Exam 15: Aggregate Demand and Aggregate Supply

A) represents the relationship between prices and quantities of all goods produced in an economy
B) is derived from equilibrium conditions in the labor and money markets
C) gives the equilibrium level of real GDP corresponding to a given price level
D) is the sum of an economy's individual demand curves
E) plots the interest rate as a function of output

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A) increase the price of non-labor inputs,increase input requirements per unit of output,and increase the price level
B) increase the price of non-labor inputs,decrease input requirements per unit of output,and decrease the price level
C) decrease the price of non-labor inputs,decrease input requirements per unit of output,and decrease the price level
D) increase the price of non-labor inputs,decrease input requirements per unit of output,and increase the price level
E) decrease the price of non-labor inputs,increase input requirements per unit of output,and increase the price level

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A) Change in business mentality
B) Change in nominal wage rate
C) Large changes in the capital stock
D) Inability of the price level to change
E) Change in inventories.

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A) The money demand curve shifts leftward,the interest rate drops,the aggregate expenditure line shifts upward,and there is movement downward along the aggregate demand curve.
B) The money demand curve shifts rightward,the interest rate increases,the aggregate expenditure line shifts downward,and there is movement upward along the aggregate demand curve.
C) The money demand curve shifts leftward,the interest rate drops,the aggregate expenditure line shifts downward,and there is movement upward along the aggregate demand curve.
D) The money demand curve shifts rightward,the interest rate increases,the aggregate expenditure line shifts upward,and there is movement downward along the aggregate demand curve.
E) The money demand curve shifts leftward,the interest rate drops,the aggregate expenditure line shifts upward,and there is movement upward along the aggregate demand curve.

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A) Prices of non-labor inputs,input requirements per unit of output,and unit costs would all increase,and the economy would move downward along the aggregate supply curve.
B) Prices of non-labor inputs,input requirements per unit of output,and unit costs would all decrease,and the economy would move downward along the aggregate supply curve.
C) Prices of non-labor inputs,input requirements per unit of output,and unit costs would all decrease,and the economy would move upward along the aggregate supply curve.
D) Prices of non-labor inputs,input requirements per unit of output,and unit costs would all increase,and the economy would move upward along the aggregate supply curve.
E) Prices of non-labor inputs and input requirements per unit of output would increase,unit costs would decrease,and the economy would move downward along the aggregate supply curve.

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A) will increase if unit costs increase.
B) will increase if average markup decreases.
C) will increase if unit costs decrease.
D) is held constant by government decree.
E) will decrease if there is a negative supply shock.

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A) An increase in GDP,an increase in the price level,an increase in money demand,and an increase in the interest rate
B) An increase in GDP,a decrease in the price level,an increase in money demand,and a decrease in the interest rate
C) A decrease in GDP,a decrease in the price level,a decrease in money demand,and a decrease in the interest rate
D) A decrease in GDP,a decrease in the price level,an increase in money demand,and an increase in the interest rate
E) An increase in GDP,an increase in the price level,a decrease in money demand,and a decrease in the interest rate.

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A) the economy will return to point D unless a demand or supply shock occurred
B) wages will fall and aggregate demand will decrease
C) wages will rise and aggregate demand will increase
D) wages will fall and aggregate supply will increase as the economy moves to point C
E) the full-employment level of real GDP would fall to the equilibrium level of real GDP.

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A) An upward shift of the aggregate expenditure line,a rightward shift of the money demand curve,and a leftward shift of the aggregate demand curve
B) A downward shift of the aggregate expenditure line,a leftward shift of the money demand curve,and a leftward shift of the aggregate demand curve
C) A downward shift of the aggregate expenditure line,a leftward shift of the money demand curve,and a rightward shift of the aggregate demand curve
D) A downward shift of the aggregate expenditure line,a rightward shift of the money demand curve,and a rightward shift of the aggregate demand curve
E) An upward shift of the aggregate expenditure line,a rightward shift of the money demand curve,and a rightward shift of the aggregate demand curve.

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A) A spontaneous decrease in money demand
B) A tax increase
C) A contraction of the money supply by the Fed
D) An increase in the price level
E) A reduction in government spending.

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A) In the short run,real GDP and the price level would increase;in the long run,real GDP would return to its original level while the price level would rise even further.
B) In the short run,real GDP and the price level would increase;in the long run,real GDP and the price level would return to their original level.
C) In the short run,real GDP would increase and the price level would decrease;in the long run,real GDP would return to its original level while the price level would rise even further.
D) In the short run,real GDP and the price level would decrease;in the long run,real GDP would return to its original level while the price level would rise even further.
E) In the short run,real GDP and the price level would increase;in the long run,real GDP would increase while the price level would return to its original level.

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A) An increase in the price level.
B) A decrease in the price level.
C) A change in the interest rate caused by a change in the price level.
D) A change in autonomous consumption
E) Both a change in the interest rate caused by a change in the price level,and a change in autonomous consumption.

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A) A rightward shift of the aggregate demand curve
B) It had no effect
C) A downward shift of the aggregate supply curve
D) A leftward shift of the aggregate demand curve
E) An upward shift of the aggregate supply curve.

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A) An upward shift of the aggregate supply curve as unit costs increase,followed by a gradual decrease in the wage as employment decreases,leading to a downward shift of the aggregate supply curve.
B) A downward shift of the aggregate supply curve as unit costs decrease,followed by a gradual increase in the wage as employment increases,leading to an upward shift of the aggregate supply curve.
C) An upward shift of the aggregate supply curve as unit costs increase,followed by a gradual decrease in the wage as employment decreases,leading to an upward shift of the aggregate supply curve.
D) A downward shift of the aggregate supply curve as unit costs decrease,followed by a gradual decrease in the wage as employment decreases,leading to a downward shift of the aggregate supply curve.
E) An upward shift of the aggregate demand curve.

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A) The money demand curve shifts leftward,the interest rate drops,the aggregate expenditure line shifts upward,and there is movement downward along the aggregate demand curve.
B) The money demand curve shifts rightward,the interest rate increases,the aggregate expenditure line shifts downward,and there is movement upward along the aggregate demand curve.
C) The money demand curve shifts leftward,the interest rate drops,the aggregate expenditure line shifts downward,and there is movement upward along the aggregate demand curve.
D) The money demand curve shifts rightward,the interest rate increases,the aggregate expenditure line shifts upward,and there is movement downward along the aggregate demand curve.
E) the money demand curve shifts leftward,the interest rate drops,the aggregate expenditure line shifts upward,and there is movement upward along the aggregate demand curve.

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A) 200 percent
B) 10 percent
C) 100 percent
D) 20 percent
E) 50 percent.

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A) Many labor contracts specify wages for up to three years.
B) The process of wage setting in large corporations is slow moving.
C) Frequent wage changes can reduce worker morale and reduce productivity.
D) Firms benefit from having a reputation of paying stable wages.
E) The labor supply and demand curves move rapidly to clear labor markets.

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