Econ Chapter 30 - Assignment Essays

question

Which of the following explain why the aggregate demand curve slopes downward?

answer

The interest-rate effect, the real balances effect, and the foreign purchases effect

question

The explanation of a downsloping aggregate demand curve differs from the explanation for the downsloping demand curve for a single product because a downsloping

answer

single-product demand curve assumes constant money income such that a lower price causes a substitution of the now relatively cheaper product for those whose prices have not changed.

question

The multiplier

answer

causes an initial change in spending to generate an even larger change in the aggregate demand curve.

question

According to the "real-balances effect," if prices

answer

decline, the purchasing power of assets will rise, so spending at each income level should rise.

question

According to the "wealth effect," a change in consumer wealth causes a

answer

shift in consumer spending and the aggregate expenditures curve.

question

Which of the following statements is true concerning the real-balances effect and the wealth effect?

answer

The real-balances effect explains the shape of the aggregate demand curve, whereas the wealth effect causes shifts of the aggregate demand curve.

question

The long-run aggregate supply curve is vertical because the economy's potential output is determined by

answer

the availability and productivity of real resources, not by the price level.

question

The shape of the short-run aggregate supply curve is

answer

upsloping because wages adjust more slowly than the price level, increasing profits and output.

question

The short-run aggregate supply curve is relatively flat to the left of the full employment output because

answer

there are large amounts of unused capacity and idle human resources.

question

An upsloping aggregate supply curve weakens the realized multiplier effect because any increase in aggregate

answer

demand will have both a price and an output effect.

question

A reduction in aggregate demand likely causes a decline in real output rather than the price level because

answer

prices are inflexible downward.

question

A full-strength multiplier applies to a decrease in aggregate demand when the aggregate _____.

answer

Supply is horizontal

question

True or False? "Unemployment can be caused by a decrease of aggregate demand or a decrease of aggregate supply."

answer

True, but the magnitude of unemployment depends on the economic situation.

question

The U.S. experience of strong economic growth, full employment, and price stability in the late 1990s and early 2000s can be explained by a

answer

rightward shift of aggregate demand and a rightward shift of aggregate supply.

question

A strong negative wealth effect from, say, a precipitous drop in the stock market could cause a recession even though productivity is surging if aggregate demand shifts

answer

left while aggregate supply shifts right.

question

In early 2001 investment spending sharply declined in the United States.

This event caused a

answer

leftward shift in aggregate demand, and lower investment would have caused a leftward shift in aggregate supply.

question

In the 2 months following the September 11, 2001, attacks on the United States, consumption also declined.

This event caused a

answer

leftward shift in aggregate demand, and lower investment would have caused a leftward shift in aggregate supply.

question

In 2002, the annual oil price was $24.36. As of late July 2006, the annual oil price was $62.07. The percentage increase in real GDP from 2001 to 2005 (the latest year for which data were available) was about 12.6 percent.

This indicates that

answer

oil prices increased faster than real GDP, but real GDP still grew at a healthy pace.

question

Which of the following help to explain why the aggregate demand curve slopes downward?

answer

When the domestic price level rises, our goods and services become more expensive to foreigners.

The government raises corporate profit taxes.

question

Which of the following will shift the aggregate demand curve to the left?

answer

Interest rates rise.

There is an economic boom overseas that raises the incomes of foreign households

question

Immediate Short Run

answer

A horizontal line.
The price level is fixed.

question

Short Run

answer

Output prices are flexible but input prices are fixed.
An upsloping curve.

question

Long Run

answer

Vertical line
Output is fixed

question

Which of the following will shift the aggregate supply curve to the right?

answer

Business Taxes fall.
A new networking technology increases productivity all over the economy.

question

At the current price level, producers supply $375 billion of final goods and services while consumers purchase $355 billion of final goods and services. The price level is:

answer

above equilibrium

question

aggregate demand

answer

the total demand for final goods and services in an economy at a given time. It specifies the amounts of goods and services that will be purchased at all possible price levels. This is the demand for the gross domestic product of a country.

question

aggregate supply

answer

the total supply of goods and services produced within an economy at a given overall price level in a given time period. It is represented by the aggregate-supply curve, which describes the relationship between price levels and the quantity of output that firms are willing to provide.

question

True or False. In the real world, decreases in AD normally lead to decreases in both output and the price level.

answer

False

question

a. An increase in aggregate demand.

answer

The price level rises rapidly and there is little change in real output.

question

b. A decrease in aggregate supply, with no change in aggregate demand.

answer

The price level rises and real output decreases.

question

c. Equal increases in aggregate demand and aggregate supply.

answer

The price level does not change, but real output increases.

question

d. A decrease in aggregate demand.

answer

The price level does not change, but real output declines.

