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Effects of Price Level Changes

Effects of Price Level Changes

Assessment

Flashcard

Social Studies

University

Practice Problem

Medium

Created by

Nahreen Rahman

Used 2+ times

FREE Resource

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10 questions

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1.

FLASHCARD QUESTION

Front

Real-Balances Effect

Back

When price level falls, the purchasing power of existing financial balances rises, which can increase spending.

2.

FLASHCARD QUESTION

Front

Multiplier effect

Back

A component involved in changes in aggregate demand

3.

FLASHCARD QUESTION

Front

Real interest rates

Back

Cost of borrowing

4.

FLASHCARD QUESTION

Front

Business tax reduction

Back

Encourages more investment spending

5.

FLASHCARD QUESTION

Front

Net Export Spending

Back

Refers to the impact of national income abroad and exchange rates on aggregate demand (AD).

6.

FLASHCARD QUESTION

Front

Dollar Appreciation

Back

Makes US products more expensive and foreign products cheaper, leading to a decrease in net exports and aggregate demand.

7.

FLASHCARD QUESTION

Front

Long Run

Back

A time horizon in aggregate supply where there are no fixed costs and everything is variable.

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