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The aggregate demand curve shows the:

Inverse relationship between the price level and real GDP purchased

The labels for the axes of the aggregate demand graph should be:

Real domestic output on the horizontal axis and the price level on the vertical axis

Which of the following effects best explains the downward slope of the aggregate demand curve?

An interest-rate effect

The following factors explain the downward slope of the aggregate demand curve, except:

A substitution effect

The foreign purchases, interest rate, and real-balances effects explain why the:

Aggregate demand curve is downward-sloping

An expected decline in the future prices of consumer goods will:

Decrease aggregate demand now

A decrease in expected returns on investment will most likely shift the AD curve to the:

Left because Ig will decrease

In the Great Recession of 2007-2009, the stock market values shrank, causing a reverse:

Wealth effect

Which of the following events would most likely reduce aggregate demand?

An increase in real interest rates

A decrease in government spending will cause a(n):

Decrease in aggregate demand

If the dollar appreciates in value relative to foreign currencies:

Aggregate demand decreases because net exports decrease

If the dollar depreciates in value relative to foreign currencies, then aggregate:

Demand increases

When national income in other nations decreases, aggregate demand in our economy:

Decreases because our exports will decrease

An aggregate supply curve represents the relationship between the:

Price level and the production of real domestic output

The labels for the axes of an aggregate supply curve should be:

Real domestic output for the horizontal axis and price level for the vertical axis

The immediate-short-run aggregate supply curve is:


The short-run aggregate supply curve shows the:

Direct relationship between the price level and real GDP produced

The long-run aggregate supply curve is:


A fall in the prices of inputs will shift the aggregate:

Supply curve rightward

An increase in productivity will:

Increase aggregate supply

If the price of crude oil decreases, then this event would most likely:

Increase aggregate supply in the U.S.

If Congress passed new laws significantly increasing the regulation of business, this action would tend to:

Increase per-unit production costs and shift the aggregate supply curve to the left

The intersection of the aggregate demand and aggregate supply curves determines the:

Equilibrium level of real domestic output and prices

An increase in the aggregate expenditures schedule:

Increases aggregate demand by the amount of the initial increase in aggregate expenditures times the multiplier

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