1 A) increase net exports B) reduce the value of household debt and increase investment C) increase production costs and reduce short-run aggregate supply D) reduce the purchasing power of household wealth and reduce consumption 2 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0217511447/883757/ch29_q2.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (20.0K)</a>]]> 1 to AD2 may have been caused by:A) a reduction in the price level B) a reduction in aggregate supply C) a decline in personal taxes D) a decrease in government spending 3 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0217511447/883757/ch29_q3.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (20.0K)</a>]]> 1 to AD2 . In the short run, this will cause output to:A) fall to Q2 and the price level to P2 B) fall to Q2 but the price level to remain at P1 C) fall to Q3 but the price level to remain at P1 D) remain unchanged but the price level will fall to P2 4 A) assumes that wages and salaries fully match any change in the price level B) is a vertical line located at the full-employment level of output C) shows the amount of real output supplied at various price levels D) becomes increasingly flatter as output expands 5 A) demand-pull inflation B) an inflationary gap C) a positive GDP gap D) cost-push inflation 6 A) flat, because firms are reluctant to give their current workers raises when output is so low B) flat, because firms can expand output with relatively little increase in per-unit production costs C) steep, because increasing output will cause relative large increases in per-unit production costs D) steep, because increasing output will cause aggregate demand to increase 7 A) because a lower domestic price level reduces net exports B) because of the income and substitution effects of lower prices C) at low prices, but not at high prices D) because a lower price level reduces the demand for money, which lowers the interest rate and increases desired investment 8 A) aggregate demand curve to the right B) aggregate demand curve to the left C) aggregate supply curve to the right D) aggregate supply curve to the left 9 A) move the economy downward and to the right along the aggregate demand curve B) make the aggregate demand curve steeper C) shift the aggregate supply curve to the left D) shift the aggregate demand curve to the left 10 A) likely to cause a reduction in the price level B) unlikely to cause a reduction in the price level because of the interest rate effect C) unlikely to cause a reduction in the price level because of menu costs and efficiency wages D) likely to cause a reduction in aggregate supply
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