Exam 11: The Determination of Aggregate Output, the Price Level, and the Interest Rate

Refer to the information provided in Figure 11.4 below to answer the questions that follow. Figure 11.4 -Refer to Figure 11.4. Suppose the economy is at Point A, an oil price increase could move the economy to Point

Other things equal, a decrease in the Z factors shifts

Other things equal, an increase in government spending ________ the equilibrium interest rate and ________ equilibrium output.

If there is an increase in the percentage of employees whose wages adjust automatically with changes in the price level, the aggregate supply curve will become

The aggregate supply curve shows the relationship between the aggregate quantity of output supplied by ________ and ________.

11.3 The Final Equilibrium Refer to the information provided in Figure 11.6 below to answer the questions that follow. Figure 11.6 -Refer to Figure 11.6. Suppose the equilibrium output is initially $600 billion. A decrease in wages and an increase in government spending will, for sure, increase

A decrease in government spending will decrease the equilibrium price level and decrease aggregate output, ceteris paribus.

Refer to the information provided in Figure 11.5 below to answer the questions that follow. Figure 11.5 -Refer to Figure 11.5. As a result of ________, the equilibrium interest rate increases and the equilibrium output level increases.

Potential output is the level of aggregate output that can be sustained in the long run without

Refer to the information provided in Figure 11.5 below to answer the questions that follow. Figure 11.5 -Refer to Figure 11.5. An increase in the price level shifts the ________ to the ________.

The Federal Reserve's policy to ________ means that interest rates are increased gradually as the economy expands.

The aggregate demand curve slopes downward because at higher price levels

Which of the following will, unambiguously, increase the price level?

Coal is used as a source of energy in many manufacturing processes. Assume a long strike by coal miners reduced the supply of coal and increased the price of coal. This would cause

Refer to the information provided in Figure 11.8 below to answer the questions that follow. Figure 11.8 -Refer to Figure 11.8. For this economy to produce Y₁ and sustain it without inflation

Refer to the information provided in Figure 11.8 below to answer the questions that follow. Figure 11.8 -Refer to Figure 11.8. If the economy is at Point A currently producing Y₀ and the Z factors decrease, the economy will move to Point ________ in the short run and to Point ________ in the long run.

The level of aggregate output that can be sustained in the long run without inflation is known as

Refer to the information provided in Figure 11.3 below to answer the questions that follow. Figure 11.3 -Refer to Figure 11.3. A shift from AS₁ to AS₀ represents a(n)

If the short-run aggregate supply curve intersects the aggregate demand curve to the right of potential GDP, wages will rise.

Other things equal, an increase in government spending shifts