Macroeconomics Chapter 8- Exam 3

A rise in foreign real national income tends to raise U.S. __________, shifting the U.S. AD curve to the __________.
Select one:

A. exports; left
B. exports; right
C. imports; left
D. imports; right

Aggregate demand curves are
Select one:

A. downward sloping.
B. upward sloping.
C. horizontal.
D. vertical.

As income taxes rise, disposable income __________, causing __________ the AD curve.
Select one:

A. increases; movement down along
B. increases; a rightward shift of
C. decreases; movement up along
D. decreases; a leftward shift of

Business optimism about future sales tends to __________ investment expenditures, shifting the AD curve to the __________.
Select one:

A. increase; left
B. increase; right
C. decrease; left
D. decrease; right

Greater wealth makes people _____________ willing to spend on consumption, causing __________ the economy's AD curve.
Select one:

A. more; movement down along
B. more; a rightward shift of
C. less; movement up along
D. less; a rightward shift of

Individuals' expectations of lower future prices is a
Select one:

A. rightward shifter of the AD curve.
B. leftward shifter of the AD curve.
C. reason for moving up along a given AD curve.
D. reason for moving down along a given AD curve.

The interest rate effect is one of the
Select one:

A. reasons why an AD curve is downward-sloping.
B. shifters of an AD curve.
C. reasons why a short-run aggregate supply curve can be derived.
D. shifters of a short-run aggregate supply curve.

The real balance effect describes the change in
Select one:

A.
checking account balances that occur when the money supply increases or decreases.
B.
the value of physical assets (e.g., houses) that results from a change in the price level.
C.
the output producers produce as they attempt to balance their production in response to changes in consumers' demand.
D.
the value of cash holdings that results from a change in the price level.
E.
the balance of cash holdings that results from a change in the amount of income earned.

The short-run aggregate supply curve is ________ and the long-run aggregate supply curve is _________.
Select one:

A. upward sloping; horizontal
B. vertical; upward sloping
C. vertical; horizontal
D. upward sloping; vertical
E. none of the above

Which of the following best describes how the international trade effect works?
Select one:

A.
The price level in the U.S. falls relative to foreign price levels, U.S. goods become relatively less expensive than foreign goods, and both Americans and foreigners buy more U.S. goods.
B.
The price level in the U.S. falls relative to foreign price levels, U.S. goods become relatively more expensive than foreign goods, and both Americans and foreigners buy more U.S. goods.
C.
The price level in the U.S. rises relative to foreign price levels, U.S. goods become relatively more expensive than foreign goods, and both Americans and foreigners buy fewer U.S. goods.
D.
The price level in the U.S. rises relative to foreign price levels, U.S. goods become relatively more expensive than foreign goods, and both Americans and foreigners buy more U.S. goods.
E.
A and C