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Which of the following enhance the expected returns on investment and thus increase aggregate demand?
new and improved technology
The short-run is the period in which ______.
output prices are flexible but input prices are fixed or highly inflexible
The interest-rate effect occurs when a higher price level decreases the demand for money, thereby increasing the interest rate, assuming a fixed money supply. True or False
false
Which of the following would be effects on the price of machinery when the cost of machinery components increases?
per-unit production prices for machinery would rise; the aggregate supply curve would shift to the left
Aggregate supply is represented as a schedule or curve showing the relationship between a nation's _____ level and the amount of real domestic output that firms in the economy produce.
price
New and improved technology, seen as investment spending by firms will lead to a(n) ___ in aggregate demand.
increase
the AD curve will shift to the right when consumers expect their future incomes to
increase
Which of the following shifts the short-run aggregate supply curve to the left?
increased labor demand, increased production costs
What is a major factor in per-unit production costs and therefore a key determinant of aggregate supply?
input prices
In the short run ____
input prices are fixed and output prices can vary
One of the reasons that the short run aggregate supply curve is upsloping is because ____ prices are fixed while _____ prices are variable
input, output
Select all the choices that explain what happens with rising price levels.
purchasing power drops, people demand less output, real balances drop
If an economy is producing beyond its full employment output, nominal wages will start to increase, which causes the short-run aggregate supply curve to ______.
shift left
factors of change in AD
spending, expectations, interest rates, returns, national income abroad, exchange rates, taxes
Manufacturing firms expect steel prices to decrease significantly.
AS shift right
Technological changes enable workers to be more productive.
AS shift right
The complete disintegration of OPEC, causing oil prices to fall by one-half.
AS shift right
The spread of democracy around the world increases consumer confidence in the United States.
AD shift right
A 12 percent increase in nominal wages (with no change in productivity).
AS shift left
A hurricane destroys manufacturing plants
AS shift left
A new national tax on producers based on the value added between the costs of the inputs and the revenue received from their output.
AS shift left
A revolution in Iran results in a significant reduction in the world's supply of oil.
AS shift left
Employers are required to provide paid sick leave to part-time as well as full-time employees.
AS shift left
A new computer chip is developed that is faster and cheaper than previous chips.
AS shift right
A sizable increase in labor productivity (with no change in nominal wages).
AS shift right
A stock market crash reduces people's wealth.
AD shift left
Which of the following explain the reasons for the downward slope of the aggregate demand curve?
A higher price level decreases the purchasing power of the publics' accumulated savings balances.
How is the real-balances effect defined?
A higher price level reduces the purchasing power of the public's accumulated savings balances.
A widespread fear by consumers of an impending economic depression.
AD shift left
Consumers become more pessimistic about the economy.
AD shift left
A 10 percent across-the-board reduction in personal income tax rates
AD shift right
A major increase in spending for health care by the federal government.
AD shift right
A reduction in interest rates.
AD shift right
An increase in exports that exceeds an increase in imports (not due to tariffs).
AD shift right
Government spending increases.
AD shift right
The United States enters into an arms race with China, resulting in a significant increase in military spending.
AD shift right
The general expectation of coming rapid inflation.
AD shift right
Which of the following are true of an economy in its long-run equilibrium?
It achieves its potential output, Aggregate demand intersects both short-run and long-run aggregate supply at the same point.
In the long run, when the price level rises or falls, real output will do which of the following?
Stay the same, because nominal wages also rise or fall with the price level
When is equilibrium achieved in the short run?
When the downward-sloping aggregate demand curve intersects the upward-sloping aggregate supply curve
A decline in aggregate supply, assuming constant aggregate demand, will result in _______ in the quantity demanded for real GDP.
a decrease
Consumer wealth is defined as the total value of ______.
assets minus the total value of liabilities
In terms of aggregate supply and aggregate demand, the equilibrium price level is ______.
at the point of intersection of the aggregate demand and aggregate supply curves
A decline in expected returns will ______ investment and shift the aggregate demand curve to the ______.
decrease, left
factors of change in AS
domestic resource prices, prices of imported resources, productivity, business taxes, subsidies, regulations
When output falls below the economy's full-employment output level, which of the following adjustments will occur?
the demand for labor will decrease, nominal wages will decrease
