Exam 9: Aggregate Demand and Supply

What are the determinants of short-run aggregate supply?

If the marginal propensity to consume is 0.5, then $50 of every additional $100 of income will be spent on consumption.

Which of these will shift the short-run aggregate supply curve to the right?

The collapse of home values in 2008 led to a(n) _____ in Americans' consumption and a(n) _____ in their saving rates.

As the aggregate price level declines

_____ in wealth and _____ in government spending, along with a(n) _____ of the dollar, will shift the U.S. aggregate demand curve to the left.

At high domestic price levels compared to other countries, Americans

Which of these would cause a movement along a country's aggregate demand curve, but not a shift in its aggregate demand curve?

If the government of Econia raises the minimum wage, what impact will this have on the average price level and output level of the country?

One reason the amount of real output demanded declines when the aggregate price level rises is the result of a reduction in household wealth called the _____ effect.

An increase in interest rates will lead to an increase in aggregate demand.

Which event would reduce short-run aggregate supply but not long-run aggregate supply?

John Maynard Keynes's analysis was based on an economy whose resources were underutilized.

Who recognized the need to develop tools to analyze the macroeconomy as a whole?

Too much spending will cause

If an economy is in long-run equilibrium, it is also in short-run equilibrium.

If the marginal propensity to consume is 0.8, then $80 of every additional $100 of income will be spent on consumption.

Define the spending multiplier and describe why it is important. Provide an example and formulas to describe how to calculate the multiplier at a stable price level.

When the price of a product falls, causing consumers to purchase more of that product and less of other products, this is known as the _____ effect.

One reason real output declines when the aggregate price level rises is the reduction in the purchasing power of money.