A weak dollar will ___________ net exports and shift the AD curve to the _________. d. shift the demand curve of D to the r, For a demand curve to shift to the right, where there is greater demand at every price, there has to be one of the following situations: a. increase in income. The long-run output of an economy depends on: Which of the following would cause an upward movement along the aggregate demand curve? Suppose advances in computer technology lead to a surge in worker productivity. B. a rightward shift of the demand curve. The short-run aggregate supply curve is and the long-run aggregate supply curve is . 8-26. Why national income can rise and fall? copyright 2003-2023 Homework.Study.com. In the long run, the output of an economy: Firms and workers expect the price level to fall. Higher interest rates tend to discourage borrowing and thus reduce both household spending on big-ticket items like houses and cars and investment spending by businesses. B. the money demand curve to shift to the right. If people expect higher income in the future, then spending today __________ and aggregate demand __________. Suppose consumption decreases at each price level. Which set of changes will definitely shift the aggregate demand (AD) curve to the right? As a direct consequence of this, GDP and prices will be greater when we reach the new point of equilibrium. [Why is one of the components spending on exports MINUS imports? The wealth effect is best described as resulting from: an increase in the price level reducing the real value of wealth. C. shift long-run aggregate supply to the right. An expected increase in the prices of consumer goods in the near future will: a. increase (or shift right) in aggregate demand now b. decrease (or shift left) in aggregate demand now c. increase in the quantity of real output demanded (or movement down al. When a tariff is imposed, the supply curve for the imported good: A. shifts upward and to the left. D. a rightward movement along the demand cur, Suppose that consumer assets and wealth increase in real value. Register Now. c. will shift aggregate supply to the right. Long Run Macroeconomic Equilibrium is the meeting point of the three curves: short run aggregate supply, aggregate demand, and the long run aggregate supply curves. d. a shortage of the good to develop. When the government imposes a binding price floor, it causes: a. the demand curve to shift to the right. Suppose that many countries in Europe sink into recession. The aggregate demand (AD) curve shifts to the right. The price level rises, and real output rises. C) shift the supply curve left. Because the government has influence over several of the components of aggregate demand, it has the power to shift AD through its policy choices. b. right. D. shift, 1. If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked. d. shift the aggregate demand curv, To close an expansionary gap: A. the aggregate demand curve should be shifted to the right. B) movement along the and and If the supply curve shifts to the left and the demand. C. a leftward shift in both the aggregate supply and aggregate demand curves. Sold merchandise on account to Black Tie Co., $28,000. Raising transfer payments shifts the: A) aggregate demand curve to the left. If wage rates rise at the same time that labor productivity increases, what is the effect on short-run aggregate supply (SRAS)? Whether equilibrium output changes relatively more than the price level or whether the price level changes relatively more than output is determined by where the AD curve intersects with the AS curve. B) Downward movement along. cutback in defense or highway spending) shifts the aggregate-demand curve to the left. b.The option is incorrect because when aggregate demand rises due to rise in foreign income, the aggregate supply curve does not shift as there is no change in aggregate supply. A change in income will not lead to: a. a rightward shift of the demand curve. [1] This includes regional, national, and global economies. Tax policy can also pump up investment demand by offering lower tax rates for corporations or tax reductions that benefit specific kinds of investment. An increase in the value of the dollar will: Input prices affect the firm's _________, and output prices affect the firm's _________. This lowers , which lowers and the curve shifts . If wage rates rise, at which point is the economy most likely to end up in the short run? 8-50. When the government imposes a binding price floor, it causes: a. the supply curve to shift to the left. As the interest rate rises, businesses invest and the AD curve shifts to the . Because the economy was near the full employment GDP (Y 1f), the rise in aggregate demand pushed the unemployment rate below the natural rate of unemployment and had a strong inflationary impact. 2. }&\text{X}&=&\$118,000&+&\$338,100\\ 8-56. b. short-run aggregate supply curve down (to the right). When the price of a good is above the equilibrium level: a. the quantity demanded exceeds the quantity supplied. Purchased an insurance (bonding) policy against losses from theft by a cashier. 8-48. Business taxes fall. Remember to consider only this change as you determine your answers. Direct link to John Smith's post What about the MPC does t, Posted 3 years ago. A. a nationwide drought lasting for many months B. an outbreak of war among several of the Middle Eastern oil-producing countries C. an influenza virus that affects 50 percent of the labor force for two weeks. A shift of AD to the left moves the equilibrium from. Aggregate- "added all together." . b. the quantity supplied exceeds the quantity demanded. increase; both long-run and short-run aggregate supply decrease. Use the AD-AS model and assume the economy was in long-run equilibrium before this change. Direct link to Bharath Reddy Makthal's post The government borrows th, Posted a month ago. An increase in exports will shift the aggregate demand curve to the right. 