Test 3 Macro ch12

A sharp rise in the real value of stock prices, which is independent of a change in the price level, would best be an example of:

A change in real value of consumer wealth

An increase in personal income tax rates will cause a(n):

Decrease (or shift left) in aggregate demand

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

Decrease aggregate demand and increase aggregate supply

A decrease in government spending will cause a(n):

Decrease in aggregate demand

An increase in expected future income will:

Increase aggregate demand

A fall in labor costs will cause aggregate:

Supply to increase

Prices and wages tend to be:

flexible upward, but inflexible downward.

Graphically, cost-push inflation is shown as a:

leftward shift of the AS curve.

The fear of unwanted price wars may explain why many firms are reluctant to:

reduce prices when a decline in aggregate demand occurs.

Graphically, demand-pull inflation is shown as a:

rightward shift of the AD curve along an upsloping AS curve.

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

The real-balances effect on aggregate demand suggests that a:

Lower price level will increase the real value of many financial assets and therefore cause an increase in spending

The economy experiences an increase in the price level and an increase in real domestic output. Which is a likely explanation?

Net exports have increased

When the economy is experiencing demand-pull inflation, its real GDP tends to be rising.(true/false)

True

Wage contracts, efficiency wages, and the minimum wage are explanations for why:

Wages tend to be inflexible downward

An increase in net exports will shift the:

aggregate expenditures curve upward and the aggregate demand curve rightward.

If Congress passed 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

If the dollar appreciates in value relative to foreign currencies:

Aggregate demand decreases because net exports decrease

Which combination of factors would most likely increase aggregate demand?

An increase in consumer wealth and a decrease in interest rates

A change in business taxes and regulation can affect production costs and aggregate supply.(true/false)

True

An expected increase in the prices of consumer goods in the near future will:

Increase (or shift right) in aggregate demand now

An increase in productivity will:

Increase aggregate supply

A decrease in aggregate demand in the short run will reduce:

Both real output and the price level

Minimum wage laws tend to make the price level more flexible rather than less flexible.(true/false)

False

If the dollar appreciates relative to foreign currencies, then:

Foreign buyers will find U.S. goods become more expensive