Econ Chp 7

Refer to the above diagram. A shift from AS1 to AS2 would be consistent with what economic event in U.S. history?

Cost-push inflation in the mid-1970s

A short-run aggregate supply curve shows the:

Direct relationship between the price level and real GDP produced

decrease in aggregate supply means:

The real domestic output would decrease and the price level would rise

Cost-push inflation arises from:

a decrease in aggregate supply

Which would most likely increase aggregate supply?

a decrease in the prices of resources

The amount of real domestic output that will be purchased at each possible price level is best shown by the:

aggregate demand curve

A decrease in aggregate demand is likely to result from:

an appreciation in the value of the U.S. dollar

Which set of events would most likely increase aggregate demand?

an increase in incomes foreign nations and a depreciation of the dollar

Refer to the above graph. Which factor will shift AD1 to AD2?

an increase in national income abroad

Refer to the above diagram. A shift from AS1 to AS2 would be consistent with that economic event in the U.S. history?

cost-push inflation in the mid-1970s

If the U.S. dollar appreciates in value relative to foreign currencies, then this will:

decrease aggregate demand and increase aggregate supply

If the prices of imported resources increase, then this event would most likely:

decrease aggregate supply

A decrease in government spending will cause a:

decrease in aggregate demand

A decrease in net export will cause a:

decrease in aggregate demand

An increase in personal income tax rates will cause a:

decrease in aggregate demand.

Demand-pull inflation will:

decrease the strength of the multiplier

Refer to the above diagram. A shift from AD1 shifts to AD2, would be consistent with what economic event in U.S. history?

demand-pull inflation in the late 1960s

Aggregate demand is a schedule which shows the various amounts of goods and services that only consumers and businesses desire to purchase at each possible price level.

false

The long-run aggregate supply curve slow is horizontal

false

Aggregate demand decreases and real output falls but the price level remains the same. Which factor most likely contribute to downward price inflexibility?

fear of price wars

An expected rise in the rate of inflation for consumer goods will:

increase aggregate demand

An increase in government spending will cause an:

increase aggregate demand

If the U.S. dollar depreciates in value relative to foreign currencies, then this will:

increase aggregate demand

A decline in the quantity of real output demanded along the aggregate demand curve is a result of an:

increase in the price level.

If Congress passes new laws significantly increasing the regulation of business, this action would tend to:

increase per-unit production costs and shift the aggregate supply curve to the left.

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

nominal wages and other resource costs do not respond to price level changes.

The vertical slope of the long-run aggregate supply curve is based on the assumption that:

nominal wages and other resource costs do respond to price level changes

An aggregate supply curve represents the relationship between the:

price level and the production of real domestic output

When aggregate demand decreases, product prices, wage rates, and per-unit production costs are inflexible downward because of a:

ratchet effect

Suppose that real domestic output in an economy is 300 units, the quantity of inputs is 50 and the price of each input is $9. If the price of each input decreased from $9 to $7, productivity would:

remain unchanged and aggregate supply would increase

Refer to the above diagram. Cost-push inflation can be illustrated by a:

shift in the aggregate supply curve from AS1 to AS2.

A fall in the price of capital goods will shift the aggregate:

supply curve rightward

A rise in prices of imported resources will cause aggregate:

supply to decrease

A fall in prices of imported resources will cause aggregate:

supply to increase

A movement along the aggregate demand curve would be caused by a change in:

the price level

An increase in aggregate demand is most likely to be caused by a decrease in:

the tax rates on household income

The shape of a short-run aggregate supply curve basically depends on what happens to production costs and therefore to the prices which businesses must receive to cover costs and make a profit as real domestic output expands.

true

The long-run aggregate supply curve is:

vertical

Refer to the above graph. Which line shows the full-employment output for the economy?

4

Changes in which of the above two factors would most likely cause a change in aggregate supply?

5 and 7. Productivity and Business Taxes

A change in net export spending would most likely be caused by changes is:

6 and 9. National income abroad and exchange rates

Suppose that real domestic output in an economy is 2400 units, the quantity of inputs is 60, and the price of each input is $30. The per-unit costs of production is:

$0.75