Economics I Chapter 10 Part 1 – Flashcards
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The total of all planned production for the entire economy is known as:
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Aggregate supply
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The long-run aggregate supply curve:
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Indicates the level of output (GDP) that occurs when resources are fully employed
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Which of the following will NOT cause a leftward shift in the long-run aggregate supply curve:
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A reduction in government spending
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As the capital stocks grows and technology improves, we would expect the long-run aggregate supply curve to:
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Shift right
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What could cause a decrease in the price level and simultaneously an increase in GDP similar to the 1920's in the united States?
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An increase in productivity
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We draw the long-run aggregate supply curve as a vertical line to reflect the fact that:
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Changes in the price level do not alter the level of long-run real GDP after full adjustment has occurred
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What causes long-run aggregate supply curve to shift right?
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Economic growth
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The sum of all planned expenditures for the entire economy at each possible price level is:
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Aggregate demand
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The real-balance effect refers to:
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The change in the value of cash balance due to price level changes
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One reason that the aggregate demand curve slopes downward is because:
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Higher price levels reduce net exports
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Higher interest rates tend to:
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Reduce the total planned spending on goods and services
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One impact of a rise in the dollar's value is that:
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Imports become cheaper for the U.S. consumer
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Holding nominal money balance constant, a decrease in the price level:
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Causes the real value of the money balance to increase, in turn increasing total planned real expenditures
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Which of the following would cause aggregate demand to decrease
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The government increase taxes on both business and personal income
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An increase in the amount of money in circulation would cause a:
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Shift of the aggregate demand curve to the right
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To find an economy's long-run equilibrium price level, locate the point where _____ and ____ cross and look to the left
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Long-run aggregate supply; aggregate demand
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If you have 1,000 and the Gross Domestic product ( GDP) deflator increases from 100-120, then:
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The 1,000 will buy 20 percent less of the goods and services produced by society
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Supply-side inflation is caused by:
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A decrease in aggregate supply and no change in aggregate demand
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Whenever the general level of prices rise because of continual increase in aggregate demand, we say that the economy is experiencing:
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Demand-side inflation
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When the economy is in long-run equilibrium the price level adjusts so as to equate which two values with one another?
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Total planned real expenditures and total planned production
