Question 1 Which of the following is one explanation as to why the aggregate dem

Question

Question 1

Which of the following is one explanation as to why the aggregate demand curve slopes downward?

Decreases in the price level raise the interest rate and increase consumption spending.

Decreases in the price level raise the interest rate and increase investment spending.

Decreases in the U.S. price level relative to the price level in other countries lower net exports.

Decreases in the price level raise real wealth and increase consumption spending.

1 points

Question 2

Potential GDP refers to the level of

real GDP in the long run.

nominal GDP in the long run.

real GDP in the short run.

nominal GDP in the short run.

1 points

Question 3

According to the "wealth effect", when the ________ falls, the ________ rises.

inflation rate; nominal value of household assets

unemployment rate; average level of household income

price level; the nominal value of household wealth

price level; the real value of household wealth

1 points

Question 4

The short-run aggregate supply curve has a(n) ________ slope because as prices of ________ rise, prices of ________ rise more slowly.

positive; final goods and services; inputs

infinite; final goods and services; inputs

positive; inputs; final goods and services

infinite; inputs; final goods and services

1 points

Question 5

Which of the following would cause the short-run aggregate supply curve to shift to the left?

an increase in the price level

an increase in inflation expectations

a technological advance

a decrease in interest rates

1 points

Question 6

German automobile exports were hurt in 2008 as a result of the recession. How would this decrease in exports have affected Germany's aggregate demand curve?

The aggregate demand curve would have shifted to the right.

The aggregate demand curve would not have shifted, but there would have been a movement up the aggregate demand curve.

The aggregate demand curve would not have shifted, but there would have been a movement down the aggregate demand curve.

The aggregate demand curve would have shifted to the left.

1 points

Question 7

How do lower taxes affect aggregate demand?

They increase disposable income, consumption, and aggregate demand.

They reduce disposable income, consumption, and aggregate demand.

they increase corporate investment and aggregate demand.

They increase aggregate supply and thus increase aggregate demand as well.

1 points

Question 8

In the dynamic aggregated demand and aggregate supply model, inflation occurs if

AD shifts faster than SRAS.

AD shifts slower than SRAS.

SRAS shifts faster than AD.

LRAS shifts faster than AD.

1 points

Question 9

A and B

A and C

A and D

B and D

1 points

Question 10

A decrease in the price level will

shift the short-run aggregate supply curve to the left.

shift the short-run aggregate supply curve to the right.

move the economy up along a stationary short-run aggregate supply curve.

move the economy down along a stationary short-run aggregate supply curve.

1 points

Question 11

Last week, six Swedish kronor could purchase one U.S. dollar. This week, it takes eight Swedish kronor to purchase one U.S. dollar. This change in the value of the dollar will ________ exports from the United States to Sweden and ________ U.S. aggregate demand.

increase; increase

decrease; decrease

increase; decrease

decrease; increase

1 points

Question 12

If stricter immigration laws are imposed and many foreign workers in the United States are forced to go back to their home countries,

the long-run aggregate supply curve will shift to the right.

the long-run aggregate supply curve will shift to the left.

we will move up along the long-run aggregate supply curve.

we will move down along the long-run aggregate supply curve.

1 points

Question 13

Spending on the war in Afghanistan is essentially categorized as government purchases. How do increases in spending on the war in Afghanistan affect the aggregate demand curve?

They will move the economy down along a stationary aggregate demand curve.

They will move the economy up along a stationary aggregate demand curve.

They will shift the aggregate demand curve to the right.

They will shift the aggregate demand curve to the left.

1 points

Question 14

2.5%

7.3%

8.0%

10.0%

1 points

Question 15

A decrease in aggregate demand results in a(n) ________ in the ________.

recession; long run

expansion; long run

expansion; short run

recession; short run

1 points

Question 16

If workers leave a country to seek out better opportunities in another country, then this will

shift the short-run aggregate supply curve of the original country to the left.

shift the short-run aggregate supply curve of the original country to the right.

move the original economy up along a stationary short-run aggregate supply curve.

move the original economy down along a stationary short-run aggregate supply curve.

1 points

Question 17

Suppose the U.S. GDP growth rate is slower relative to other countries' GDP growth rates. This will

move the economy up along a stationary aggregate demand curve.

move the economy down along a stationary aggregate demand curve.

shift the aggregate demand curve to the left.

shift the aggregate demand curve to the right.

1 points

Question 18

The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off

government spending.

government spending and unplanned investment.

investment and consumption spending.

net exports.

1 points

Question 19

The long-run aggregate supply curve shows the relationship between

short-run aggregate supply and short-run aggregate demand.

the price level and quantity of real GDP supplied.

the real interest rate and the nominal interest rate.

the quantity of real GDP supplied and the quantity of nominal GDP supplied.

1 points

Question 20

If the U.S. dollar decreases in value relative to other currencies, how does this affect the aggregate demand curve?

This will move the economy up along a stationary aggregate demand curve.

This will move the economy down along a stationary aggregate demand curve.

This will shift the aggregate demand curve to the left.

This will shift the aggregate demand curve to the right.

Decreases in the price level raise the interest rate and increase consumption spending.

Decreases in the price level raise the interest rate and increase investment spending.

Decreases in the U.S. price level relative to the price level in other countries lower net exports.

Decreases in the price level raise real wealth and increase consumption spending.

Explanation / Answer

1. Decreases in the price level raise real wealth and increase consumption spending

2. nominal GDP in the short run.

3. inflation rate; nominal value of household assets

4. positive; inputs; final goods and services

5. an increase in the price level

6. The aggregate demand curve would have shifted to the left.

7. They increase disposable income, consumption, and aggregate demand.

8. AD shifts faster than SRAS.

9. A and D

10. shift the short-run aggregate supply curve to the right.

11. increase; increase

12. we will move down along the long-run aggregate supply curve.

13. They will move the economy down along a stationary aggregate demand curve.

14. 7.3%

15. recession; short run

16. move the original economy up along a stationary short-run aggregate supply curve.

17. move the economy down along a stationary aggregate demand curve

18. investment and consumption spending.

19.

the real interest rate and the nominal interest rate.

20. This will shift the aggregate demand curve to the right.

the real interest rate and the nominal interest rate.

20. This will shift the aggregate demand curve to the right.

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