The aggregate demand curve slopes downward due to the _______ effect, the ________________effect, and the ____________ effect, nd the demand curve for an individual product slopes downward due to__________
  • an increase in the price level reduces real money​ holdings, which reduces the amount of expenditures.
  • A lower price level makes imports from other countries less​ expensive, and U.S. citizens buy more imports.
  • Imports to the United States fell more than the U.S.​ exports, leading to an increase in net exports.
  • due to the wealth effect, the interest-rate effect, and the international-trade effect;;due to consumers substituting the more expensive product for cheaper goods
What relationship is shown by the aggregate supply​ curve? The short run aggregate supply curve shows the relationship in the short run between
  • the number of​ workers, the amount of​ capital, and the available technology.
  • the price level and the quantity of real GDP supplied by firms.
  • a decrease in exports and an increase in imports.
  • the price level and the quantity of real GDP demanded by​ households, firms, and the government.
Aggregate demand​ (AD) is comprised of expenditure components that​ include:
  • an increase in the price level reduces real money​ holdings, which reduces the amount of expenditures.
  • government​ spending, consumption,​ investment, and net exports.
  • an increase in the expected price of an important natural resource
  • the number of​ workers, the amount of​ capital, and the available technology.
The​ international-trade effect refers to the fact that an increase in the price level will result in
  • an increase in the price level reduces real money​ holdings, which reduces the amount of expenditures.
  • an increase in the expected price of an important natural resource
  • higher interest rates and lower investment.
  • a decrease in exports and an increase in imports.
If menu costs were​ eliminated, the​ short-run aggregate supply curve will be ___________ sloping because of __________________________________-
  • downward sloping because as prices​ rise, consumer real wealth​ declines, interest rates​ rise, and exports become more expensive.
  • upward sloping; wage price stickiness and slow wage adjustment by firms.
  • the price level and the quantity of real GDP supplied by firms.
  • The economy can produce a level of GDP above potential GDP in the short run.
stagflation is a combination of...
  • a supply shock shifts the SRAS to the left, increasing the price level and decreasing actual GDP
  • inflation and recession
  • D. All of the above.
  • a decrease in government spending
Stagflation occurs when
  • a supply shock shifts the SRAS to the left, increasing the price level and decreasing actual GDP
  • inflation and recession
  • when the price level​ falls, the real value of household wealth​ rises, and so will consumption.
  • a sudden increase in the price of an important natural​ resource, resulting in a leftward shift of the SRAS curve.
The interest rate effect refers to the fact that a higher price level results in
  • A lower price level makes imports from other countries less​ expensive, and U.S. citizens buy more imports.
  • a decrease in exports and an increase in imports.
  • higher interest rates and lower investment.
  • changes in the price level do not affect potential​ GDP, as potential GDP depends on the size of the labor​ force, capital​ stock, and technology.
Menu costs are
  • a decrease in government spending
  • In the long​ run, changes in the price level do not affect the level of real GDP.
  • .the costs to firms of changing prices.
  • higher interest rates and lower investment.
Increases in firms' expectations of their future profitability and investment spendingwill make the aggregate demand curve shift
  • All of the above.
  • to the right
  • All of the above
  • shift to the right
The position of the​ long-run aggregate supply​ (LRAS) curve is determined by
  • the price level and the quantity of real GDP supplied by firms.
  • the price level and the quantity of real GDP demanded by​ households, firms, and the government.
  • changes in the price level do not affect potential​ GDP, as potential GDP depends on the size of the labor​ force, capital​ stock, and technology.
  • the number of​ workers, the amount of​ capital, and the available technology.
The​ long-run aggregate supply curve is vertical because in the long​ run,
  • A lower price level makes imports from other countries less​ expensive, and U.S. citizens buy more imports.
  • the number of​ workers, the amount of​ capital, and the available technology.
  • changes in the price level do not affect potential​ GDP, as potential GDP depends on the size of the labor​ force, capital​ stock, and technology.
  • in the short​ run, an unexpected change in the price of an important resource can change the cost to firms.
The wealth effect refers to the fact that
  • in the short​ run, an unexpected change in the price of an important resource can change the cost to firms.
  • when the price level​ falls, the real value of household wealth​ rises, and so will consumption.
  • In the long​ run, changes in the price level do not affect the level of real GDP.
  • A lower price level makes imports from other countries less​ expensive, and U.S. citizens buy more imports.
In​ 1969, actual real GDP was greater than potential real GDP. Which of the following best explains​ this?
  • a decrease in exports and an increase in imports.
  • the number of​ workers, the amount of​ capital, and the available technology.
  • the price level and the quantity of real GDP demanded by​ households, firms, and the government.
  • The economy can produce a level of GDP above potential GDP in the short run.
The aggregate demand curve is downward sloping because
  • an increase in the price level reduces real money​ holdings, which reduces the amount of expenditures.
  • a decrease in exports and an increase in imports.
  • an increase in the expected price of an important natural resource
  • due to the wealth effect, the interest-rate effect, and the international-trade effect;;due to consumers substituting the more expensive product for cheaper goods
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