Exam 8: Macroeconomic Equilibrium: Aggregate Demand and Supply

In the long run, increased government spending is ineffective in raising equilibrium real GDP.

Aggregate demand-aggregate supply analysis shows that in the long run the effect of increased aggregate spending on real GDP is:

A rightward shift in the aggregate supply curve is generally associated with a reduction in resource prices.

An increase in aggregate demand due to higher foreign income will cause:

In 2009, a nation reported total imports worth $250,000 and total exports worth $225,000. This implies the nation had net exports worth $25,000 during this year.

Assume that the AD curve is held constant and short-run aggregate supply decreases. The result is a(n):

Which of the following could lead to a decline in aggregate supply in the U.S.?

As the level of real GDP increases, the short-run aggregate supply curve:

The interest rate effect suggests that investment spending and planned aggregate expenditures fall when the general price level rises.

In the long-run, if the economy is operating at the full employment level, the equilibrium level of real GDP is determined solely by the:

If people expect the economy to do well in the future, they will increase their consumption today at every price level.

If the national output cannot be increased unless the productive capacity or potential GDP increases, the aggregate supply curve is:

To determine short-run equilibrium in the economy, we use an aggregate supply curve that is:

Suppose the long-run aggregate supply curve shifts to the right as a consequence of the discovery of more efficient production technologies. Given unchanged aggregate expenditure, this implies a rise in long-run equilibrium output and a decline in the equilibrium price level.

Aggregate demand represents the _____ at alternative price levels.

Assuming a fixed exchange rate, a decrease in U.S. prices relative to European prices will:

The long-run aggregate supply of an economy at the potential level of real GDP is graphically represented by:

Firms' profits or production do not increase in the long run because:

Which of the following is true of the aggregate demand curve?

The table given below reports the inflation rate in the U.S. and Canada for two years. -Refer to Table 8.1. Assume that the exchange rate is fixed at 1.4 CAD = $1 and that price changes for salmon are identical to the inflation rate in each country. If U.S. importers pay 10,000 CAD for a trailer of Canadian salmon in year 1, what is the approximate price of that salmon in year 2, given that exchange rates do not change?