Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
1. The aggregate demand curve:
2. The aggregate demand curve is:
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
3. The interest-rate effect suggests that:
4. The real-balances effect indicates that:
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
5. The foreign purchases effect suggests that an increase in the U.S. price level relative to
other countries will:
6. The foreign purchases effect suggests that a decrease in the U.S. price level relative to other
countries will:
7. The foreign purchases effect:
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
8. If the price level increases in the United States relative to foreign countries, then American
consumers will purchase more foreign goods and fewer U.S. goods. This statement describes:
9. The real-balances, interest-rate, and foreign purchases effects all help explain:
10. Which of the following is incorrect?
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
11. The factors that affect the amounts that consumers, businesses, government, and
foreigners wish to purchase at each price level are the:
12. The determinants of aggregate demand:
13. Other things equal, if the national incomes of the major trading partners of the United
States were to rise, the U.S.:
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
14. Which one of the following would not shift the aggregate demand curve?
15. Other things equal, a decrease in the real interest rate will:
16. A decline in investment will shift the AD curve to the:
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
17. An increase in net exports will shift the AD curve to the:
18. If investment increases by $10 billion and the economy’s MPC is .8, the aggregate demand
curve will shift:
19. If investment decreases by $20 billion and the economy’s MPC is .5, the aggregate
demand curve will shift:
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
20. An economy’s aggregate demand curve shifts leftward or rightward by more than changes
in initial spending because of the:
21. Which of the following would most likely shift the aggregate demand curve to the right?
22. Which of the following would most likely reduce aggregate demand (shift the AD curve
to the left)?
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
23. Suppose that technological advancements stimulate $20 billion in additional investment
spending. If the MPC = 0.6, how much will the change in investment increase aggregate
demand?
24. In an effort to avoid recession, the government implements a tax rebate program,
effectively cutting taxes for households. We would expect this to:
25. The immediate-short-run aggregate supply curve represents circumstances where:
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
26. The immediate-short-run aggregate supply curve is:
27. In the above diagram, the economy’s immediate-short-run aggregate supply curve is
shown by line:
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
28. In the above diagram, the economy’s relevant aggregate demand and immediate-short-run
aggregate supply curves, respectively, are lines:
29. In the above diagram, the economy’s immediate-short-run AS curve is line ___, its short-
run AS curve is ____, and its long-run AS curve is line __.
30. The shape of the immediate-short-run aggregate supply curve implies that:
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
31. What percentage of the average U.S. firm’s costs are accounted for by wages and
salaries?
32. The aggregate supply curve:
33. The aggregate supply curve (short-run):
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
34. The aggregate supply curve (short-run):
35. The aggregate supply curve (short-run) is upsloping because:
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
36. In the above diagram, a shift from AS1 to AS3 might be caused by a(n):
37. In the above diagram, a shift from AS1 to AS2 might be caused by a(n):
38. In the above diagram, a shift from AS3 to AS2 might be caused by an increase in:
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
12–15
39. In the above diagram, a shift from AS2 to AS3 might be caused by a(n):
40. Other things equal, an improvement in productivity will:
41. A rightward shift in the aggregate supply curve is best explained by an increase in:
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.
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
42. Refer to the above information. The level of productivity is:
43. The per unit cost of production in the economy described above is:
44. Refer to the above information. All else being equal, if the price of each input increased
from $4 to $6, productivity would:
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
45. Refer to the above information. Given an increase in input price from $4 to $6, we would
expect the aggregate:
46. Other things equal, if the U.S. dollar were to depreciate, the:
47. Which one of the following would increase per unit production cost and therefore shift the
aggregate supply curve to the left?
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
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.
48. Refer to the above information. The per-unit cost of production in this economy is:
49. Refer to the above information. If the per unit price of raw materials rises from $4 to $8
and all else remains constant, the per-unit cost of production will rise by about:
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
50. Refer to the above information. If the per unit price of raw materials rises from $4 to $8
and all else remains constant, the aggregate:
51. The determinants of aggregate supply:
52. Which of the following would not shift the aggregate supply curve?
Chapter 12 – Aggregate Demand and Aggregate Supply (+ Appendix)
53. Productivity measures:
54. Per-unit production cost is:
55. Suppose that nominal wages fall and productivity rises in a particular economy. Other
things equal, the aggregate: