Exam 10: Aggregate Demand and Aggregate Supply

The interest-rate and real-balances effects are important because they help explain:

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:

Which would increase aggregate supply?

-Which of the above diagrams best portrays the effects of declines in the incomes of other major nations with whom we trade?

-Refer to the above diagram. At the equilibrium price and quantity:

Cost-push inflation occurs because of a:

An increase in consumer wealth will decrease aggregate demand.

-Which of the above diagrams best portrays the effects of a decrease in the availability of key natural resources?

The following table shows the aggregate demand and aggregate supply schedule for a hypothetical economy. -Refer to the above table. The equilibrium price level and quantity of real domestic output will be:

The determinants of aggregate demand:

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

The interest-rate effect is one of the determinants of aggregate demand.

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

A decrease in taxes will cause a(n):

Refer to the table below. If this nation's aggregate supply schedule graphs as a vertical line at the $25 billion level of real GDP, its price level will be: The following table is for a particular country in which C is consumption expenditures, I_g is gross investment expenditures, G is government expenditures, X is exports, and M is imports. All figures are in billions of dollars.

Cost-push inflation arises from:

A movement downward along an existing aggregate demand curve is equivalent to a(n):

Other things being equal, if the national incomes of our major international lending partners were to rise, our:

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. If the price level unexpectedly declines from 100 to 75, the level of real output in the short run will:

-Refer to the above diagram. When output decreases from Q₁ and the price level increases from P₁, then this change will: