Exam 8: Macroeconomic Equilibrium: Aggregate Demand and Supply

The figure given below represents the equilibrium real GDP and price level in the aggregate demand and aggregate supply model.?Figure 8.3 -Refer to Figure 8.3. Potential GDP is greater than real GDP at all output levels:

Pessimistic consumer expectations and decreased government spending are both associated with:

The fact that the aggregate demand curve slopes downward means that aggregate expenditures increase when the price level decreases.

A lower domestic price level raises aggregate expenditures and, therefore, shifts the aggregate demand curve to the right.

Other things equal, a decrease in government spending:

Which of the following explains the effect of prices on profits in the short-run?

Lower interest rates on business loans usually result in a(n):

The short-run aggregate supply curve will shift to the left if:

Identify the correct statement about the aggregate supply curve.

Other things equal, an increase in aggregate demand will result in:

Which of the following is an incorrect statement?

The table given below reports the average hourly wage received by laborers and the price index for two years.? -Refer to Table 8.2. The data in the table suggests that in year 2:

The aggregate quantity of goods and services produced will decrease at every price level when resource price rises.

The intersection of the aggregate demand and the aggregate supply curve defines the equilibrium level of _____ and the price level.

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 USD and that price changes for lumber are identical to the inflation rate for each country. If Canadian lumber is sold in year 1 for 5,500 CAD, what is the price of that lumber in year 2, given that exchange rates do not change?

Which of the following accounts for a movement along a given AD curve?

In the long run, increased consumption spending raises only the price level.

The main reason why the short-run aggregate supply curve slopes upward is that as the average price level increases, larger scales of production become more profitable.

The wealth effect and the interest rate effect are changes in the price level that:

If the aggregate supply curve is vertical, then shifts in aggregate demand will not change aggregate output.