Exam 8: Aggregate Demand and Aggregate Supply

Part of the story of the interest rate effect is that a lower price level causes __________ in the supply of credit,which then causes the interest rate to __________.

As income taxes rise,disposable income __________,causing __________ the AD curve.

Exhibit 8-2 -Refer to Exhibit 8-2.Based on the given change,what word (rises or falls)should go in blank (1)and blank (2),respectively,to summarize the resulting impact on short run equilibrium?

Which set of changes is definitely predicted to raise the price level in the short run?

If consumption changes because of a change in a factor other than the price level,then the

When foreign real national income rises,domestic Real GDP falls,ceteris paribus.

Which of the following factors can shift the AD curve?

The short-run aggregate supply curve slopes upward as a result of the real balance effect,the interest rate effect,and the international trade effect.

Exhibit 8-2 -Refer to Exhibit 8-2.Based on the given change,what word (rises or falls)should go in blank (11)and blank (12),respectively,to summarize the resulting impact on short run equilibrium?

Which of the following statements is false?

A rise in aggregate demand and a fall in short-run aggregate supply will definitely

Which of the following is an example of an adverse supply shock?

A decrease in the price of machinery

Which of the following best describes the international trade effect?

Starting from short-run equilibrium,the following occurs: the U.S.dollar depreciates and wage rates rise.Moreover,the effect on the economy from the dollar depreciating is stronger than the effect on the economy from rising wage rates.What is the effect on the price level and Real GDP in the short run?

Which set of changes is definitely predicted to lower Real GDP in the short run?

A lower income tax rate __________ consumption,causing a __________ the AD curve.

One of the problems facing the Greek economy in 2012 was the Greek government's inability to unilaterally devalue the euro.

A decrease in business taxes,causes the expected profitability of investment projects to __________,which then shifts the AD curve to the __________.

Which of the following is consistent with the sticky-wage explanation of the upward-sloping SRAS curve?