Exam 12: Aggregate Demand and Aggregate Supply

Suppose higher taxes on businesses cause a decrease in spending on plant and equipment.How will this affect the aggregate expenditure (AE)and the aggregate demand (AD)schedules?

List the three major determinants that can cause a shift in the short-run aggregate supply.

What is the difference in the explanation of the shape of the aggregate demand curve and a single product demand curve? After all,both demand curves show an inverse relationship between price and quantity.

We would expect a decline in personal and corporate income taxes to:

Other things equal,a reduction in personal and business taxes can be expected to:

Other things equal,a decrease in the price level will:

A decrease in consumer spending can be expected to shift the:

The Great Moderation refers to:

Per unit production cost is:

Cost-push inflation arises from:

An increase in aggregate expenditures resulting from some factor other than a change in the price level is equivalent to:

Depreciation of the dollar relative to foreign currencies will tend to increase net exports and aggregate demand.

The following aggregate demand and supply schedules are for a hypothetical economy: -Refer to the above data.If the amount of real output demanded at each price level falls by $200,the equilibrium price level and equilibrium level of real domestic output will fall to:

The following aggregate demand and supply schedules are for a hypothetical economy: -Refer to the above data.The equilibrium price level will be:

Minimum wage laws tend to make the price level more flexible rather than less flexible.

-Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P₂ and that the economy initially is operating at its full-employment level of output Q_f.In the short run,an increase in the price level from P₂ to P₃ will:

An economy is employing 2 units of capital,5 units of raw materials,and 8 units of labour to produce its total output of 640 units.Each unit of capital costs $10,each unit of raw materials,$4,and each unit of labour,$3. -Refer to the above information.The per unit cost of production in this economy is:

Refer to the list below.Which two factors would most likely cause a change in investment spending? The following list of items is related to aggregate demand.

Suppose the full-employment level of real output (Q)for a hypothetical economy is $500 and that the price level (P)initially is 100.Use the following short-run aggregate supply schedules to answer the next question. -Refer to the information above.In the long run,an increase in the price level from 100 to 125 will:

Suppose the aggregate demand and short-run aggregate supply schedules for a hypothetical economy are as shown below: (a)What will be the equilibrium price and real output level in this hypothetical economy? Is this level of real GDP also the full-employment level of output? Explain. (b)Why won't a price level of 110 be the equilibrium price level? Why won't a price level of 130 index be the equilibrium price level? (c)Suppose aggregate demand increases by $400 billion at each price level.What will be the new equilibrium price and output levels? (d)What factors might cause aggregate demand to increase?