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- All of the following, except one, will cause an increase in aggregate demand. Which is the exception? a. A decrease in the exchange rate. O b. An increase in government spending. O c. A decrease in the interest rates. O d. A decrease in the price level.A price-level increase, Ceteris Paribus, will: Select one: O a. cause an upward movement along the aggregate demand curve. O b. cause a downward movement along the aggregate demand curve. O c. cause a rightward shift of the aggregate demand curve. O d. have no impact on the aggregate demand curve. O e. cause a leftward shift of the aggregate demand curve.In the figure, as the price level increases the aggregate demand curve will Price level (GDP price index, 2012 = 100) A. not shift. O B. not shift, but the aggregate demand curve will change so that it is positively sloped. O C. shift from AD, to AD, O D. shift from AD, to AD, and then back to AD,. E. shift from AD, to AD3. AD2 AD3 AD1 Real GDP (trillions of 2012 dollars)
- When would the long-run aggregate-supply curve shift right? Select one: O a. When immigration increases or the government abolishes the minimum wage. O b. When immigration decreases or the government makes a substantial increase in the minimum wage. O c. When immigration decreases or the government abolishes the minimum wage O d. When immigration increases or the government makes a substantial increase in the minimum wage.If Aggregate Demand is at AD2, production will be high as possible. Can production stay at this level foever? Price Level Price Level GDP POTENTIAL AD₁ GDP POTENTIAL AS GDP MAX AD₁ AS GDP MAX AD2 GDP AD2 GDP Select one: O a. No, because eventually, higher aggregate demand will raise prices, and this will make some people less willing to do additional work Oc. All of these are true Od. Yes, because this is maximum production e. None of these are true O b. No, because eventually higher aggregate demand will cause prices to fall, and this will make producers decide to produce lessWhich of the following government actions will shift the aggregate demand right? Select one: O O O a. a rise in personal income taxes b. closing up a military facility to reduce costs c. a repeal of an investment tax credit d. an increase in the money supply
- A decrease in the price of foreign oil will affect the U.S. economy by O a. decreasing aggregate supply. O b. increasing aggregate demand. O c. increasing aggregate supply. O d. decreasing aggregate demandFor a sloping Aggregate Demand curve which of the following arguments is unconvincing? Select one: O a. None of these O b. A rise in the price level in a country will lead to lower real spending because it wil lead to lower real wealth. O C. A rise in the price level in a country will tend to lead to a fall in the real value of exports and a rise in the real value of imports. O d. A rise in the price level in a country will reduce the real value of firms' profits, causing them to reduce planned investment. O e. A rise in the price level in a country will lead to lower real spending because it will lead to a higher interest rate.The long-run aggregate supply curve is Select one: O a.a vertical line through the non-inflationary rate of output. O b.a vertical line through the natural rate level of output. O ca horizontal line through the current level of output. d. a vertical line through the current level of output.
- Which of the following statements is correct? O A. The price level does not effect the level of real GDP demanded. O B. The higher the price level, the more.the aggregate demand curve shifts rightward. OC. The lower the price level, the greater the quantity of real GDP demanded O D. The lower the price level, the more the aggregate demand curve shifts leftward. E. The lower the price level, the more the aggregate demand curve shifts rightward.QUESTION 7 Suppose a hurricane destroys 20% of the capital stock in a country. In the long run, output will O a. remain unchanged; remain unchanged O b. decrease; decrease c. decrease; increase O d. remain unchanged; increase O e. decrease; remain unchanged QUESTION 8 Menu costs help to explain: O a. why the long-run aggregate supply curve is horizontal. b. the negative slope of the aggregate demand curve. O c. why the long-run aggregate supply curve is vertical. O d. the negative slope of the aggregate supply curve. O e. the positive slope of the short-run aggregate supply curve. QUESTION 9 Suppose new drilling techniques increase the world oil supply. In the long run, output will O a. increase; remain unchanged a b. increase; increase C c. remain unchanged; remain unchanged O d. remain unchanged; decrease O e. increase; decrease and the price level will and the price level willIf price level is held constant and we decrease consumption, the aggregate demand curve will shift to theSelect one:O a. NortheastO b. SouthwestO cc Neither A nor B