Refer to the information provided in Figure 12.2 below to answer the questions that follow.ASPrice level, PADOAD,AD,AD,AD,ADAggregate output(income), YFigure 12.2Refer to Figure 12.2. Firms respond to a decrease in net taxes by mostly raising their prices when the aggregate demand curve shiftsfromSelect one:O a. AD 1 to AD 2.Ob. AD 5 to AD 6-O C. AD 6 to AD 1.O d. AD 3 to AD 4-

Refer to Figure 12.2. Firms respond to a decrease in net taxes by mostly raising their prices when the aggregate demand curve shifts from Select one: O a. AD 1 to AD 2. O b. AD 5 to AD 6- O C. AD 6 to AD 1. O d. AD 3 to AD 4.

Refer to Figure 12.2. Firms respond to a decrease in net taxes by mostly raising their prices when the aggregate demand curve shifts from Select one: O a. AD 1 to AD 2. O b. AD 5 to AD 6- O C. AD 6 to AD 1. O d. AD 3 to AD 4.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1) What is a tariff? . . . . 2) If the price level goes down, the real value of money will: . Remain unchanged. Decrease. It can increase or decrease. Increase. . . 3) Which of the following is true? • The equilibrium interest rate varies inversely with money supply. The money supply varies inversely with the price level. The money supply varies directly with the price level. The equilibrium interest rate varies directly with money supply. . . . A limit imposed on the production or sale of a product. A maximum or minimum price placed on a product by government regulation. A restriction placed on the importation of foreign products. A tax or duty levied on imports. 4) What does macroeconomic equilibrium imply? . The point where the quantity of Real GDP demanded equals the quantity of Real GDP supplied. It is where the aggregate demand curve intersects the LAS curve. • Full employment GDP. It is possible only at various price levels. The point where Real GDP is at capacity. . . .
Suppose the economy is operating at potential GDP. Then the federal government decides to implement a large tax cut. Which curve shifts and in which direction? O aggregate demand shifts left aggregate supply shifts right. aggregate supply shifts left. aggregate demand shifts right
In a binding situation,an increase in net taxes Select one: O a. causes the ADcurve to become horizontal. O b. does not shift the ADcurve. O c shifts the AD curve to the left. O d. shifts the ADcurve to the right.
Refer to the information provided in Figure 12.1 below to answer the questions that follow. AD AD AD Agregete output (Y) Figure 12.1 Refer to Figure 12.1. Suppose the economy is at Point A, a decrease in taxes can cause a movement to Point Select one: O a. C. O b.E. O.B. O d. D. Pice level
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How do fluctuations in aggregate demand and short-run aggregate supply bring fluctuations in real GDP around potential GDP? Starting from a full-employment equilibrium, a decrease in aggregate demand and creates gap. O A. increases real GDP above potential GDP; an inflationary OB. decreases real GDP below potential GDP; an inflationary OC. increases real GDP above potential; a recessionary O D. decreases real GDP below potential GDP; a recessionary _, short-run aggregate , and the economy returns to a full-employment In the long run, the money wage rate supply equilibrium. O A. rises; increases B. falls; decreases C. rises; decreases D. falls; increases
Question 6 Which of the following characteristics is NOT consistent with an upward-sloping AS curve? O when forecasted future prices increase, the AS curve shifts upward. a rise in the firms' pricing power will lead to a rise in the aggregate price. the AS curve passes through a point that corresponds to the natural level of national income and stable price. O as inflation rises output growth falls
Price level (GDP price index, 2012 = 100) Potential Potential GDP, AS, GDP2 AS2 Real GDP (trillions of 2012 dollars)
Which one of the following statements is correct? i. The aggregate demand curve (AD curve) can be shifted by monetary as well as fiscal policy measures. ii. A restrictive fiscal policy will result in a rightward shift of the aggregate demand curve (AD curve). iii. A general increase in wages in the economy will shift the aggregate supply curve downward (to the right). O A. iii O B. ii and iii O C. i and ii O D. i
An increase in government regulation would cause aggregate: supply to shift to the left. demand to shift to the right. demand to shift to the left. O supply to shift to the right.
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