front 1 During recession | back 1 sales and profits fall |
front 2 According to classical macroeconomic theory, changes in the money supply affect | back 2 nominal variables, but not real |
front 3 If money is neutral, then changes in the quantity of money | back 3 do not affect real output. |
front 4 Most economists believe that in the short run | back 4 real and nominal variables are highly intertwined and that money can temporarily move real GDP away from its long-run |
front 5 Aggregate demand includes | back 5 the quantity of goods and services the government, households, firms, and customers abroad want to |
front 6 The effect of an increase in the price level on the aggregate-demand curve is represented by a | back 6 movement to the left along a given aggregate-demand curve |
front 7 Which of the following effects helps to explain the slope of the aggregate-demand curve? | back 7
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front 8 A decrease in the price level | back 8 increases the quantity of goods and services |
front 9 The aggregate quantity of goods and services demanded changes as the price level rises because | back 9 real wealth falls, interest rates rise, and the dollar appreciates |
front 10 The aggregate quantity of goods and services demanded changes as the price level falls because | back 10 real wealth rises, interest rates fall, and the dollar depreciates. |
front 11 Other things the same, an increase in the price level induces people to hold | back 11 more money, so they lend less, and the interest rate |
front 12 When the price level falls | back 12 the interest rate falls, so the quantity of goods and services demand |
front 13 when the interest rate falls | back 13 firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. |
front 14 when the price level falls, households | back 14 want to lend more, so the interest rate falls, making the quantity of goods and services demanded rise. |
front 15 as the price level rises, the exchange rate | back 15 rises, so exports fall and imports rise. |
front 16 Other things the same, if the price level falls, domestic interest rates | back 16 fall, so domestic residents will want to hold more foreign bonds. |
front 17 Other things the same, if the price level falls, people | back 17 increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. |
front 18 Other things the same, if the price level rises, people | back 18 decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. |
front 19 Other things the same, if the S. price level falls, then | back 19 US. residents want to buy more foreign bonds. The real exchange rate falls. |
front 20 When the dollar depreciates, each dollar buys | back 20 ess foreign currency, and so buys fewer foreign goods. |
front 21 When the dollar appreciates, US. | back 21 net exports fall, which decreases the aggregate quantity of goods and services demanded. |
front 22 As the price level rises, | back 22 the exchange rate rises, so net exports fall. |
front 23 As the price level falls, | back 23 the exchange rate falls, so net exports rise. |
front 24 Other things the same, an increase in the price level causes the interest rate to | back 24 increase, the dollar to appreciate, and net exports to decrease. |
front 25 Suppose a stock market boom makes people feel wealthier. The increase in wealth would cause people to desire | back 25 increased consumption, which shifts the aggregate-demand curve right. |
front 26 Suppose a stock market crash makes people feel poorer. This decrease in wealth would induce people to | back 26 decrease consumption, which shifts aggregate demand left. |
front 27 When the Fed buys bonds | back 27 the supply of money increases and so aggregate demand shifts right. |
front 28 If countries that imported goods and services from the United States went into recession, we would expect that S. net exports would | back 28 fall, making aggregate demand shift left. |
front 29 If speculators gained greater confidence in foreign economies so that they wanted to buy more assets of foreign countries and fewer US. bonds, | back 29 the dollar would depreciate which would cause aggregate demand to shift right. |
front 30 The long-run aggregate supply curve shifts left if | back 30 there is a natural disaster. |
front 31 The discovery of a large amount of previously-undiscovered oil in the S. would shift | back 31 the long-run aggregate-supply curve to the right. |
front 32 The aggregate supply curve is | back 32 vertical in the long run and slopes upward in the short run. |
front 33 The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected, | back 33 production is more profitable and employment rises. |
front 34 The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected, | back 34 production is less profitable and employment falls |