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Exam 31: Aggregate Demand and Aggregate Supply

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Question 61

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

A) True
B) False

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Question 62

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When aggregate demand declines,many firms may reduce employment rather than wages because wage reductions may:

A) reduce per-unit production costs.
B) reduce worker morale and work effort,and thus lower productivity.
C) increase the firms' cost of raising financial capital.
D) reduce the demands for their products.

E) B) and D)
F) None of the above

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Question 63

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Cost-push inflation is depicted as a rightward shift of the aggregate demand curve along an upsloping aggregate supply curve.

Suppose that real domestic output in an economy is 20 units,the quantity of inputs is 10,and the price of each input is $4.Answer the following question on the basis of this information. Refer to the information.The level of productivity is:

Suppose that nominal wages fall and productivity rises in a particular economy.Other things equal,the aggregate:

The real-balances effect indicates that:

Answer the question on the basis of the following aggregate demand and supply schedules for a hypothetical economy: $\begin{array}{c}\begin{array}{c}\text {Amount of Real }\\\underline{\text {Output Demanded}}\\\$ 200 \\300 \\400 \\500 \\600\end{array}\begin{array}{c}\text {Price Level}\\\underline{\text {(Index Value) }}\\300\\250\\200\\150\\100\end{array}\begin{array}{c}\text {Amount of Real}\\\underline{\text {Output Supplied}}\\\$ 500 \\450 \\400 \\300 \\200\end{array}\end{array}$ Refer to the data.The equilibrium price level will be:

Answer the question on the basis of the following information.An economy is employing 2 units of capital,5 units of raw materials,and 8 units of labor to produce its total output of 640 units.Each unit of capital costs $10;each unit of raw materials,$4;and each unit of labor,$3. Refer to the information.The per-unit cost of production in this economy is:

Which of the following would most likely reduce aggregate demand (shift the AD curve to the left) ?

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?

Per-unit production cost is:

When aggregate demand declines,the price level may remain constant,at least for a time,because:

An increase in aggregate expenditures resulting from some factor other than a change in the price level is equivalent to:

Other things equal,an increase in productivity will shift the short-run aggregate supply curve rightward.

Suppose that real domestic output in an economy is 20 units,the quantity of inputs is 10,and the price of each input is $4.Answer the following question on the basis of this information. Refer to the information.All else being equal,if the price of each input increased from $4 to $6,productivity would:

In deriving the aggregate demand curve from the aggregate expenditures model,we note that:

An increase in imports (independent of a change in the U.S.price level)will increase both U.S.aggregate supply and U.S.aggregate demand.

The aggregate supply curve (short run) :

Answer the question on the basis of the following table for a particular country in which C is consumption expenditures,I_g is gross investment expenditures,G is government expenditures,X is exports,and M is imports.All figures are in billions of dollars.Each question is independent of other question using the same table,unless otherwise stated. $\begin{array}{c}\begin{array}{c}\underline{\text {Price Level}}\\128 \\125 \\122 \\119 \\116\end{array}\begin{array}{c}\underline{\text {C}} \\ \$ 18 \\20 \\22 \\24 \\26\end{array}\begin{array}{c}\underline{\mathrm{I}_{\mathrm{g}} }\\ \$ 2 \\4 \\6 \\8 \\10\end{array}\begin{array}{c}\underline{\text {G }}\\ \$ 3 \\3 \\3 \\3 \\3\end{array}\begin{array}{c}\underline{\text {X }}\\\$ 1 \\2 \\3 \\4 \\5\end{array}\begin{array}{c}\underline{\text {M}} \\ \$ 5 \\4 \\3 \\2 \\1\end{array}\begin{array}{c}\underline{\text {Real GDP}} \\ \\\\\\ \\\\\end{array}\end{array}$ Refer to the table.The interest-rate effect of changes in the price level is shown by columns:

Productivity measures: