ECON 131 HW 12 – Flashcards
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Consumption, investment, government spending, exports, and imports are:
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all components of aggregate demand.
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If markets throughout the global economy all have flexible and continually adjusting prices, then:
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each economy will always head for its natural rate of unemployment.
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Aggregate demand is more likely to _______ than aggregate supply in the short run.
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shift substantially
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The equilibrium quantity of labor and the equilibrium wage increase when:
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labor demand shifts to the right, if wages are flexible.
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______________ will not cause a shift of the AS curve in a Keynesian framework.
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Changes in output prices
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According to the Keynesian framework, _____ may cause a recession, but not inflation.
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a major trading partner's economic slowdown
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The Keynesian economic framework is based on an assumption that:
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prices and wages are sticky and do not adjust rapidly.
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According to the _____________________ argument, a market-oriented economy has no obvious way to implement a plan of systematic wage reductions.
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coordination
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In macroeconomics, what name is given to the costs of changing prices that businesses must consider?
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menu costs
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When an economy is experiencing higher real interest rates, business firms will most likely be discouraged from investing in:
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tangible and/or intangible capital.
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According to macroeconomic theory, evidence that high unemployment may be accompanied by low inflation, and low unemployment may be accompanied by high inflation is supported by the:
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Keynesian Phillips curve tradeoff.
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If a Phillips curve shows that unemployment is high and inflation is low in the economy, then that economy:
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is producing at a point where output is less than potential GDP.
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The sum of all the income received for contributing resources to GDP is called _____.
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national income (Y)
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The onset of a trade deficit is most likely supported by a country's:
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strong economic growth.
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According to the Keynesian framework, ________________ will not help reduce inflation, but may help a country get out of a recession.
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increased spending by the government on health care
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When the economy is in a recession, the government will want to increase output. If the multiplier equals 2.5 and the government increases spending by 200, how much will output increase by?
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500
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Refer to the graph shown below. At point B:
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economic growth it low or even negative.
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According to the Keynesian framework, ____________ in ______________ may cause inflation, but not a recession.
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an increase; domestic investment
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Refer to the graph shown below. This graph illustrates a:
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Phillips Curve.
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If a Phillip curve shows that unemployment is low and inflation is high in the economy, then that economy:
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is producing at a point where output is more than potential GDP.
