Indicate which of the following would cause a shift in the aggregate demand curve from point A to point C.
Increased consumer optimism, Change in the US exchange rate relative to other currencies, Lower taxes, Monetary policy
Consider the downward sloping aggregate demand (AD) curve to the right. Which of the following results in a movement from point A to point B (a movement up along the AD curve) or from point A to point C (a movement down along the AD curve)?
wealth effect, interest rate effect
When the economy enters a recession, your employer is ___ to reduce your wages because ___.
unlikely; lower wages reduce productivity and morale
Deflation will
increase the quantity of real GDP demanded.
German luxury car exports were hurt in 2009 as a result of the recession. How would this decrease in exports have affected Germany's aggregate demand curve?
The aggregate demand curve would have shifted to the left.
A change in the price level causes a ___ the short run aggregate supply (SRAS) curve. In the figure, this is shown by moving from point ___.
A change in any other factor causes a ___ the SRAS curve. In the figure, this is shown by moving from point ___.
movement along; A to B
shift in; B to C
How does an increase in the price level affect the quantity of real GDP supplied in the long run?
Changes in the price level do not affect the level of GDP in the long run.
An increase in the labor force or capital stock is illustrated as a ___.
An increase in the expected price of an important natural resource is indicated by ___.
An improvement in technology is shown as a ___.
An increase in the expected future price level
shift from A to B (line shifts to right)
shift from B to A (line shifts to left)
shift from A to B
shift from B to A
Consider the figure to the right. Why does the short run aggregate supply curve (SRAS) slope upward?
All of the above;
Firms and workers fail to predict changes in the price level, contracts keep wages "sticky", prices of final goods rise more quickly than the prices of inputs
On the long run aggregate supply curve,
a decrease in the price level has no effect on the aggregate quantity of GDP supplied.
Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy. As a result,
the long run aggregate supply curve will shift to the right.
If, due to a recession, foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended, this will
shift the short-run aggregate supply curve of the home country to the right.
Short run macroeconomic equilibrium occurs when
aggregate demand and short run aggregate supply intersect.
Suppose the economy is at full employment and firms become more pessimistic about the future profitability of new investment. Which of the following will happen in the short run?
Unemployment will rise.
If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run, the economy would experience
stagflation.
An increase in aggregate demand causes an increase in ___ only in the short run, but causes an increase in ___ in both the short run and the long run.
real GDP; the price level
The long run adjustment to a negative supply shock results in
the short run aggregate supply shifting to the right.
According to the dynamic AD-AS model, what is the most common cause of inflation?
A and B only.
Total spending increases faster than total production, AD increases by more that LRAS.
When people became less concerned with the underlying value of their houses and instead focused on the expectations of the prices of their houses increasing, ___ occurred.
a housing bubble
When people became ___ concerned with the underlying value of their houses and became ___ with the expectations of prices of their houses increasing, a housing bubble occurred.
less; more