The short-run aggregate supply curve shows:O How firms respond to changes in interest ratesO What happens to the level of real GDP suppliers are willing and able to produce in an economy as the overall price level changes, during aperiod in which output prices can change but input prices are fixedO What happens to output in an economy when the government spends more moneyO The relationship between the price level and aggregate expenditureWhich of the following are assumed to remain unchanged along a given short-run aggregate supply curve? Check all that apply.The technology available to firmsReal GDPInstitutions, such as patent laws and tax systemsInput pricesThe natural rate of unemployment refers to:O The unemployment that arises due to purely seasonal factors, such as unemployed lifeguards in the winterO The minimum possible unemployment rate of an economyO The unemployment rate that occurs when an economy's real GDP is equal to its potential outputO The unemployment rate that would occur if there were no frictional unemploymentComplete the following table by matching each definition to the appropriate economic time frame.Long RunOODefinitionA period of time in which all input prices and wages are renegotiatedA period of time in which some input prices and wages are fixedShort RunO

The short-run aggregate supply (SRAS) curve depicts how producers would modify production in…

The short-run aggregate supply curve shows: O How firms respond to changes in interest rates O What happens to the level of real GDP suppliers are willing and able to produce in an economy as the overall price level changes, during a period in which output prices can change but input prices are fixed O What happens to output in an economy when the government spends more money O The relationship between the price level and aggregate expenditure Which of the following are assumed to remain unchanged along a given short-run aggregate supply curve? Check all that apply. The technology available to firms Real GDP Institutions, such as patent laws and tax systems Input prices

The short-run aggregate supply curve shows: O How firms respond to changes in interest rates O What happens to the level of real GDP suppliers are willing and able to produce in an economy as the overall price level changes, during a period in which output prices can change but input prices are fixed O What happens to output in an economy when the government spends more money O The relationship between the price level and aggregate expenditure Which of the following are assumed to remain unchanged along a given short-run aggregate supply curve? Check all that apply. The technology available to firms Real GDP Institutions, such as patent laws and tax systems Input prices

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 2TY

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Which of the following is true? O An increase in aggregate demand is the same as a downward shift in the total expenditure function O An increase in aggregate demand is the same as an increase in aggregate supply O An inward shift of the aggregate demand curve is the same as an upward shift in the total expenditure function O An increase in aggregate demand is the same as an upward shift in the total expenditure function
Short-run macroeconomic equilibrium is when (Hint: Be careful! Be sure to return to the general definition of equilibrium): Firms have no incentive to change how much they produce O Households have bought as much as they want O Spending is equal to consumption (AE = C) O The government is content with the level of employment
The short-run aggregate supply curve shows: O What happens to the level of real GDP suppliers are willing and able to produce in an economy as the overall price level changes, during a period in which output prices can change but input prices are fixed O How firms respond to changes in interest rates O The relationship between the price level and aggregate expenditure O What happens to output in an economy when the government spends more money Which of the following are assumed to remain unchanged along a given short-run aggregate supply curve? Check all that apply. O Input prices The price level O Institutions, such as patent laws and tax systems Real GDP Potential output (also called the natural rate of real output) refers to: O The quantity of output that would be produced if every member of the labour force worked 40 hours per week O The quantity of output produced when the prices of all inputs are allowed to fully adjust O The quantity of output produced at the intersection of the…
Which of the following policies will NOT shift the Aggregate Expenditure curve upward? Select one: O a. increasing autonomous taxes O b. decreasing autonomous taxes O c. increasing autonomous transfer payments O d. increasing government expenditures on goods and services
In the Aggregate Expenditure framework, which of the following government policy choices offer a possible solution to inflationary pressures? (Check all that apply.) Select all that apply: O a. A reduction in taxes for businesses that increase investment. O b. A major decrease in what the government spends on healthcare. Oc. A decrease in military spending. O d. A tax increase on consumer income. The United States is Canada's major export market. Suppose there is a decrease in American real GDP. The impact of this change will be a in which will mean a shift in the Canadian AE function. As a result, Canadian real GDP will decrease consumption investment upward downward net exports increase
Match each definition to the appropriate component of aggregate demand. Definition The sum of the expenditures of business firms on new plant, equipment, and software and of households on new homes The goods and services purchased by all levels of government The total amount spent by consumers on newly produced goods and services The difference between exports and imports ⒸNet exports O Government spending Consumer Expenditure Which of the following components represents the largest piece of aggregate demand? O Consumer expenditure O Investment spending O Which of the following components represents the smallest piece of aggregate demand? O Consumer expenditure O Government spending O Investment spending ONet exports Investment Spending Government Spending Net Exports O O O O
Use the following graph to answer the next question. Price Level 0 AS3 AS₁ AS₂ Real Domestic Output, GDP Which of the following factors will shift AS1 to AS2? O An increase in real interest rates O A decrease in business subsidies O An increase in input prices O A decrease in business taxes.
Refer to Figure 9.1. When the price level rises and causes lower consumption expenditures, it is illustrated as: `AD2 AD1 ADo Aggregate output, Y O a move from Point B to Point A, but not a shift of the aggregate demand curve. O an aggregate demand curve shift from AD1 to ADO. an aggregate demand curve shift from AD1 to AD2. O a move from Point A to Point B, but not a shift of the aggregate demand curve. Price level, P
Which of the following will NOT shift the ADTT curve? O a. A rise in consumer confidence O b. A rise in interest rates O c. A rise in government spending O d. A rise in exports
1. Aggregate expenditures and income The following table shows consumption (C), investment (1), government spending (G), and net exports (X-M) in a hypothetical economy for various levels of real GDP (Y). Assume that the price level remains unchanged at all levels of income. All figures are in billions of dollars. Compute aggregate expenditures for each income level and fill in the last column In the following table. Y с G 500 525 250 150 600 550 250 150 575 250 150 600 250 150 -200 900 625 250 150 -200 700 800 AL AGGREGATE EXPENDITURES (Billions of dollars) The following graph shows real GDP on the horizontal axis and aggregate expenditures (AE) on the vertical axis. The orange line (square symbols) represents a 45-degree (Y-AE) line. 1000 Use the blue points (circle symbol) to plot the aggregate expenditures line for this economy. Line segments will automatically connect the points. 900 300 I 700 X-M Aggregate Expenditures -200 725 -200 750 775 800 825 600 500 + -200 AE line *+…
Which of the following will NOT shift the ADT curve? O a. A rise in government spending O b. A rise in exports Ос. A rise in interest rates O d. A rise in consumer confidence
The aggregate supply curve shows the relationship between the price level and the: O potential GDP in the economy. O total quantity of output that suppliers collectively produce. total quantity of output that buyers collectively plan to purchase. equilibrium GDP in the economy.