Which of the following help to explain why the aggregate demand curve slopes downward? a. When the domestic price level rises, our goods and services become more expensive to foreigners. b. When government spending rises, the price falls. c. There is an inverse relationship between consumer expectations and personal taxes. d. When the price level rises, the real value of financial assets (like stocks, bonds, and savings account balances) declines. Label each of the following descriptions as being either an immediate-short-run aggregate supply curve, a short-run aggregate supply curve, or a long-run aggregagte supply curve. a. A vertical line b. The price level is fixed c. Output prices are flexible, but input prices are fixed d. A horizontal line e. An upsloping curve f. Output is fixed What effects would each of the following have on aggregate demand or aggregate supply, other things equal? In each case, use a diagram to show the expected effects on the equilibrium price level and the level of real output, assuming that the price level is flexible both upward and downward. a. A widespread fear by consumers of an impending economic depression. b. A new national tax on producers based on the value added between the costs of the inputs and the revenue received from their output c. A reduction in interest rates at each price level. d. A major increase in spending for health care by the federal government. e. The general expectation of coming rapid inflation. f. The complete disintegration of OPEC, causing oil prices to fall by one-half. g. A 10 percent across-the-board reduction in personal income tax rates. h. A sizable increase in labor productivity (with no change in nominal wages). i. A 12 percent increase in nominal wages (with no change in productivity). j. An increase in exports that exceeds an increase in imports (not due to tariffs).
- Which of the following help to explain why the aggregate
demand curve slopes downward?
a. When the domestic price level rises, our goods and services become more expensive to foreigners.
b. When government spending rises, the price falls.
c. There is an inverse relationship between consumer expectations and personal taxes.
d. When the price level rises, the real value of financial assets (like stocks, bonds, and savings account balances) declines.
- Label each of the following descriptions as being either an immediate-short-run
aggregate supply curve , a short-run aggregate supply curve, or a long-run aggregagte supply curve.
a. A vertical line
b. The price level is fixed
c. Output prices are flexible, but input prices are fixed
d. A horizontal line
e. An upsloping curve
f. Output is fixed
- What effects would each of the following have on aggregate demand or aggregate supply, other things equal? In each case, use a diagram to show the expected effects on the
equilibrium price level and the level of real output, assuming that the price level is flexible both upward and downward.
a. A widespread fear by consumers of an impending economic depression.
b. A new national tax on producers based on the value added between the costs of the inputs and the revenue received from their output
c. A reduction in interest rates at each price level.
d. A major increase in spending for health care by the federal government.
e. The general expectation of coming rapid inflation.
f. The complete disintegration of OPEC, causing oil prices to fall by one-half.
g. A 10 percent across-the-board reduction in personal income tax rates.
h. A sizable increase in labor productivity (with no change in nominal wages).
i. A 12 percent increase in nominal wages (with no change in productivity).
j. An increase in exports that exceeds an increase in imports (not due to tariffs).
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