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

If production costs increase, the price level will rise.

Other things being equal, the more wealth households have, the more they consume.

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. This economy cannot continue to produce Y₁ (or at point B because

A decrease in taxes on business investments will increase aggregate supply.

An oil price decrease would

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, an increase in the price level moves the economy to Point

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. As a result of ________, the equilibrium interest rate increases and the equilibrium output level decreases.

The aggregate supply curve is probably better thought of as a price/output response curve.

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. A decrease in the Z factors shifts the ________ to the ________.

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 price level is 110. An increase in wages and an increase in government spending will, for sure, increase

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, an increase in aggregate demand moves the economy to Point

The level of aggregate output demanded falls when the price level rises, because the resulting increase in the interest rate will lead to

Whenever the aggregate supply curve intercepts the aggregate demand curve, the economy is producing full employment output.

Potential output is the level of aggregate output that can be sustained in the long run without

Increases in pollution regulations would

The long-run aggregate supply curve reflects the idea that in the long run, output is determined only by

If the economy is operating on the relatively vertical segment of the aggregate supply curve, an increase in aggregate demand causes a ________ change in the price level and a ________ change in output.

The aggregate demand curve shows that, ceteris paribus, at ________ price levels total quantity demanded is ________.

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. Suppose the economy is currently at Point A producing potential output Y₀. If the government increases spending, the economy moves to Point ________ in the short-run and to Point ________ in the long-run.

If the United States were to pass legislation that would make it easier for people to emigrate to the United States, this would cause