Aggregate Demand
Which of the following factors will shift AS1 to AS3?
An increase in input prices
The economy experiences a decrease in the price level and an increase in real domestic output. Which is a likely explanation?
Business costs and wage rates have decreased.
The economy experiences an increase in the price level and a decrease in real domestic output. Which of the following is a likely explanation?
Input prices have increased.
Which of the following would not shift the aggregate demand curve?
Productivity rates
When the general price level in our economy increases, which of the following effects does NOT occur?
The purchasing power of people's savings will increase.
The economy's long-run AS curve assumes that wages and other resource prices _____.
eventually rise and fall to match upward or downward changes in the price level
Which of the diagrams best portrays the effects of an increase in resource productivity?
graph 1, AS shifts to the right
Which of the diagrams best portrays the effects of an increase in foreign spending on U.S. products and an expansion?
graph 3, AD shift to the right
Which of the diagrams best portrays the effects of a substantial reduction in government spending?
graph 4, AD shifts to the left
In an effort to avoid recession, the government implements a tax rebate program, effectively cutting taxes for households. We would expect this to _____.
increase aggregate demand
A decrease in the price of crude oil would most likely _____.
increase aggregate supply in the U.S.
A shift of the aggregate demand curve from AD1 to AD0 might be caused by a(n) _____.
increase in investment spending
Congress's passage of new laws significantly increasing the regulation of business would tend to _____.
increase per-unit production costs and shift the aggregate supply curve to the left
If the national incomes of our trading partners increase, then our aggregate demand _____.
increases because net exports increase
The short-run aggregate supply curve is most likely to shift to the right if _____.
input prices decrease
Item 5 If personal taxes were decreased and resource productivity increased simultaneously, the equilibrium _____.
output would necessarily rise
In the diagrams, AD1 and AS1 are the "before" curves. Stagflation is depicted by _____.
panel (B) only, only AS shifts left
Suppose that oil prices increase sharply while the rate of growth in labor productivity declines. The combination of these two factors should ______.
shift the short-run aggregate supply curve to the left
If the dollar appreciates in value relative to foreign currencies, aggregate demand _____.
decreases because net exports decrease
Which of the following factors will shift AD1 to AD3?
A decrease in consumer wealth
Which combination of factors would most likely increase aggregate demand?
An increase in consumer wealth and a decrease in interest rates.
Item 21 Which would most likely increase aggregate supply?
An increase in productivity
Which of the following effects best explains the downward slope of the aggregate demand curve?
An interest-rate effect
If the economy is initially at full employment, which of the diagrams best portrays a recession as a result of an increase in the cost of production?
graph 2, AS shift to the left
