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Exam 12: Aggregate Demand and Aggregate Supply

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Question 21

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The following list contains items that are related to aggregate demand and/or aggregate supply. 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) Price of Imported Products 10) Profit Expectations on Investments - Refer to the above list. Changes in which of the above two factors would most likely cause a change in aggregate supply?

A) 1 and 5
B) 3 and 10
C) 5 and 7
D) 8 and 9

E) B) and D)
F) A) and B)

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Question 22

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A decrease in aggregate demand is likely to result from:

A) a decrease in the price level.
B) an increase in the price level.
C) an appreciation in the value of the U.S. dollar.
D) a decrease in the excess capacity of factories.

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

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Question 23

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The magnification of small changes in spending into larger changes in output and income is produced by:

A rightward shift of the aggregate demand curve will increase real domestic output and the price level in the short run.

- Refer to the above graph, which shows an aggregate demand curve for a hypothetical economy. If the price level is 200, the quantity of real GDP demanded is:

Refer to the above graph. The ratchet effect would suggest that:

In an economy it costs $1500 to produce 2000 units of output. If the costs increase to $2500, then the per-unit cost of production will have increased from:

A change in household indebtedness will cause a movement along an existing aggregate demand curve.

- Refer to the above diagram. When AD₁ shifts to AD₂, real output:

When the price level falls:

The following list contains factors that are related to the aggregate demand curve. 1) Household expectations 2) Profit expectations 3) Degree of excess capacity 4) Personal income tax rates 5) Exchange rates 6) National income abroad 7) Government spending 8) Household wealth - Refer to the above information. Investment spending would most likely be influenced by changes in:

A decrease in aggregate demand will have no effect on the real equilibrium GDP of the economy and will lower its price level in the short run.

If the prices of imported resources decrease, then this event would most likely:

If a $100 billion increase in government spending results in a $500 billion increase in real GDP, then the value of the multiplier:

When there is an increase in aggregate demand in the long run, there will be an increase in the price level but not in the level of output or employment.

- Refer to the above graph. As the price level changes, real domestic output remains constant with which line?

If the U.S. dollar appreciates in value relative to foreign currencies, then this will:

The massive increase in government spending during World War II moved the economy in the span of a few short years from mass unemployment and price stability to "overfull" employment and severe demand-pull inflation. This situation can be best characterized by:

The following list contains items that are related to aggregate demand and/or aggregate supply. 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) Price of Imported Products 10) Profit Expectations on Investments - Refer to the above list. A change in which factor is most likely to change both aggregate demand and aggregate supply?

The following list contains factors that are related to the aggregate demand curve. 1) Household expectations 2) Profit expectations 3) Degree of excess capacity 4) Personal income tax rates 5) Exchange rates 6) National income abroad 7) Government spending 8) Household wealth - Changes in which three of the above factors would most likely cause a change in consumer spending?