Exam 8: Macroeconomic Equilibrium: Aggregate Demand and Supply

Each of the panels given below represents the short-run equilibrium in the U.S. economy. The Aggregate Demand and Aggregate Supply curves in each panel responds to various economic changes.?Figure 8.1 -Refer to Figure 8.1. Which of the graphs in the figure best describes the impact of a generalized more optimistic view of the future by consumers?

Other things equal, an increase in aggregate spending tends to be associated with:

The figure given below represents the long-run equilibrium in the aggregate demand and aggregate supply model.?Figure 8.2 -Refer to Figure 8.2. The combination of rising prices and falling output is known as stagflation. This phenomenon is represented by which of the following shifts?

If the average price level falls, the real value of wealth also falls.

A decrease in the price level will result in:

In the 1970s the international price of crude oil rocketed because:

An increase in aggregate demand normally does not cause inflation.

Other things remaining unchanged, the flatter the aggregate supply curve:

Consider the following statement: "If the government attempts to raise employment through increased fiscal spending, all it will end up doing is increasing the price level." The statement rests on the assumption that:

When the foreign price level falls, domestic goods become more expensive relative to foreign goods, causing domestic net exports and aggregate demand to fall.

The figure given below represents the long-run equilibrium in the aggregate demand and aggregate supply model.?Figure 8.2 -Refer to Figure 8.2. A movement from equilibrium point A to equilibrium point B would be the result of a(n):

Which of the following will cause net exports to rise?

A simultaneous increase in inflation and decrease in economic growth in a country can be associated with:

In the short run, a decrease in the general price level will cause business profits to rise and, hence, the total quantity of output to increase.

The degree of responsiveness of aggregate output to a price change declines as the:

Which of the following is not held constant in the short run when determining the aggregate supply curve?

Which of the following statements is true about the economy in the long run?

A decrease in the relative price of economics textbooks will raise the aggregate quantity of an economy's goods and services demanded.

_____ represents the relation between total expenditures, or total spending, and the price level.

Identify the correct statement.