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Exam 12: Aggregate Demand and Aggregate Supply

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Question 41

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An increase in the aggregate expenditures schedule

A) increases aggregate demand by the amount of the increase in aggregate expenditures only.
B) increases aggregate demand by the amount of the initial increase in aggregate expenditures times the multiplier.
C) decreases aggregate demand by the amount of the increase in aggregate expenditures.
D) decreases aggregate demand by the amount of the initial increase in aggregate expenditures times the multiplier.

E) A) and C)
F) B) and C)

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Question 42

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How does the aggregate expenditures analysis relate to the aggregate demand analysis?

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The aggregate expenditures analysis assu...

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Question 43

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The real-balance effect pertains to the effect of

The immediate-short-run aggregate supply curve is

$\begin{array} { | c | c | c | c | c | c | c | } \hline \text { Price Level } & C & I _ { g } & G & X & M & \text { Real GDP } \\\hline 128 & \$ 18 & \$ 2 & \$ 3 & \$ 1 & \$ 5 & \\\hline 125 & 20 & 4 & 3 & 2 & 4 & \\\hline 122 & 22 & 6 & 3 & 3 & 3 & \\\hline 119 & 24 & 8 & 3 & 4 & 2 & \\\hline 116 & 26 & 10 & 3 & 5 & 1 & \\\hline\end{array}$ In the accompanying table for a particular country, C is consumption expenditures, $I _ { g }$ is gross Investment expenditures, G is government expenditures, X is exports, and M is imports. All ?gures Are in billions of dollars. If the equilibrium level of real GDP is $43 billion, its level of consumption will Be

(Last Word) In response to the Great Recession, the federal government engaged in significant deficit-funded spending. While it kept the recession from getting worse, and did result in some Positive economic growth, it did not fully achieve the desired result. Which of the following best Explains why the fiscal policy actions fell short of their objective?

The aggregate demand curve or schedule shows the relationship between the total demand for output and the

The shape of the immediate-short-run aggregate supply curve implies that

$\begin{array} { | c | c | c | c | c | c | c | } \hline \text { Price Level } & C & I _ { g } & G & X & M & \text { Real GDP } \\\hline 128 & \$ 18 & \$ 2 & \$ 3 & \$ 1 & \$ 5 & \\\hline 125 & 20 & 4 & 3 & 2 & 4 & \\\hline 122 & 22 & 6 & 3 & 3 & 3 & \\\hline 119 & 24 & 8 & 3 & 4 & 2 & \\\hline 116 & 26 & 10 & 3 & 5 & 1 & \\\hline\end{array}$ In the accompanying table for a particular country, C is consumption expenditures, $I _ { g }$ is gross Investment expenditures, G is government expenditures, X is exports, and M is imports. All ?gures Are in billions of dollars. Which of the following schedules constitutes aggregate demand in this Country?

1. Government Spending 2. Consumer Expectations 3. Degree of Excess Capacity 4. Personal Income Tax Rates 5. Productivity 6. National Income Abroad 7. Business Taxes 8. Domestic Resource Availability 9. Prices of Imported Products 10. Profit Expectations on Investments Answer the question based on the accompanying list of items related to aggregate demand or aggregate supply. Changes in which two factors would most likely cause a change in aggregate demand?

$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Amount of Real Output } \\\text { Demanded }\end{array} & \text { Price Level (Index Value) } & \begin{array} { c } \text { Amount of Real Output } \\\text { Supplied }\end{array} \\\hline \$ 200 & 300 & \$ 500 \\\hline 300 & 250 & 450 \\\hline 400 & 200 & 400 \\\hline 500 & 150 & 300 \\\hline 600 & 100 & 200 \\\hline\end{array}$ The table gives aggregate demand and supply schedules for a hypothetical economy. If the amount of real output demanded at each price level falls by $200, this might have been caused by

If investment increases by $10 billion and the economy's MPC is 0.8, the aggregate demand curve will shift

Other things equal, an improvement in productivity will

The equilibrium price level and equilibrium level of real GDP occur at the intersection of the aggregate demand curve and the aggregate supply curve.

The price level in the United States is more flexible downward than upward.

In an economy, it costs $1,500 to produce 2,000 units of output. If the costs increase to $2,500, then the per unit cost of production will have increased from

The aggregate supply curve

$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Amount of Real Output } \\\text { Demanded }\end{array} & \text { Price Level (Index Value) } & \begin{array} { c } \text { Amount of Real Output } \\\text { Supplied }\end{array} \\\hline \$ 200 & 300 & \$ 500 \\\hline 300 & 250 & 450 \\\hline 400 & 200 & 400 \\\hline 500 & 150 & 300 \\\hline 600 & 100 & 200 \\\hline\end{array}$ The table gives aggregate demand and supply schedules for a hypothetical economy. The equilibrium price level will be

$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Amount of Real Output } \\\text { Demanded }\end{array} & \text { Price Level (Index Value) } & \begin{array} { c } \text { Amount of Real Output } \\\text { Supplied }\end{array} \\\hline \$ 200 & 300 & \$ 500 \\\hline 300 & 250 & 450 \\\hline 400 & 200 & 400 \\\hline 500 & 150 & 300 \\\hline 600 & 100 & 200 \\\hline\end{array}$ The table gives aggregate demand and supply schedules for a hypothetical economy. If the price level is 250 and producers supply $450 of real output,