question

e. An increase in aggregate demand that exceeds an increase in aggregate supply.

answer

The price level increases somewhat, with a relatively large change in output.

question

True or False. If the price of oil suddenly increases by a large amount, AS will shift left but the price level will not rise thanks to price inflexibility.

answer

False

1 of 34

question

Which of the following explain why the aggregate demand curve slopes downward?

answer

The interest-rate effect, the real balances effect, and the foreign purchases effect

question

The explanation of a downsloping aggregate demand curve differs from the explanation for the downsloping demand curve for a single product because a downsloping

answer

single-product demand curve assumes constant money income such that a lower price causes a substitution of the now relatively cheaper product for those whose prices have not changed.

question

The multiplier

answer

causes an initial change in spending to generate an even larger change in the aggregate demand curve.

question

According to the "real-balances effect," if prices

answer

decline, the purchasing power of assets will rise, so spending at each income level should rise.

question

According to the "wealth effect," a change in consumer wealth causes a

answer

shift in consumer spending and the aggregate expenditures curve.

question

Which of the following statements is true concerning the real-balances effect and the wealth effect?

answer

The real-balances effect explains the shape of the aggregate demand curve, whereas the wealth effect causes shifts of the aggregate demand curve.

question

The long-run aggregate supply curve is vertical because the economy's potential output is determined by

answer

the availability and productivity of real resources, not by the price level.

question

The shape of the short-run aggregate supply curve is

answer

upsloping because wages adjust more slowly than the price level, increasing profits and output.

question

The short-run aggregate supply curve is relatively flat to the left of the full employment output because

answer

there are large amounts of unused capacity and idle human resources.

question

An upsloping aggregate supply curve weakens the realized multiplier effect because any increase in aggregate

answer

demand will have both a price and an output effect.

question

A reduction in aggregate demand likely causes a decline in real output rather than the price level because

answer

prices are inflexible downward.

question

A full-strength multiplier applies to a decrease in aggregate demand when the aggregate _____.

answer

Supply is horizontal

question

True or False? "Unemployment can be caused by a decrease of aggregate demand or a decrease of aggregate supply."

answer

True, but the magnitude of unemployment depends on the economic situation.

question

The U.S. experience of strong economic growth, full employment, and price stability in the late 1990s and early 2000s can be explained by a

answer

rightward shift of aggregate demand and a rightward shift of aggregate supply.

question

A strong negative wealth effect from, say, a precipitous drop in the stock market could cause a recession even though productivity is surging if aggregate demand shifts

answer

left while aggregate supply shifts right.

question

In early 2001 investment spending sharply declined in the United States.

This event caused a

answer

leftward shift in aggregate demand, and lower investment would have caused a leftward shift in aggregate supply.

question

In the 2 months following the September 11, 2001, attacks on the United States, consumption also declined.

This event caused a

answer

leftward shift in aggregate demand, and lower investment would have caused a leftward shift in aggregate supply.

question

answer

oil prices increased faster than real GDP, but real GDP still grew at a healthy pace.

question

Which of the following help to explain why the aggregate demand curve slopes downward?

answer

When the domestic price level rises, our goods and services become more expensive to foreigners.

The government raises corporate profit taxes.

question

Which of the following will shift the aggregate demand curve to the left?

answer

Interest rates rise.

There is an economic boom overseas that raises the incomes of foreign households

question

Immediate Short Run

answer

A horizontal line.
The price level is fixed.

question

Short Run

answer

Output prices are flexible but input prices are fixed.
An upsloping curve.

question

Long Run

answer

Vertical line
Output is fixed

question

Which of the following will shift the aggregate supply curve to the right?

answer

Business Taxes fall.
A new networking technology increases productivity all over the economy.

question

At the current price level, producers supply $375 billion of final goods and services while consumers purchase $355 billion of final goods and services. The price level is:

answer

above equilibrium

question

aggregate demand

answer

question

aggregate supply

answer

question

True or False. In the real world, decreases in AD normally lead to decreases in both output and the price level.

answer

False

question

a. An increase in aggregate demand.

answer

The price level rises rapidly and there is little change in real output.

question

b. A decrease in aggregate supply, with no change in aggregate demand.

answer

The price level rises and real output decreases.

question

c. Equal increases in aggregate demand and aggregate supply.

answer

The price level does not change, but real output increases.

question

d. A decrease in aggregate demand.

answer

The price level does not change, but real output declines.

question

e. An increase in aggregate demand that exceeds an increase in aggregate supply.

answer

The price level increases somewhat, with a relatively large change in output.

question

True or False. If the price of oil suddenly increases by a large amount, AS will shift left but the price level will not rise thanks to price inflexibility.

answer

False

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