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- 7) Spending on the war in Afghanistan is essentially categorized as government purchases. How do increases in spending on the war in Afghanistan affect the aggregate demand curve? A) They will move the economy up along a stationary aggregate demand curve. B) They will move the economy down along a stationary aggregate demand curve. C) They will shift the aggregate demand curve to the right. D) They will shift the aggregate demand curve to the left.If an economy is on the horizontal portion of the aggregate supply curve, then it is: A.)in a severe recession. B.)overheating. C.)at full employment. D.)experiencing inflation.If the price level increases in the economy, A) The total spending in the economy will fall. B)The aggregate supply will fall and shift to the left. C) The total spending in the economy will rise.
- Please Define Aggregate supply in no more than 3 linesWhich of the following would cause the aggregate supply curve to increase... A) Energy prices such as gas and electricity have increased rapidly throughout the country. B) The government has reduced its spending by more than 10% over the last 2 years C) Consumers are more confident and spending more than before. D) Throughout the economy, workers are using better equipment and output per hour is rising.What effects would each of the following have on aggregate demand or aggregate supply? Justify your answer. In each case use a diagram to show the expected effects on the equilibrium price level and real output level in the economy. Assume that all other things remain constant and prices are inflexible downward. (a) A reduction in interest rates at each price level (b) A sizable increase in labor productivity. (c) The nation’s currency appreciates against its major trading partners .
- Assume the aggregate demand and aggregate supply curve intersect at a price level of 100. Explain the effect of a shift in the price level to 120 and to 50An increase in the price level causes the aggregate supply curve to shift to another supply schedule. True or Falsean increase in the price level cause the aggregate supply curve to shiftto anotherupply schedule. true or false
- A sudden increase in consumer spending will shift the aggregate demand curve to the right and lower the price level/inflation and increase the level of GDP output. True /False6) The short-run aggregate supply curve (AS) is upward sloping because: A) an increase in output causes an increase in employment, a reduction in unemployment, an increase in the nominal wage and an increase in the price level. B) a reduction in the aggregate price level causes a reduction in nominal money demand and a reduction in the interest rate. C) a reduction in the aggregate price level (P) will cause a reduction in the interest rate and an increase in output. D) an increase in the aggregate price level will cause an increase in the interest rate and a reduction in output. E) an increase in the nominal wage causes a reduction in the amount of output that firms are willing to produce.(1) Suppose the economy is in long-run equilibrium. If there is a sharp increase in the expected price level, what do we expect to happen? Select one: (A) In the short run, the SRAS curve will shift left, real GDP and price will fall. (B) In the short run, SRAS will shift right, real GDP will rise and prices will fall. (C) In the short run, AD will shift left, real GDP and prices will fall. (D) In the short run, LRAS and SRAS will shift left, causing real GDP to fall.