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Exam 23: Output and Prices in the Short Run

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Question 71

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Other things being equal,when the domestic price level falls exogenously,

A) Canadian goods become more expensive relative to foreign goods.
B) the net export function shifts upward.
C) the aggregate expenditure function shifts downward.
D) imports of foreign goods rise.
E) the net export function shifts downward.

F) C) and D)
G) C) and E)

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Question 72

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Consider the basic AD/AS model.Suppose that high-school graduates have better computing skills than did graduates in the past,resulting in an increase in average labour productivity.This change will

A) shift the AS curve to the left.
B) shift the AS curve to the right.
C) shift the AD curve to the left.
D) shift the AD curve to the right.
E) cause a movement along the AS curve to the right.

F) C) and D)
G) B) and C)

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Question 73

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Consider the relationship between the AE curve and the AD curve.A fall in the amount of desired consumption,investment,government purchases,or net exports at any given level of national income

A leftward shift of the aggregate demand (AD) curve could result from a fall in

Consider a simple macro model with demand-determined output.Other things being equal,the price level and desired aggregate expenditure are related to each other

Aggregate supply refers to the

Other things being equal,a closed economy will have a ________ marginal propensity to spend and thus a ________ AD curve compared to an open economy with foreign trade.

The AD curve shows the relationship between

On a graph that shows the derivation of the AD curve,an exogenous change in the price level causes

FIGURE 23-1 -Refer to Figure 23-1.Assume the economy is initially in equilibrium with desired aggregate expenditure equal to real GDP at point V.The price level is .Now,suppose the AE curve shifts to and we move to a new equilibrium level of GDP at and point E on .A possible cause of this change in equilibrium is

Consider the following news headline: "Information technology costs for Canadian firms continue to drop." Choose the statement below that best describes the likely macroeconomic effect.

FIGURE 23-1 -Refer to Figure 23-1.Assume the economy is initially in equilibrium with desired aggregate expenditure equal to real GDP at point V.The price level is .Now,suppose the AE curve shifts to and we move to a new equilibrium level of GDP at and point C on .A possible cause of this change in equilibrium is

Suppose firms are currently producing output at a level beyond their normal capacity.In this situation,the AS curve will be relatively ________ and a positive AD shock will result in ________.

Consider the basic AD/AS model.Suppose firms are currently producing beyond their normal capacity.A change in AD leads to a relatively

Consider the economy's aggregate supply curve.Other things being equal,unit costs will tend to fall if

Suppose there is a drop in the price of an important factor input.What will be the effect on the aggregate supply curve?

FIGURE 23-5 -Refer to Figure 23-5.Suppose that an increase in government purchases caused the AD curve to shift to the right,as shown.If the simple multiplier in this model is 5,then how much was the increase in government purchases?

FIGURE 23-3 -Refer to Figure 23-3.Which of the following statements correctly describes the difference between the multipliers (in response to an increase in autonomous expenditure) in Economy A and Economy B? The multiplier in Economy A is ________ while the multiplier in Economy B is ________.

Consider the relationship between the AE curve and the AD curve.A rise in the amount of desired investment expenditure at each level of national income

Consider the following two headlines appearing in the same day: "Federal government announces major new infrastructure investments" and "New technology drives down transport costs." Choose the statement below that best describes the likely macroeconomic effects.