question
The basic aggregate demand and aggregate supply curve model helps explain..
answer
short term fluctuations in real GDP and the price level
question
The ________ shows the relationship between the price level and quantity of real GDP demanded.
answer
aggregate demand curve
question
Because of the slope of the aggregate demand curve, we can say that..
answer
a decrease in the price level leads to a higher level of real GDP demanded
question
Which of the following best describes the "wealth effect"?
answer
When the price level falls, the real value of household wealth rises.
question
The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off..
answer
investment and consumption spending
question
An increase in the price level results in a/an ________ in the quantity of real GDP demanded because ________.
answer
decrease; a higher price level reduces consumption, investment, and net exports
question
When the price level in the United States falls relative to the price level of other countries, ________ will fall, ________ will rise, and ________ will rise.
answer
imports; exports; net exports
question
Spending on the war in Afghanistan is essentially categorized as government purchases. How do increases in spending on the war in Afghanistan affect the aggregate demand curve?
answer
They will shift the aggregate demand curve to the right
question
The recession of 2007-2009 made many consumers pessimistic about their future incomes. How does this increased pessimism affect the aggregate demand curve?
answer
This will shift the aggregate demand curve to the left
question
Higher personal income taxes..
answer
decrease aggregate demand
question
Which of the following will shift the aggregate demand curve to the right, ceteris paribus?
answer
an increase in net exports
question
Last week, six Swedish kronor could purchase one U.S. dollar. This week, it takes eight Swedish kronor to purchase one U.S. dollar. This change in the value of the dollar will ________ exports from the United States to Sweden and ________ U.S. aggregate demand.
answer
decrease; decrease
question
Suppose the U.S. GDP growth rate is faster relative to other countries' GDP growth rates. This will..
answer
shift the aggregate demand curve to the left
question
During the recession of 2007-2009 in the United States, ________ relative to potential GDP.
answer
net export spending rose and consumption spending declined
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