Exam 26: The Determination of Aggregate Output, the Price Level, and the Interest Rate

Coal is used as a source of energy in many manufacturing processes. Assume a long strike by coal miners reduced the supply of coal and increased the price of coal. This would cause

Each point on the IS curve represents ________ in the goods market for the given interest rate.

Refer to the information provided in Figure 26.4 below to answer the question(s) that follow. Figure 26.4 -Refer to Figure 26.4. Which of the following causes the economy to move from Point A to Point E?

Other things equal, a decrease in government spending shifts

The level of output determined by the intersection of the short-run aggregate supply curve and the aggregate demand curve

Refer to the information provided in Figure 26.2 below to answer the question(s) that follow. Figure 26.2 -Refer to Figure 26.2. At $900 billion, this economy

________ shifts the Fed rule to the left.

All of the following shift the short-run aggregate supply curve except

Related to the Economics in Practice on p. 543: Which measure of the aggregate price level does the Fed consider the most important?

When the ________ decreases, then potential output decreases.

If the economy produces full employment output, an increase in government spending increases output but not the price level.

If the economy is operating way below capacity, an increase in aggregate demand causes a ________ change in the price level and ________ change in output.

The Federal Reserve's policy to "lean against the wind" means that

The level of aggregate output that can be sustained in the long run without inflation is known as

If there is a decrease in the percentage of employees whose wages adjust automatically with changes in the price level, the aggregate supply curve will become

If the price level falls, the aggregate supply increases as a result of the aggregate demand curve shifting left.

Which of the following causes a movement along the aggregate demand curve?

If the combination r = 5% and Y = $100 billion is on the Fed rule line, we know that the combination r = 7% and Y = $100 billion would represent

The IS curve shows combinations of output and interest rates consistent with equilibrium in the goods market.

Refer to the information provided in Figure 26.2 below to answer the question(s) that follow. Figure 26.2 -Refer to Figure 26.2. This economy reaches capacity at