Exam 32: Aggregate Demand and Aggregate Supply

(Advanced analysis) Assume that the MPS is 0.33 in an economy that has an aggregate supply curve with a slope of 1.An increase in investment spending of $10 billion will shift the aggregate demand curve rightward by

If the price level decreases, then the aggregate expenditures schedule will shift.This translates into a

Other things equal, a reduction in personal and business taxes can be expected to

Other things equal, a decrease in the real interest rate will

A sharp rise in the real value of stock prices, which is independent of a change in the price level, would best be an example of

An increase in the aggregate expenditures schedule

(Last Word) In response to the Great Recession, the federal government engaged in significant deficit-funded spending, but it did not fully achieve the desired result.Which of the following best explains why the fiscal policy actions fell short of their objective?

A rightward shift of the AD curve in the very flat part of the short-run AS curve will

When there is an increase in aggregate demand in the short run, there will be an increase in the price level but not in the level of output or employment.

The aggregate demand curve shows that when the price level rises, the quantity of real output demanded decreases.

In the Great Recession of 2007-2009, stock market values shrank, causing a reverse

The real-balances, interest-rate, and foreign purchases effects all help explain

The greater the upward slope of the AS curve, the larger is the realized multiplier effect of a change in investment spending.

Which of the following events would most likely reduce aggregate demand?

The aggregate supply curve (short run)

Other things equal, appreciation of the dollar

If the dollar depreciates in value relative to foreign currencies, then aggregate

A fall in labor costs will cause aggregate

An increase in the price level in the aggregate expenditures model would

Suppose that nominal wages fall and productivity rises in a particular economy.Other things equal, the aggregate