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Chapter 12 - Aggregate Demand and Aggregate Supply (+ Appendix)
135. (Consider This) The ratchet effect is the tendency of:
136. (Last Word) Which of the following is a reason why changes in the price of imported oil
have less of an effect on the U.S. economy than in the 1970s and early 1980s?
137. (Last Word) In recent years:
Chapter 12 - Aggregate Demand and Aggregate Supply (+ Appendix)
138. (Last Word) Relative to previous decades, the U.S. economy is less affected by changes
in the price of oil partly because:
139. The interest-rate effect is one of the determinants of aggregate demand.
140. The real-balances effect indicates that inflation makes the public feel wealthier and they
therefore spend more out of their current incomes.
Chapter 12 - Aggregate Demand and Aggregate Supply (+ Appendix)
141. Other things equal, an increase in productivity will shift the short-run aggregate supply
curve rightward.
142. In the immediate short run, both input and output prices are fixed.
143. An increase in wealth from a substantial increase in stock prices will move the economy
along a fixed aggregate demand curve.
144. 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.
Chapter 12 - Aggregate Demand and Aggregate Supply (+ Appendix)
145. An increase in business excise taxes will shift the aggregate supply curve leftward.
146. A decrease in per unit production costs will shift the aggregate supply curve leftward.
147. The aggregate supply curve (short-run) becomes steeper as the economy moves
rightward and upward along it.
148. Cost-push inflation is depicted as a rightward shift of the aggregate demand curve along
an upsloping aggregate supply curve.
Chapter 12 - Aggregate Demand and Aggregate Supply (+ Appendix)
149. A negative GDP gap can be caused by either a decrease in aggregate demand or a
decrease in aggregate supply.
150. The equilibrium price level and equilibrium level of real GDP occur at the intersection of
the aggregate demand curve and the aggregate supply curve.
151. The greater the upward slope of the AS curve, the larger is the realized multiplier effect
of a change in investment spending.
152. The price level in the United States is more flexible downward than upward.
Chapter 12 - Aggregate Demand and Aggregate Supply (+ Appendix)
153. The aggregate expenditures model and the aggregate demand curve can be reconciled
because, other things equal, in the aggregate expenditures model:
154. In deriving the aggregate demand curve from the aggregate expenditures model we note
that:
155. An increase in aggregate expenditures resulting from a decrease in the price level is
equivalent to a:
Chapter 12 - Aggregate Demand and Aggregate Supply (+ Appendix)
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Chapter 12 - Aggregate Demand and Aggregate Supply (+ Appendix)
156. Refer to the above diagrams. A decline in aggregate expenditures from AE2 to AE1
resulting from the real-balances, interest-rate effect, and foreign purchases effects would be
depicted as:
157. Refer to the above diagrams. Assuming a constant price level, an increase in aggregate
expenditures from AE1 to AE2 would:
158. An increase in net exports will shift the:
Chapter 12 - Aggregate Demand and Aggregate Supply (+ Appendix)
159. An increase in investment spending caused by higher expected rates of return will:
160. An increase in aggregate expenditures resulting from some factor other than a change in
the price level is equivalent to:
161. When deriving the aggregate demand (AD) curve from the aggregate expenditure model,
an increase in U.S. product prices would cause an increase in:
Chapter 12 - Aggregate Demand and Aggregate Supply (+ Appendix)
162. (Advanced analysis) Assume that the MPS is .33 in an economy that has an aggregate
supply curve with a slope of 1. An increase in investment spending of $10 billion will shift
the aggregate demand curve rightward by:
163. (Advanced analysis) Assume that the MPC is .8 in an economy that has an aggregate
supply curve with a slope of 1. Also, suppose that the price level is flexible downward. A
decrease in investment spending of $10 billion will shift the aggregate demand curve leftward
by:
