ real GDP and ________ the price level.
increases; rises
The Federal Reserve lowers interest rates. As a result, in the short run, real GDP ________ and the price level ________.
increases; rises
Changes in which of the following will affect the size of the multiplier?
marginal propensity to import, marginal propensity to consume, marginal income tax rate
A change in ________ creates a movement along the aggregate demand curve but does not shift the aggregate demand curve.
the price level
The difference between planned and unplanned spending is:
unplanned changes in inventories.
The short-run aggregate supply curve is ________ because along it, as prices rise, the money wage rate ________.
upward sloping; stays constant
If consumption expenditures for a household increase from $1,000 to $1,800 when disposable income rises from $1,000 to $2,000, the marginal propensity to consume is:
0.8
If higher inflation is expected in the future, then the
AD curve shifts rightward.
________ consumption is consumption that will occur ________ the level of GDP and disposable income.
Autonomous; independent of
The components of aggregate expenditure include:
Imports and Consumption
Which of the following would NOT shift the U.S. aggregate demand curve?
a change in the quantity of capital in the United States
Suppose consumers decrease their consumption expenditure because they worry about what their income will be in the future. There is:
a leftward shift of the aggregate demand curve.
Suppose there is a temporary increase in the price of oil. This is represented by:
a rightward shift of the SAS curve.
In the macroeconomic short run:
actual real GDP may be less than or more than potential GDP.
Which of the following events will increase long-run aggregate supply?
an advance in technology.
There is a movement along the consumption function if there is:
an increase in disposable income.
All of the following shift the LAS curve EXCEPT?
an increase in the money wage rate.
Which of the following changes does NOT shift the short-run aggregate supply curve?
an increase in the price level.
When the economy is at an above-full-employment equilibrium,
an inflationary gap exists.
When real GDP exceeds potential GDP, then the economy has,
an inflationary gap.
n a change to immigration policy during 2012, "people younger than 30 who came to the United States before the age of 16, pose no criminal or security threat, and were successful students or served in the military can get a two-year deferral from deportation", then-Homeland Security Secretary Janet Napolitano said, according to CNN, 06/16/2012. If many of these immigrants had previously been afraid to work, now as a result of being able to work legally
both the short-run and long-run aggregate supply curves shift rightward.
According to the intertemporal substitution effect, a fall in the price level will:
cause the interest rate to fall so that investment increases and the quantity of real GDP demanded increases.
Which of the following shifts both the short-run aggregate supply curve and the long-run aggregate supply curve?
changes in the size of the labor force, changes in the quantity of capital
Imports
decrease the size of the multiplier because spending on imports does not increase real GDP in the domestic nation.
The government increases taxes. As a result, in the short run, real GDP ________ and the price level ________.
decreases; falls
When the price level rises, the long-run aggregate supply curve:
does not shift.
One reason that the aggregate demand curve has a negative slope is that when the domestic price level rises,
people substitute toward more imported goods and services.
In the very short run, the components of aggregate planned expenditure that depend on the of real GDP are:
planned consumption expenditure and planned imports
In the short run, an increase in aggregate demand
raises the price level and increases real GDP.
If the economy is in short run equilibrium then,
real GDP can be greater than, less than, or equal to potential GDP.
At long-run macroeconomic equilibrium,
real GDP equals potential GDP.
An inflationary gap occurs when,
real GDP exceeds potential GDP.
The long-run aggregate supply curve illustrates the:
relationship between the price level and real GDP when the economy is at full employment.
As a result of a tax increase,
the aggregate demand curve shifts leftward.