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

The change in consumption brought about by a change in purchasing power of savings that results from a change in the price level is the

11.5 The Long-Run AS Curve Refer to the information provided in Figure 11.7 below to answer the questions that follow. Figure 11.7 -Refer to Figure 11.7. Potential output

Since aggregate supply is the total supply of all goods and services in the economy, the aggregate supply curve is the sum of the individual supply curves for each of these goods and services.

Decreasing government spending and decreasing the minimum wage are two policies that both work to decrease the price level.

The aggregate demand curve is the sum of all demand curves of all goods and services in the economy.

Refer to the information provided in Figure 11.5 below to answer the questions that follow. Figure 11.5 -Refer to Figure 11.5. Which of the following combinations would definitely increase the equilibrium interest rate?

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

Aggregate demand is the total demand for goods and services in an entire economy.

Refer to the information provided in Figure 11.8 below to answer the questions that follow. Figure 11.8 -Refer to Figure 11.8. Suppose the economy is currently at Point A producing potential output Y₀. If the government decreases spending, the economy moves to Point ________ in the short run and to Point ________ in the long run.

An increase in oil prices will increase the equilibrium price level and decrease aggregate output, ceteris paribus.

The graph that shows the relationship between the aggregate quantity of output supplied by all the firms in an economy and the overall price level is

________ shifts the IS curve to the left.

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 decrease could move the economy to Point

If the United States were to pass legislation that would make it easier for people to emigrate to the United States, this would cause

When the aggregate supply curve is ________ any increase in the price level will not cause an increase in aggregate output.

A movement up the aggregate supply curve is caused by a(n)

Government spending is a variable that is exogenous to the AS/AD model.

An increase in the price level cause aggregate demand to increase.

Refer to the information provided in Figure 11.4 below to answer the questions that follow. Figure 11.4 -Refer to Figure 11.4. Which of the following causes the economy to move from Point A to Point E?

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, a decrease in aggregate demand moves the economy to Point