Exam 23: Output and Prices in the Short Run

Consider two economies,A and B.Economy A has a marginal propensity to consume of 0.9,a net tax rate of 0.3 and a marginal propensity to import of 0.3.Economy B has a marginal propensity to consume of 0.9,a net tax rate of 0.1 and a marginal propensity to import of 0.3.Suppose there is an increase in autonomous investment of $5 billion in each of these economies.Which of the following statements is true?

Other things being equal,as the price level falls exogenously,the aggregate expenditure (AE)function shifts

Which of the following will cause a positive aggregate supply shock?

A leftward shift of the aggregate demand (AD)curve could result from a rise in

Other things being equal, a rise in the price level will imply ________ in wealth for the bondholder and ________ in the wealth of the issuer of the bond.

Other things being equal,as the price level rises exogenously,the aggregate expenditure (AE)function shifts

Consider a simple macro model with a given price level and demand-determined output.An exogenous change in the price level causes a

Aggregate supply refers to the

Consider two economies,A and B.Economy A has a marginal propensity to consume of 0.9,a net tax rate of 0.3 and a marginal propensity to import of 0.3.Economy B has a marginal propensity to consume of 0.9,a net tax rate of 0.1 and a marginal propensity to import of 0.3.Suppose there is an increase in autonomous investment of $5 billion in each of these economies.Which of the following statements is true?

A rightward shift in the aggregate demand ( AD)curve could result from a rise in

A leftward shift in the economyʹs AS curve implies that

A leftward shift of the aggregate demand (AD)curve could result from a fall in

Other things being equal, an economy with a higher net tax rate will have a ________ marginal propensity to spend and thus a ________ AD curve compared to an economy with a lower net tax rate.

On a graph that shows the derivation of the AD curve,an exogenous change in the price level causes

The AD curve shows the relationship between

Aggregate supply shocks cause the price level and real GDP to change in

Consider the nature of macroeconomic equilibrium.If,at a particular price level,the total output demanded is greater than that supplied by producers,then

Consider the simple multiplier when the price level is constant. We can say that national income is ________and that the simple multiplier measures the horizontal shift in ________ in response to a change in autonomous desired expenditure

Aggregate demand (AD)shocks have a smaller effect on real GDP and a larger effect on the price level

If the economy is in macroeconomic equilibrium with a vertical AS curve,and then aggregate demand decreases,we expect the AE function to shift to a