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

Refer to the information provided in Figure 26.3 below to answer the question(s) that follow. Figure 26.3 -Refer to Figure 26.3. Following the recession of 2008-2009, many firms in the United States eventually began investing in new capital. This increase in investment in new capital would cause

Other things equal, a decrease in the Z factors ________ the equilibrium interest rate and ________ equilibrium output.

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. Suppose the economy is at Point A, a decrease in the price level moves the economy to Point

An increase in the price level shifts the IS curve to the left.

Refer to the information provided in Figure 26.6 below to answer the question(s) that follow. Figure 26.6 -Refer to Figure 26.6. Suppose the equilibrium output is initially $600 billion. A decrease in the Z factors ________ equilibrium output and ________ the price level.

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. Between the output levels of $300 billion and $600 billion, the relationship between the price level and output is

When the interest rate is low, planned investment is ________ so output is ________.

When the general price level rises

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

To increase the price level the government could

When the aggregate supply curve is ________ the price of factors of production is fixed, with little or no upward pressure on price.

Refer to the information provided in Figure 26.6 below to answer the question(s) that follow. Figure 26.6 -Refer to Figure 26.6. Suppose the equilibrium output is initially $600 billion. An oil embargo would probably

A decrease in the "Z" factors shifts the aggregate demand curve to the left.

The long-run aggregate supply curve is vertical if

Refer to the information provided in Figure 26.5 below to answer the question(s) that follow. Figure 26.5 -Refer to Figure 26.5. An increase in the price level shifts the ________ to the ________.

Refer to the information provided in Figure 26.8 below to answer the question(s) that follow. Figure 26.8 -Refer to Figure 26.8. If the economy is at Point A currently producing Y₀ and the Z factors decrease, the economy will move to Point ________ in the short run and to Point ________ in the long run.

If ________ equilibrium output ________, the price level decreases.

The real wealth effect explains why the aggregate supply curve is horizontal in the long run.

Refer to the information provided in Figure 26.3 below to answer the question(s) that follow. Figure 26.3 -Refer to Figure 26.3. A decrease in aggregate supply is represented by

A decrease in the price of inputs shifts the AS curve to the left.