Exam 14: Aggregate Demand and Aggregate Supply

An increase in the overall price level _____ the interest rate, which leads to a decrease in investment spending and _____ the aggregate demand curve.

Which of the following will decrease aggregate demand, thereby shifting the curve left?

In the upward-sloping range of the short-run aggregate supply curve, firms are willing to supply more output when the overall price level increases because:

According to John Maynard Keynes, which one of the following is true about the supply decisions of firms in the short run?

According to the interest rate effect, when all else is equal, a lower price level implies a _____ demand for money, which leads to a _____ interest rate.

In the upward-sloping range of the short-run aggregate supply curve, the nominal wage is _____, which implies that the real wage is:

The real wage of workers increases when the nominal wage _____ by 5% and the overall price level _____.

If the short-run macroeconomic equilibrium occurs in the upward-sloping range of the short-run aggregate supply curve and government increases personal income tax, then which of the following will be true in the long run?

Which of the following will decrease aggregate demand, thereby shifting the curve left?

If the short-run macroeconomic equilibrium occurs in the classical range of the short-run aggregate supply curve, then an increase in money supply will _____ output and will _____ the price level.

If the short-run macroeconomic equilibrium occurs in the upward-sloping range of the short-run aggregate supply curve and the Federal Reserve increases the money supply, then which of the following will be true in the long run?

Econland is a country with a low GDP and a poor standard of living. Politicians and policymakers in that country want to achieve long-run economic growth to help their country come out of poverty. One policymaker suggests cutting taxes and increasing money supply because that increases GDP. Can these policies help Econland in its goal of achieving long-run growth? Justify your answer with the help of a graph.

Use Figure: Macroeconomic Equilibrium. The figure shows four different macroeconomic equilibria for an economy. Which of the following can shift the macroeconomic equilibrium from point D to point A? ​ Figure: Macroeconomic Equilibrium

Which one of the following CANNOT lead to economic growth?

If the short-run macroeconomic equilibrium occurs in the Keynesian range of the short-run aggregate supply curve, then an increase in the government's discretionary spending will lead to:

Suppose that the U.S government decreases its mandatory spending on goods and services. This policy will:

Which one of the following would constitute a negative supply shock?

Which one of the following is NOT a category of government spending?

Use Table: Income and Consumption Spending. The table depicts the total income of an economy and the consumption spending at each income level. Given this information, what is the marginal propensity to consume and save for the economy? Further, assuming that there are no leakages in the economy except saving, by how much would total spending in the economy increase if government spending in the economy increases by $500? Finally, how would your answer to the second part change if there was an additional leakage in the form of taxes? ​ ​

If the short-run macroeconomic equilibrium occurs in the Keynesian range of the short-run aggregate supply curve, then a decrease in the income tax rate will lead to: