Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 14, Problem 3QQ
To determine
The result of contraction on price level in the short run and long run.
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______ is the total quantity of goods and services that will be purchased at all possible price levels.
a.
Demand
b.
Aggregate supply
c.
Supply
d.
Aggregate demand
At a price level of 105, firms are unable to _______.
A.
meet the demand for their output, so they increase production and raise prices
B.
sell their output, so they cut production and aggregate supply decreases
C.
meet the demand for their output, so they increase production and aggregate supply increases
D.
sell their output, so they cut production and lower prices
What is the relationship between the price level and the following components of aggregate demand?
a. There is (a negative/ no / a positive) relationship between the price level and consumption.
b. There is (a negative/no/ a positive) relationship between the price level and investment.
c. There is (a negative/no/ a positive) relationship between the price level and government spending.
d. There is (a negative/no/ a positive) relationship between the price level and net exports.
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- R T 3. Price level B K SAS 1 SASO Real output C. an increase in aggregate demand. D. a decrease in aggregate demand. IUO Refer to the graph shown. A movement from A to C is most likely to be caused by: A. an increase in input prices. B. a decrease in input prices. NGarrow_forwardIf the price level rises, what happens to aggregate supply? Aggregate supply _______. A. doesn't change, but the quantity of real GDP supplied increases B. decreases C. increases D. doesn't change, but the quantity of real GDP supplied decreasesarrow_forward1. As the aggregate demand curve shifts to the right: A)the price level falls and real GDP rises. B) the price level and real GDP both fall. C) the price level and real GDP both rise. D) the price level rises and real GDP falls .arrow_forward
- The effect of an increase in the price level on the aggregate-demand curve is represented by a a. movement to the left along a given aggregate-demand curve. b. shift to the right of the aggregate-demand curve. c. shift to the left of the aggregate-demand curve. d. movement to the right along a given aggregate-demand curve.arrow_forward28. Which of the following is a determinant of the height of the aggregate supply curve? Select one: a. Consumption. b. Costs of production. c. Investment. d. The trade balance. e. Government expenditure.arrow_forwardFigure 6 PRICE LEVEL LRAS 4 B Y, Y₂ QUANTITY OF OUTPUT SRAS, SRAS, AD Refer to Figure 6. Starting from point A and assuming that aggregate demand is held constant, in the long run the economy is likely to experience a a. falling price level and a falling level of output, as the economy moves to point C. b. rising price level and a falling level of output, as the economy moves to point B. c. falling price level and a rising level of output, as the economy moves to point B. d. rising price level and a rising level of output, as the economy moves to point C.arrow_forward
- Why does the aggregate demand curve slope downward? The aggregate demand curve slopes downward because _______. A. as the price level falls, expected future income increases B. of the wealth effect and the price level effect C. as the price level falls, expected future profits increase D. of the wealth effect and the substitution effectarrow_forwardWhat is the effect of an increase in the price level when the money wage rate remains unchanged? A. Aggregate supply increases. B. Potential GDP increases. C. The quantity of real GDP supplied increases. D. Resource prices increase by the same percentage as the increase in the price level.arrow_forwardIf the economy is operating way below capacity, an increase in aggregate demand causes a big change in the and small change in Select one: a. aggregate demand; aggregate supply b. price level; output C. output; price level d. aggregate supply; aggregate demandarrow_forward
- 1. As the aggregate demand curve shifts to the right: A) the price level falls and real GDP rises. B) the price level and real GDP both fall. C) the price level and real GDP both rise. D) the price level rises and real GDP falls. 2. The US experienced significant stagflation in the 1970s as a result of: A) a sharp increase in oil prices. B) drastically bad growing weather caused by a drought. C) the expectation that inflation would be high. D) a sharp increase in steel prices. 3. can bring about an inflationary recession. A) Demand-side inflation B) Supply-side inflation C) Neither demand-side inflation nor supply-side inflation D) Both demand-side inflation and supply-side inflation 4. Suppose banks are currently charging a 4.5 percent nominal interest rate on mortgages because they expect inflation to average 3 percent over the life of the loan. If their expectations change so that they instead expect there to be DEFLATION of 2 percent over the life of the loan, can they still…arrow_forward16. Why is the aggregate supply curve completely vertical in the long run? A. Short-run business cycles do not affect short-run output. B. Aggregate supply is impossible to illustrate in the long run. C. A country’s total output will always be constant. D. A country’s total output is not affected by price in the long run.arrow_forward11. Recession True or False: The aggregate-demand curve slopes downward because it is the horizontal sum of the demand curves for individual goods. True Falsearrow_forward
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