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Exam 10: Aggregate Demand and Aggregate Supply

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Question 51

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Changes in which of the two factors below would most likely cause a change in consumer spending? The following list of factors, are related to the aggregate demand curve.

A) 1 and 3
B) 2 and 4
C) 5 and 10
D) 8 and 9

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Question 52

Multiple Choice

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The aggregate expenditures model and the aggregate demand curve can be reconciled because, other things being equal, in the aggregate expenditures model:

A) changes in the price level have no effect on the equilibrium level of GDP.
B) an increase in the price level increases the real value of wealth.
C) the level of aggregate expenditures and therefore the level of real GDP vary inversely with the price level.
D) the level of aggregate expenditures and therefore the level of real GDP vary directly with the price level.

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Question 53

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Other things equal, an increase in the price level will:

In which of the following sets of circumstances can we confidently expect inflation?

-Which of the above diagrams best portrays the effects of an increase in productivity?

Other things equal, an improvement in productivity will:

Other things equal, appreciation of the dollar:

Suppose the full-employment level of real output (Q) for a hypothetical economy is $500 and that the price level (P) initially is 100. Use the following short-run aggregate supply schedules to answer the next question. -Refer to the information above. In the long run, an increase in the price level from 100 to 125 will:

Refer to the list below. Which two factors would most likely cause a change in investment spending? The following list of items is related to aggregate demand.

An increase in aggregate expenditures resulting from a decrease in the price level is equivalent to a:

Refer to the diagram below. Assume that nominal wages initially are set on the basis of the price level P₂ and that the economy initially is operating at its full-employment level of output Q_f. In the short run, cost-push inflation could best be shown as:

A n expected rise in the rate of inflation for consumer goods will:

If real output rises and the price level falls, this would likely be due to a:

Which would most likely shift the aggregate supply curve? A change in:

An increase in aggregate demand is most likely to be caused by a decrease in:

The per unit cost of production in the economy described above is:

Refer to the above diagram. If the price level rises above P₁ because of an increase in aggregate demand, the:

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

-Which of the above diagrams best portrays the effects of a dramatic increase in energy prices?

Refer to the above information. Given an increase in input price from $4 to $6, we would expect the aggregate: