Chapter 13 Homework – Flashcards
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Indicate which of the following would cause a shift in the aggregate demand curve from point A to point C.
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Increased consumer optimism, Change in the US exchange rate relative to other currencies, Lower taxes, Monetary policy
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Consider the downward sloping aggregate demand (AD) curve to the right. Which of the following results in a movement from point A to point B (a movement up along the AD curve) or from point A to point C (a movement down along the AD curve)?
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wealth effect, interest rate effect
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When the economy enters a recession, your employer is ___ to reduce your wages because ___.
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unlikely; lower wages reduce productivity and morale
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Deflation will
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increase the quantity of real GDP demanded.
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German luxury car exports were hurt in 2009 as a result of the recession. How would this decrease in exports have affected Germany's aggregate demand curve?
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The aggregate demand curve would have shifted to the left.
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A change in the price level causes a ___ the short run aggregate supply (SRAS) curve. In the figure, this is shown by moving from point ___.
A change in any other factor causes a ___ the SRAS curve. In the figure, this is shown by moving from point ___.
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movement along; A to B
shift in; B to C
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How does an increase in the price level affect the quantity of real GDP supplied in the long run?
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Changes in the price level do not affect the level of GDP in the long run.
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An increase in the labor force or capital stock is illustrated as a ___.
An increase in the expected price of an important natural resource is indicated by ___.
An improvement in technology is shown as a ___.
An increase in the expected future price level causes ___.
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shift from A to B (line shifts to right)
shift from B to A (line shifts to left)
shift from A to B
shift from B to A
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Consider the figure to the right. Why does the short run aggregate supply curve (SRAS) slope upward?
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All of the above;
Firms and workers fail to predict changes in the price level, contracts keep wages "sticky", prices of final goods rise more quickly than the prices of inputs
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On the long run aggregate supply curve,
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a decrease in the price level has no effect on the aggregate quantity of GDP supplied.
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Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy. As a result,
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the long run aggregate supply curve will shift to the right.
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If, due to a recession, foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended, this will
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shift the short-run aggregate supply curve of the home country to the right.
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Short run macroeconomic equilibrium occurs when
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aggregate demand and short run aggregate supply intersect.
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Suppose the economy is at full employment and firms become more pessimistic about the future profitability of new investment. Which of the following will happen in the short run?
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Unemployment will rise.
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If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run, the economy would experience
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stagflation.
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An increase in aggregate demand causes an increase in ___ only in the short run, but causes an increase in ___ in both the short run and the long run.
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real GDP; the price level
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The long run adjustment to a negative supply shock results in
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the short run aggregate supply shifting to the right.
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According to the dynamic AD-AS model, what is the most common cause of inflation?
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A and B only.
Total spending increases faster than total production, AD increases by more that LRAS.
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When people became less concerned with the underlying value of their houses and instead focused on the expectations of the prices of their houses increasing, ___ occurred.
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a housing bubble
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When people became ___ concerned with the underlying value of their houses and became ___ with the expectations of prices of their houses increasing, a housing bubble occurred.
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less; more
