Mac 8

An aggregate demand (AD) curve shows the
Select one:

• a. amount of a particular good people are willing and able to buy at a particular price, ceteris paribus.

• b. real output (Real GDP) people are willing and able to sell at different price levels, ceteris paribus.

• c. real output (Real (GDP) people are willing and able to buy and to sell at different price levels, ceteris paribus.

• d. real output (Real GDP) people are willing and able to buy at different price levels, ceteris paribus.

Aggregate demand curves are

Select one:

• a. downward sloping.

• b. upward sloping.

• c. horizontal.

• d. vertical.

One of the reasons why the AD curve slopes downward is that as the
Select one:

• b. price level falls, purchasing power rises.

• a. price level rises, purchasing power rises.

• c. nation's income level rises, purchasing power rises.

• d. nation's income level rises, purchasing power falls.

• e. This is a trick question, because the AD curve is upward sloping.

If some of a person's wealth is in cash, it follows that
Select one:

• a. this person's monetary wealth will change as the price level changes.

• c. this person is wealthier than a person who holds all his wealth in nonmonetary form.

• b. this person's monetary wealth will not change as the price level changes.

• e. b and c

• d. a and c

The change in the purchasing power of dollar-denominated assets (such as cash holdings) is the
Select one:

• d. real balance effect.

• e. none of the above

• c. asset effect.

• a. money effect.

• b. interest rate effect.

The real balance effect describes the change in
Select one:

• d. the value of cash holdings that results from a change in the price level.

• e. the balance of cash holdings that results from a change in the amount of income earned.

• c. the output producers produce as they attempt to balance their production in response to changes in consumers' demand.

• b. the value of physical assets (e.g., houses) that results from a change in the price level.

• a. checking account balances that occur when the money supply increases or decreases.

Suppose consumption decreases at each price level. As a result, aggregate demand __________, and the AD curve shifts __________.
Select one:

• b. decreases; leftward

• a. increases; leftward

• c. increases; rightward

• d. decreases; rightward

Which of the following will cause a movement from one point on an AD curve to another point on the same AD curve?
Select one:

• d. a change in the price level

• a. a change in consumption

• b. a change in government expenditures

• c. a change in net exports

• e. all of the above

The real balance effect is one of the
Select one:

• a. reasons why an AD curve is downward-sloping.

• b. shifters of an AD curve.

• c. reasons why a short-run aggregate supply curve can be derived.

• d. shifters of a short-run aggregate supply curve.

The interest rate effect is one of the
Select one:

• a. reasons why an AD curve is downward-sloping.

• b. shifters of an AD curve.

• c. reasons why a short-run aggregate supply curve can be derived.

• d. shifters of a short-run aggregate supply curve.