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- An increase in aggregate demand when the economy is operating at near full capacity is likely to result in: Group of answer choices An increase in both output and the overall price level. An increase in output but no increase in the overall price level. An increase in the overall price level but no increase in output. No increase in either output or the overall price level.A sudden increase in consumer spending will shift the aggregate demand curve to the right and lower the price level/inflation and increase the level of GDP output. True /FalseAn increase in aggregate demand when the economy is operating at full capacity is likely to result in An increase in output but no increase in the overall price level An increase in both output and the overall price level No increase in either output or the overall price level O A decrease in the overall price level but no increase in output TOSHIBA
- Assume an economy operates in the intermediate range of its aggregate supplycurve. For each of the following changes in conditions, state the direction of theeffect on: aggregate demand, aggregate supply, price level, real GDP.(a) A decrease in government expenditure in infrastructure(b) A severe recession occurs in a country which has been a major importer of thenation’s exports.(c) The federal government increases business taxes with diagramthe equilibrium price level and the equilibrium level of real GDP are jointly determned by the intersection of the economy's aggregate supply and ggregate demand schedule true falseTrue or False (Why?): An increased price level reduces the quantities of investment goods and consumer durables demanded.
- An increase in the GDP price level will: Multiple Choice O decrease aggregate demand increase aggregate demand. Increase the quantity of real domestic output demanded. decrease the quantity of real domestic output demanded. Dani 38 of 47 Next >Which items describe long-run aggregate supply (LRAS), and which ones describe short-run aggregate supply (SRAS)? Long-Run Aggregate Supply The unemployment rate, u, may be above or below the natural rate. Unemployment is at the natural rate, u*. All prices can change. Short-Run Aggregate Supply + Only some prices can change. The economy's output may be above or below the full-employment level, Y*. The economy's output, Y, is at the full- employment level.Increases in personal income taxes increase disposable income. increase aggregate demand. decrease aggregate demand. both B and C
- Suppose an Increase in aggregate demand shifts the economy from equilibrium to P₁ and Y₁. Price Level LRAS P₁ #X Pt AD Yo Y₁ Real GDP a. Which of the following events would likely cause the Increase in aggregate demand? Exports decrease due to reduced foreign incomes. Personal consumption falls as workers become concerned with future employment prospects. Gross Investment increases as capital units become fully utilized. AS b. An increase in aggregate demand is of policy concern due to the Increase in the unemployment rate. price level. O productivity of workers c. Which policy action should the federal government enact? O Increase government spending on Infrastructure increase personal income tax rates O decrease real Interest rates d. The size of the policy acuon should result in an intersection of AD and AS that is greater than output Y O less than output Y Ooqual to output YWhich of the following would cause a leftward shift of aggregate demand?(a) An expectation of increased business regulation and restrictions on the use of technology causes a decrease in investment spending.(b) A decrease in interest rates causes an increase in investment spending.(c) A depreciation of the domestic currency on foreign exchange markets causes an increase in net exports.(d) A decrease in income tax rates results in more disposable income for households and increased consumer spending.an increase in the price level cause the aggregate supply curve to shiftto anotherupply schedule. true or false