8-39. The correct answer is c) a decrease in domestic aggregate demand. As the interest rate rises, the cost of a given investment project and businesses invest . Which of the following will cause a movement from one point on an AD curve to another point on the same AD curve? Which of the following is not a factor that can shift the short-run aggregate supply curve? C) the exchange rate rises. Whether these changes in output and price level are relatively large or relatively small, and how the change in equilibrium relates to potential GDP, depends on whether the shift in the AD curve happens in the relatively flat or relatively steep portion of the short-range aggregate supply, or SRAS, curve. An increase in the price level will: a. move the economy up along a stationary aggregate demand curve. C) There will, Suppose the supply curve for peanuts has shifted to the right and the demand curve for peanuts has shifted to the right. The value of one's accumulated assets is best defined as: Supply shocks cause short-run aggregate supply to: return to its original position in the long run. A. to approve the president's proposed budget B. to debate the concurrent resolution C. to cut the budget D. to establish spending and revenue guidelines. Business cycles can be readily identified from, A and B (unemployment-rate data; real GDP data.). Suppose new drilling techniques increase the world oil supply. A leftward shift of the demand curve, c. A rightward shift of the demand curve, d. All of the statements are correct. Take, for example, government spendingone component of AD. Suppose there is a surge in stock market values. Which of the following statements is false? The rise in aggregate demand raises the aggregate output, which . b. the demand curve for Euros shifts to the left. f. External auditors are regularly hired to evaluate internal controls. In the short run, aggregate demand will __________ and output will __________. AD components can change because of different personal choiceslike those resulting from consumer or business confidenceor from policy choices like changes in government spending and taxes. b. movement down the U.S. aggregate demand curve. c. Aggregate Demand Imagine once again an economy in its long-run equilibrium. The real balance effect describes the change in. Which of the following will not lead to a leftward shift in the SRAS curve? When U.S. goods become more expensive relative to foreign goods, exports will __________ and imports will __________. Direct link to devastatingroy's post if the government wants t, Posted 5 years ago. An increase in the amount of money in circulation would cause a: a. shift of the aggregate demand curve to the left. If demand for a product falls, the demand curve for labour used to produce the product will a. shift leftward. This raises , which raises and the curve shifts rightward. Therefore, higher prices lead to an increase in the demand for money. The labor ________ curve(s) will shift ________ if there is an increase in productivity or an increase in the demand for the final product. . Posted 6 years ago. c. rightward. Shift the supply curve of the product to the left. The real balance effect is one of the. Consumer wealth increases due to a rise in housing prices. d. demand curve to the right. When foreign income rises, U.S. aggregate: a. demand will shift to the right. Movement down the demand curve B. The change in the purchasing power of dollar-denominated assets (such as cash holdings) is the, 8-6. After taking an economics course, you decide that devaluing your currency (Zhoullars) is the way to increase GDP. It is apparent that between 1992 and 2000 the U.S. economy went through the _________ phase of the business cycle. An increase in the wealth level in China will. Aggregate demand is determined by adding up the spending of: consumers, firms, the government, and foreigners that buy goods and services produced in the United States. The aggregate demand for the mushroom pasta for each day is given by q = 200 - 4p, where p is the price of the pasta. The dollar has , making Japanese goods expensive for Americans. Shift in demand is a representation of a change in the quantity of a good or service demanded at every price level due to various economic factors. Change in quantity demanded c. Complements d. Income effect e. Substitutes, An increase in the price level causes: A. the money demand curve to shift to the left B. a movement down along the money demand curve C. the money demand curve to shift to the right D. a movement up along the money demand curve. If the US Congress cu, Posted a year ago. How will this affect the aggregate demand curve? An aggregate demand/aggregate supply model is used to study. Assume the economy was experiencing long-run economic growth in the 1990s. D. will necessarily remain unchanged. there is a wealth effect but no interest rate effect. This year, if national product at factor cost is Rs. The price index used to illustrate the aggregate demand curve is the:. Aggregate demand is lesser than the aggregate supply due to the economic recovery but if it is booming it is possible to have an equal aggregate demand and aggregate supply. If the price level in the United States falls, all else being equal, U.S. exports will _____________ and U.S. imports will ______________. 8-36. If large emerging economies continue to grow rapidly, we can expect U.S. aggregate: Which of the following would cause an increase in long-run aggregate supply? The higher of the two aggregate demand curves is closer to the vertical potential GDP line and hence represents an economy with a low unemployment. An inward shift of AD means that total expenditure on goods and services at each price . Suppose Mexico, one of our largest trading partners and purchaser of a large quantity of our exports, goes into a recession. c. the supply curve shifts to the left. both increase aggregate demand in China and increase aggregate demand in the U.S. 1. d. demand will shift to the left. When the money supply decreases a.) b) aggregate supply curve shifting to the right. The price level influences aggregate supply in the short run but not in the long run. 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