ECN 506 Lecture Notes - Lecture 7: Real Interest Rate, Aggregate Supply, Aggregate Demand

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champagneant983

2 Jun 2015

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The total amount of physical capital in all firms and households is called the. Q: physical policy, capital stock, steady state. d. investment sum. A rise in the real interest rate will cause business investment spending to. A rise in wealth will cause household investment in housing to. The aggregate-demand curve shows the combinations of ____ and ____ that are. When all capital and labor are fully utilized, the economy is said to be. Q: at the peak of the business cycle, about to start an expansion, at full employment, satiated with total factor productivity. The amount of output produced when the economy is at full employment is called. ________ output: natural, aggregate c. d. full-employment long-run. Q. long-run aggregate-supply curve a: slopes down. c. is horizontal, slopes up. A rise in the price level causes long-run aggregate supply to. Q: decline, not change. c. d. rise. rise at first, then decline later.

Related Questions

A) When the real economy expands (Y rises), the demand for money expands. As a result households hold more cash and the supply of money expands.

B) Inflation, a rise in the price level, causes the demand for money to decline. Because inflation causes money to be worthless, households want to hold less of it.

C) If the fed buys bonds in the open market interest rates will no doubt rise.

1. State whether you agree or disagree with the following statements and explain why?

a. When the real economy expands (Y rises), the demand for money expands. As a result, households hold more cash and the supply of money expands.

b. Inflation, a rise in the price level, causes the demand for money to decline. Because inflation causes money to be worthless, households desire to hold less of it.

c. If the Fed buys bonds in the open market and at the same time we experience a recession, interest rates will no doubt rise.

mauvemarten239

1. What happens when the price level rises?
a. The value of money rises, and exchange rates and interest rates also rise.
b. The value of money rises, while exchange rates and interest rates fall.
c. The value of money falls while exchange rates and interest rates rise.
d. The value of money falls, and exchange rates and interest rates also fall.

2. Which of the following best describes what happens when the price level rises?
a. Households increase foreign bond purchases, and the supply of dollars increases.
b. Households increase foreign bond purchases, and the supply of dollars decreases.
c. Households decrease foreign bond purchases, and the supply of dollars increases.
d. Households decrease foreign bond purchases, and the supply of dollars decreases.

3. In which of the following situations does investment spending increase?
a. when the price level rises, causing interest rates to rise
b. when the price level rises, causing interest rates to fall
c. when the price level falls, causing interest rates to rise
d. when the price level falls, causing interest rates to fall

4. If a government started with a deficit and moved to a surplus, which of the following best describes the
effects of these changes?
a. Domestic investment and the real exchange rate would rise.
b. Domestic investment and the real exchange rate would fall.
c. Domestic investment would rise, and the real exchange rate would fall.
d. Domestic investment would fall, and the real exchange rate would rise.

5. Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp increase in the
minimum wage. In the short run, what would we expect to happen?
a. the price level to rise, and real GDP to fall
b. the price level to fall, and real GDP to remain unchanged
c. the price level to remain unchanged, and real GDP to fall
d. the price level to fall, and the real GDP to rise the same

skyleopard547

ECN 506 Lecture Notes - Lecture 7: Real Interest Rate, Aggregate Supply, Aggregate Demand

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