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The purchasing power of assets increases. Which of the following will not occur if the level of prices rises? The purchasing power of assets increases. Aggregate expenditures tend to fall. The purchasing power of money falls. The real value of wealth falls. The real value of assets falls. Consider the following statement: "If the government attempts to raise employment through increased fiscal spending, all it will do is drive up the price level." The proponent of this statement assumes that the aggregate supply curve is upward-sloping. supply curve is downward-sloping. demand curve is a horizontal line. supply curve is a vertical line. supply curve is flat. When aggregate demand increases, all of the following result except: cost-push inflation results the price level increases none - all of these result when aggregate demand increases unemployment decreases equilibrium level of real GDP increases Which of the graphs in Figure 12.3 best describes the impact of lower real income in Germany on U.S. equilibrium income and the U.S. equilibrium price level? The slope of the aggregate supply curve becomes steeper the faster the costs of production adjust and the smaller the amount of excess capacity in the economy. Other things equal, a decrease in aggregate demand will result in an economic expansion. increased economic welfare. an increase in equilibrium real GDP and a decrease in the equilibrium level of prices. lower unemployment and a higher equilibrium price level. an economic contraction. Consider the economy described in Figure 12.2. When macroeconomic equilibrium shifts from point A to point B, productive capacity decreases. aggregate expenditures decrease. inflation decreases. cyclical unemployment decreases. business profits decrease. Which of the following statements concerning the long-run aggregate demand and supply model is true? A change in aggregate demand leads to a permanent change of higher output. An increase in aggregate demand increases real GDP by a multiple of the initial increase in expenditures. An increase in aggregate demand increases real GDP only temporarily. Output change that results from a change in aggregate demand is a permanent effect. Prices are fixed. One of the goals of macroeconomic policy is to achieve economic growth without inflation. Refer to Table 12.3. Assume that labor is a major production cost. In year 2, employers would like to hire the same amount of labor as in year 1. less labor because profits are rising. less labor because profits are falling. more labor because profits are falling. more labor because profits are rising
Explanation / Answer
(1) The purchasing power of assets increases.
(2)supply curve is upward-sloping.
(3)none - all of these result when aggregate demand increases
(4)C
(5)False
(6)lower unemployment and a higher equilibrium price level.
(7)aggregate expenditures decrease
(8) An increase in aggregate demand increases real GDP by a multiple of the initial increase in expenditures.
(9)False
(10)less labor because profits are rising.
