Exam 8: Production and Costs

Starting from short-run equilibrium,the following occurs: personal income taxes are cut,business taxes are cut,and labor productivity rises.What is the effect on the price level and Real GDP in the short run?

As the dollar depreciates,foreign goods become more expensive for Americans to purchase.

The short-run aggregate supply curve shows the various amounts of real output that producers are willing to

A depreciation of the U.S.dollar against foreign currencies tends to __________ U.S.net exports and shift the U.S.AD curve to the __________.

When foreign real national income rises,domestic Real GDP rises,ceteris paribus.

As the price level rises,ceteris paribus,people holding some of their wealth in monetary form become

-Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If wage rates rise,at which point is the economy most likely to end up in the short run?

If aggregate quantity supplied is greater than aggregate quantity demanded at a particular price level,then a

Foreign real national income rises.This raises U.S.___________ which ________ aggregate demand (AD).The AD curve shifts ___________ as a result.

-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If foreign real national income rises,at which point is the economy most likely to end up in the short run?

Suppose the price level is rising and it is widely forecast to rise even further.This forecast might cause __________ of some consumption plans,resulting in __________ the AD curve.

The nominal wage is $40 an hour and the price level as measured by a price index is 2.00.If the nominal wage falls to $30 and the price index declines to 1.50,according to the worker misperception explanation of the upward-sloping SRAS curve,workers will initially perceive the

Suppose the following: (1)the wage rate falls,(2)business taxes decline,(3)any change in SRAS is greater than any change in AD.Based on this information,in the short run Real GDP will __________ and the price level will __________.

If investment changes because of a change in the price level,then the

-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If businesses become more optimistic about future sales,at which point is the economy most likely to end up in the short run?

As the U.S.dollar appreciates against foreign currencies,the U.S.____________ curve shifts _____________ resulting in a(n)_________________ in the U.S.price level and a(n)_________________ in Real GDP in the United States.

In short-run equilibrium,the quantities supplied and demanded of Real GDP can be less than or greater than Natural Real GDP.

An increase in the money supply may __________ total expenditures,leading to a __________ shift of the AD curve.

Changes in which of the following will not cause the SRAS curve to shift?

-Refer to Exhibit 8-4.A movement from point A to point B on SRAS₁ could have been the result of