MACRO CH30

Which of the following situations would most likely result in a decrease in the price level and a decrease in real GDP?

A decrease in consumer confidence

Assume the government significantly increases spending for infrastructure, and taxes and interest rates do not change as a result of the spending. How will that change in government spending affect aggregate demand, short-run aggregate supply, the price level, and real GDP?

Aggregate Demand: Increase Short-Run Aggregate Supply: No change Price Level: Increase Real GDP: Increase

A substantial increase in immigration of new workers into the domestic workforce will most likely result in the following changes to wages, per-unit production costs, real GDP, price level, and short-run aggregate supply. Per-Unit Short-Run Production Real Aggregate Price Wages Costs GDP Supply Level

Decrease Decrease Increase Increase Decrease

Consumer spending as a component of aggregate demand increases when I. consumer wealth increases II. consumer borrowing decreases III. consumer expectations about the economy are optimistic IV. personal taxes increase

I and III only

The aggregate demand curve slopes downward because I. as the price level falls, the real value of personal assets increases, leading personal consumption spending to increase II. asthe price level falls,interest rates decrease, causing investment and interest-sensitive spending to increase III. asthe price level falls, exports increase and imports decrease, resulting in a positive change in net trade

I, II, and III

Net export spending and domestic aggregate demand will change as a result of a change in I. foreign national income II. the interest rate effect III. exchange rates

II and III only

If short-run aggregate supply increases, which of the following is the likely effect on output and price level?

Output: Increase Price Level: Decrease

A substantial decrease in the cost of technology will most likely result in the following changes to per-unit production costs, short-run aggregate supply, price level, and real GDP.

Per-Unit Production Costs: Decrease Short-Run Aggregate Supply: Increase Price Level: Decrease Real GDP: Increase

A substantial increase in the cost of energy will most likely result in the following changes to per-unit production costs, short-run aggregate supply,price level, andreal GDP. Per-Unit Short-Run Production Aggregate Price Real Costs Supply Level GDP

Per-Unit Production Costs: Increase Short-Run Aggregate Supply: Decrease Price Level: Increase Real GDP: Decrease

Cost-push inflation would most likely result in the following changes to per-unit production costs, short-run aggregate supply, price level, and real GDP

Per-Unit Production Costs: Increase Short-Run Aggregate Supply: Decrease Price Level: Increase Real GDP: Decrease

How will an increase in business taxes affect per-unit production costs, short-run aggregate supply, the price level, and real GDP? Per-Unit Short-Run Production Costs Aggregate Supply Price Level Real GDP

Per-Unit Production Costs: Increase Short-Run Aggregate Supply: Decrease Price Level: Increase Real GDP: Decrease

How will an increase in interest ratesaffect price level, real output, and unemployment in the shortrun? Price Level Real Output Unemployment

Price Level : Decrease Real Output: Decrease Unemployment: Increase

How will an increase in government spending affect price level, output, and employment in the shortrun?

Price Level: Increase Output: Increase Employment: Increase

If a nation in full-employment equilibrium found itself in stagflation, this would have most likely been caused by

a decrease in short-run aggregate supply

During the Great Recession, the government implemented the stimulus package in an effort to

increase aggregate demand

The short-run aggregate supply curve is upward-sloping and assumes

input prices are relatively inflexible and output prices are relatively flexible

An increase in each of the following would result in an increase in aggregate demand EXCEPT

interest rates

A change in each of the following factors will cause the short-run aggregate supply to shift EXCEPT

level of real output

A change in any of the following factors will cause household consumption and aggregate demand to change EXCEPT

price levels

The equilibrium point of aggregate supply and aggregate demand determines

real GDP and price level

Aggregate demand is the sum of the demand from all of the following sectors of the economy EXCEPT

the import sector

A change in any of the following factors will cause investment spending and aggregate demand to change EXCEPT

the interest rate effect

According to the real balances effect, consumers buy less at higher price levels because

the purchasing power of assets decreases

The long-run aggregate supply curve is

vertical at full-employment output, as both input and output prices are flexible

Aggregate supply increases as the result of an increase in

worker productivity