Exam 14: Monopolistic Competition and Product Differentiation

What would happen to aggregate demand if the federal government increased military purchases and state and local governments increased their road building budgets at the same time?

If there was no profit effect or misperception effect in the short run, then SRAS is ____ and LRAS is ____.

A temporary decrease in the price of oil will shift the short run aggregate supply curve right but not shift the long run aggregate supply curve.

If the overall price level decreases, then the aggregate demand curve will shift to the right.

If, due to rising demand, the price of cotton rose 15 percent while the prices of other goods and services rose an average of 10 percent,

Which of the following expenditures would be counted as consumption in GDP accounts?

If both imports and exports fell,

If some non-price level determinant causes total spending to increase, then the effect on aggregate demand will be a:

An increase in disposable income would tend to shift aggregate demand right.

The short-run equilibrium level of real output and the price level are determined by the intersection of the aggregate demand curve and the short-run aggregate supply curve.

The long-run equilibrium level of RGDP only changes when the LRAS shifts.

The aggregate demand curve portrays the relationship between price level and real GDP. What are the three reasons this relationship is a negative or inverse relationship? Provide brief illustrations of each.

Investment will decrease if business taxes ____, real interest rates ____, or if business confidence ____.

The aggregate supply curves show how much a nation's businesses are willing and able to produce at each price level.

Imports are not included in GDP because they do not reflect output produced within the domestic economy.

Identify four changes in the economy that would cause the aggregate demand curve to decrease (shift to the left).

Both positive nor negative supply shocks

Faster growth rates by a major trading partner, combined with an increase in stock market wealth, would have what effect on aggregate demand?

Which of the following is true of the long-run aggregate supply curve?

If there is currently a recessionary gap, a decrease in aggregate demand would make the recessionary gap larger.