Exam 9: Aggregate Demand and Supply

If the U.S.aggregate price level falls:

The long-run aggregate supply curve is positively sloped.

If the national incomes of foreign countries fall at the same time the dollar appreciates,then in the United States the aggregate demand curve:

Why does the wealth effect not apply to assets such as houses or artwork?

(Figure: Shifting SRAS and AD) What economic event is represented if full employment GDP occurs at point (a)?

If companies increase their level of investment,a short-run increase in output will be followed by a reduction,resulting in an overall decrease in output.

What would cause the price level to decrease and employment to increase?

Which of the following tends to make aggregate demand decrease by more than the amount that consumer spending decreases?

The idea behind the spending multiplier is that new spending causes more spending,income,and output than just an amount equal to the new spending itself.

Use the following to answer questions Figure: Predicting Aggregate Demand Shifts -(Figure: Predicting Aggregate Demand Shifts)Which of the following would shift the aggregate demand curve from AD₂ to AD₁?

Describe how an increase in the price level will affect interest rates (when the money supply is fixed)and the aggregate demand curve.

The market does not necessarily clear in long-run macroeconomic equilibrium.

Which of the following is NOT a reason the aggregate demand curve is negatively sloped?

A tax decrease on producers will shift the aggregate supply curve to the left.

Which of the following factors causes a shift in the aggregate demand curve to the left?

Use the following to answer questions Figure: Predicting Aggregate Demand Shifts -(Figure: Predicting Aggregate Demand Shifts)Which of the following would shift the aggregate demand curve from AD₁ to AD₂?

The collapse of home values that began in 2008 led to ____ in Americans' saving rates,shifting aggregate demand to the ____.

Suppose workers are under a contract that fixes wages for five years.How would this contract affect the shape of the aggregate supply curve?

If the money supply is fixed and prices rise,the cost of borrowing will _____ and business investment will _____.This is called the ______.

The _____ shows the amount of output that firms are willing to produce at various price levels.