Podcast
Questions and Answers
Which of the following is NOT a component of GDP in the equation GDP = C + I + G + (X - M)?
Which of the following is NOT a component of GDP in the equation GDP = C + I + G + (X - M)?
- Gross private domestic investment (I)
- Consumer spending (C)
- Imports (M) (correct)
- Government spending (G)
According to the text, which effect is one of the reasons for the downward slope of the aggregate demand curve?
According to the text, which effect is one of the reasons for the downward slope of the aggregate demand curve?
- The interest rate effect
- The real exchange rate effect
- The wealth effect (correct)
- The nominal money supply effect
What happens to the demand for money when the price level increases, according to the text?
What happens to the demand for money when the price level increases, according to the text?
- The interest rate decreases
- The interest rate increases
- The demand for money increases (correct)
- The demand for money decreases
What is the effect of a decrease in the price level on the interest rate, according to the text?
What is the effect of a decrease in the price level on the interest rate, according to the text?
Why is holding extra money in liquid form considered to have an opportunity cost?
Why is holding extra money in liquid form considered to have an opportunity cost?
Which of the following is true about the interest rate effect?
Which of the following is true about the interest rate effect?
What happens to the real exchange rate when the domestic price level increases?
What happens to the real exchange rate when the domestic price level increases?
What is the relationship between interest rates and the real exchange rate?
What is the relationship between interest rates and the real exchange rate?
What does the aggregate supply curve represent?
What does the aggregate supply curve represent?
What is the difference between the short-run and long-run aggregate supply curves?
What is the difference between the short-run and long-run aggregate supply curves?
Which of the following best describes aggregate demand (AD)?
Which of the following best describes aggregate demand (AD)?
What does the aggregate demand curve represent?
What does the aggregate demand curve represent?
What is the relationship between price level and quantity demanded in the aggregate demand curve?
What is the relationship between price level and quantity demanded in the aggregate demand curve?
What is aggregate supply (AS)?
What is aggregate supply (AS)?
What factors does aggregate supply (AS) reflect?
What factors does aggregate supply (AS) reflect?
According to the text, when does an increase in government spending shift the AD curve to the right?
According to the text, when does an increase in government spending shift the AD curve to the right?
What is the main distinction between open-market operations and interest rate targeting?
What is the main distinction between open-market operations and interest rate targeting?
What happens to the aggregate supply curve when the economy is already in long-run equilibrium and the central bank expands the money supply?
What happens to the aggregate supply curve when the economy is already in long-run equilibrium and the central bank expands the money supply?
What is the effect of a reduction in the money supply on the AD curve?
What is the effect of a reduction in the money supply on the AD curve?
What are some channels through which an increase in the money supply may induce additional expenditures?
What are some channels through which an increase in the money supply may induce additional expenditures?
According to the text, in the very short run, companies will increase or decrease output without changing prices. This is represented by the horizontal line labeled VSRAS. What is the name of the upward sloping curve that represents the dynamic over somewhat longer periods?
According to the text, in the very short run, companies will increase or decrease output without changing prices. This is represented by the horizontal line labeled VSRAS. What is the name of the upward sloping curve that represents the dynamic over somewhat longer periods?
In the short run, wages and other input costs are relatively inflexible and do not fully adjust to changes in output prices. However, over the long run, wages and other input prices tend to 'catch up' with the prices of final goods and services. This is illustrated by which curve in Exhibit 10?
In the short run, wages and other input costs are relatively inflexible and do not fully adjust to changes in output prices. However, over the long run, wages and other input prices tend to 'catch up' with the prices of final goods and services. This is illustrated by which curve in Exhibit 10?
According to the text, what determines the position of the LRAS curve in Exhibit 10?
According to the text, what determines the position of the LRAS curve in Exhibit 10?
In the classical model of aggregate supply, the long-run equilibrium level of output is referred to as the full employment or natural level of output. At this level, the economy's resources are deemed to be fully employed and unemployment is at its natural rate. What is the assumption about the macroeconomy when referring to the natural rate of unemployment?
In the classical model of aggregate supply, the long-run equilibrium level of output is referred to as the full employment or natural level of output. At this level, the economy's resources are deemed to be fully employed and unemployment is at its natural rate. What is the assumption about the macroeconomy when referring to the natural rate of unemployment?
According to the text, what is the business cycle a result of?
According to the text, what is the business cycle a result of?
Which of the following factors can cause a shift in the aggregate demand (AD) curve?
Which of the following factors can cause a shift in the aggregate demand (AD) curve?
What is the primary reason households save a portion of their current income?
What is the primary reason households save a portion of their current income?
How does an increase in household wealth affect consumer spending?
How does an increase in household wealth affect consumer spending?
What factors can directly or indirectly influence the level of aggregate expenditures and cause the aggregate demand (AD) curve to shift?
What factors can directly or indirectly influence the level of aggregate expenditures and cause the aggregate demand (AD) curve to shift?
What impact does consumer and business confidence have on aggregate demand (AD)?
What impact does consumer and business confidence have on aggregate demand (AD)?
