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Chapter 30

Price level and the real domestic output purchased
The aggregate demand curve is the relationship between the
The demand for money and interest rates rises
When the price level rises,
A foreign purchases effect
One explanation for the downward slope of the aggregate demand curve is that a change in the price level results in
A change in the real value of consumer wealth
A sharp decline in the real value of stock prices, which is independent of a change in the price level, would best be an example of
A depreciation in the value of the U.S. dollar
The aggregate demand curve will be increased by
Price level and the real domestic output produced
The aggregate supply curve is the relationship between the
Nominal wages do not respond to changes in the price level
The short-run aggregate supply curve assumes that
Vertical
In the long run, the aggregate supply curve is
Decrease aggregate supply
If the prices of imported resources increase, then this event would most likely
5
5
The level of productivity in this economy is
$0.40
$0.40
The per-unit cost of production is
Decrease and aggregate supply would increase
Decrease and aggregate supply would increase
If productivity increased such that 60 units are now produced with the quantity of inputs still equal to 10, then per-unit production costs would
Remain unchanged and aggregate supply would decrease
Remain unchanged and aggregate supply would decrease
All else equal, if the price of each input increases from $2 to $4, productivity would
Increase per-unit production costs and shift the aggregate supply curve to the left
If Congress passed much stricter laws to control the air pollution from businesses, this action would tend to
Decrease aggregate demand and decrease aggregate supply
An increase in business taxes will tend to
Shortage and the price level will rise
If at a particular price level real domestic output from producers is less than real domestic output desired by buyers, there will be a
100 and $3,000
100 and $3,000
The equilibrium price level and quantity of real domestic output will be
150 and $4,000
150 and $4,000
If the quantity of real domestic output demanded increased by $2,000 at each price level, the new equilibrium price level and quantity of real domestic output would be
125 and $4,000
125 and $4,000
Using the original data from the table, if the quantity of real domestic output demanded increased by $1,500 and the quantity of real domestic output supplied increased by $500 at each price level, the new equilibrium price level and quantity of real domestic output would be
Both real output and the price level
An increase in aggregate demand with a short-run aggregate supply curve will increase
Decrease the strength of the multiplier
In the aggregate demand-aggregate supply model, an increase in the price level will
Efficiency wages
Aggregate demand decreases and real output falls, but the price level remains the same. Which factor most likely contributes to downward price inflexibility?
A price level that is inflexible downward
Fear of price wars, menu costs, and wage contracts are associated with
The real domestic output would decrease and the price level would rise
If there were cost-push inflation,
Decrease the price level and increase the real domestic output
An increase in aggregate supply will
Reduce the purchasing power of household wealth and reduce consumption
An increase in the price level will:
A decrease in government spending
A decrease in government spending
Refer to the graph. The shift from AD1 to AD2 may have been caused by:
Fall to Q3 but the price level to remain at P1
Fall to Q3 but the price level to remain at P1
Refer to the graph. Suppose aggregate demand falls from AD1 to AD2. In the short run, this will cause output to:
Shows the amount of real output supplied at various price levels
The short-run aggregate supply curve:
Cost-push inflation
A leftward shift of the short-run aggregate supply curve would illustrate:
Flat, because firms can expand output with relatively little increase in per-unit production costs
At very low levels of output, the short-run aggregate supply curve is relatively:
Because a lower price level reduces the demand for money, which lowers the interest rate and increases desired investment
The aggregate demand curve slopes downward to the right:
Aggregate demand curve to the right
An increase in the incomes of U.S. trading partners would shift the U.S.:
Shift the aggregate supply curve to the left
Higher prices of imported resources will:
Unlikely to cause a reduction in the price level because of menu costs and efficiency wages
In the short run, a reduction in aggregate demand is:

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