How do an increase in the exchange rate and an increase in expected future income change aggregate demand? Aggregate demand when an increase in the exchange rate occurs. Aggregate demand when an increase in expected future income occurs. O A. increases; increases. OB. increases; decreases. OC. decreases; increases OD. decreases; decreases The graph shows an aggregate demand curve. Suppose there is an increase in the exchange rate. Draw a new curve to show the effect of this change on aggregate demand. Label the new curve C₁. Now suppose that there is an increase in expected future income. Draw new curve to show the effect of this change on the original AD curve. Label the new curve C₂. 140- 130- 120- 110- 100- 90- 80- Price level (GDP deflator, 2007=100) 1.6 AD 1.7 1.8 1.9 Real GDP (trillions of 2007 dollars) 2.0

How do an increase in the exchange rate and an increase in expected future income change aggregate demand? Aggregate demand when an increase in the exchange rate occurs. Aggregate demand when an increase in expected future income occurs. O A. increases; increases. OB. increases; decreases. OC. decreases; increases OD. decreases; decreases The graph shows an aggregate demand curve. Suppose there is an increase in the exchange rate. Draw a new curve to show the effect of this change on aggregate demand. Label the new curve C₁. Now suppose that there is an increase in expected future income. Draw new curve to show the effect of this change on the original AD curve. Label the new curve C₂. 140- 130- 120- 110- 100- 90- 80- Price level (GDP deflator, 2007=100) 1.6 AD 1.7 1.8 1.9 Real GDP (trillions of 2007 dollars) 2.0

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In the figure, as the price level increases the aggregate demand curve will Price level (GDP price index, 2012 = 100) A. not shift. O B. not shift, but the aggregate demand curve will change so that it is positively sloped. O C. shift from AD, to AD, O D. shift from AD, to AD, and then back to AD,. E. shift from AD, to AD3. AD2 AD3 AD1 Real GDP (trillions of 2012 dollars)
With the passage of time, which of the following will help direct this economy in Figure 10-21 toward its potential long-run rate of output (e1 to E2)? Figure 10-21 Price Level ti LRAS E₂ SRAS, SRAS: AD₂ AD₁ Y, Y₁ Goods and Services (Real GDP) Output is initially less than long-run capacity O lower interest rates that will stimulate AD and lower resource prices that will increase SRAS O higher interest rates that will reduce aggregate demand and higher resource prices that will reduce SRAS lower interest rates and higher resource prices, both of which will stimulate aggregate demand O higher interest rates that will reduce SRAS and lower resource prices that will stimulate aggregate demand
Use the following graph to answer the next question. Price Level 0 AS3 AS₁ AS₂ Real Domestic Output, GDP Which of the following factors will shift AS1 to AS2? O An increase in real interest rates O A decrease in business subsidies O An increase in input prices O A decrease in business taxes.
Consider a non-oil-exporting economy in its long-run equilibrium. Which of the following explains the ultimate long-run effect of a decrease in international oil price on the GDP of this economy? The GDP will ultimately increase. O The GDP will ultimately decrease. The GDP will ultimately be at potential output, in the absence of downward- sticky wages. The effect on GDP will be ambiguous.
Consider the basic AD/AS macro model. A rise in an input price like the price of oil would be expected to cause a new macroeconomic equilibrium in which the price level Select one: O a. is lower and real GDP higher than in the initial equilibrium. O b. and real GDP are higher than in the initial equilibrium. O c. is higher and real GDP remained the same as in the initial equilibrium. O d. is higher and real GDP lower than in the initial equilibrium. O e. and real GDP are lower than in the initial equilibrium.
Price level LRAS AS1 Figure 12.8 C B A ASO AS₂ AD₁ ADO E Y2 Yo Y₁ Aggregate output ($ billion) AD₂ Refer to Figure 12.8. This economy cannot continue to produce Y₁ (or at point B) because O the price of raw material will increase, shifting the aggregate demand curve to AD2. O all of the above O the price of raw material and wages will increase shifting the aggregate supply curve to AS₁. O the price of inputs will decrease, shifting the aggregate supply curve to AS2.
You have been hired as a Marco Economist by the President of the United States to help evaluate the recentannouncement by Federal Reserve chairman Ben Bernanke that the FED will be increasing interest rates again.Ben Bernanke has justified the move on the grounds that the economy continues to be strong. Answer thefollowing questions. Provide a graphical explanation for your answers whenever possible What is the effect on the foreign exchangemarket (the $ market)? 8. The exchange rate (the amount of foreigncurrency that a $ buys)?A. increaseB. decreaseC. remains unchanged 9. The U.S. dollar has?A. depreciatedB. appreciatedC. remained unchanged 10. The currency in the other country has?A. depreciatedB. appreciatedC. remained unchanged
Price ↑ LRAS Level SRAS, SRAS, P3 P2 AD Quantity of Output Refer to Figure. A movement from P1 and Y2, to P2 and Y1 would be consistent with Select one: a.sticky-wages. b.an increase in net exports. O c.stagflation. d.a decrease in consumption expenditures.