True or false? In terms of aggregate demand and aggregate supply, the Great Depression can be...
Question:
True or false? In terms of aggregate demand and aggregate supply, the Great Depression can be viewed as a rightward shift of the aggregate demand curve.
Aggregate Supply:
In macroeconomics, the term "Aggregate Supply" refers to the sum of all the products and services supplied by the existing firms at a specific price level. Generally, the production of products and services rises as the price level rises. This creates a positive relationship between total quantity supplied and price level.
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View this answer- The statement given in the question is FALSE.
When the Great Depression occurred, the level of economic activity in the United States declined. This...
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Aggregate Supply and Aggregate Demand (AS-AD) Model
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Chapter 7 / Lesson 3
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Understand the aggregate demand-aggregate supply model and its features. Read more about the curve shifts of this and learn the AD-AS model through an example.
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- In the Keynesian view, a leftward shift in Aggregate Demand does not lead to falling prices since the short run Aggregate Supply curve is vertical. True False
- During the Great Recession, the aggregate expenditure curve shifted downward and the short-run aggregate supply curve and the aggregate demand curve shifted to the left. True or False?
- Answer true or false: In the Keynesian view, a leftward shift in aggregate demand does not lead to falling prices since the short-run aggregate supply curve is vertical.
- If the aggregate supply curve is vertical, then shifts in aggregate demand will not change aggregate output. (a) True (b) False
- True or false? The aggregate demand curve is the sum of individual demand curves in the economy.
- The aggregate demand curve is the sum of individual demand curves in the economy. (a) true (b) false
- True or false? The model of aggregate demand and aggregate supply is used by most economists to analyze short-run fluctuations.
- 1. True or False? Say's Law states that a general glut of goods in the economy will occur quite often. 2. At the intersection of the short run aggregate supply curve (SAS), the aggregate demand curve
- True or false? The aggregate demand curve slopes downward because it is the horizontal sum of the demand curves for individual goods.
- The long-run aggregate demand curve can never shift. True False
- True or false? An increase in the price level shifts the aggregate demand curve to the left.
- The aggregate supply (AS) - aggregate demand (AD) model can be used to analyze short-run economic events, but not long-run changes. True or false? If false, explain why.
- State True or False. In the aggregate demand and supply model, during an inflationary gap, an increase in nominal wages moves the economy toward equilibrium by shifting aggregate supply to the right.
- Is this true or false? A market demand curve is constructed by summing the quantities demanded of all individuals at each price.Is this true or false? A market demand curve is constructed by summing
- An increase in the price level shifts the aggregate demand curve to the left. True False
- Aggregate demand shifts to the left if the money supply increases. a. TRUE b. FALSE
- State True or False. The short-run aggregate supply curve is upward sloping in part because increases in aggregate demand cause some firms to increase their price markups.
- True or false? When the long-run aggregate supply curve decreases, a corresponding increase would take place with aggregate demand.
- Stagflation occurs when the aggregate demand (AD) curve shifts out on the upward sloping portion of the short-run aggregate supply (SAS) curve. True or false?
- Stagflation occurs when the aggregate demand (AD) curve shifts out on the upward sloping portion of the short-run aggregate supply (SAS) curve. (a) True (b) False.
- Since the aggregate supply curve is horizontal, aggregate demand will determine the equilibrium level of real GDP. True or false.
- State True or False and justify your answer: A given increase in the money supply is more effective at shifting the aggregate demand curve the more interest rate responsive (elastic) is the money demand curve.
- A decline in aggregate demand is analogous to an upward movement along the short-run Phillips curve. a. True. b. False.
- State whether true or false. If aggregate demand keeps shifting rightward month after month and aggregate supply remains constant, the economy will experience a recession.
- Following a rightward shift a demand curve, demand will be less elastic at any given price. True False Explain.
- A shift in aggregate demand will change the equilibrium price level. a. True. b. False.
- True or false? If the demand curve for a good is a steep, straight line, then the demand for the good is inelastic at every point along that demand curve.
- The (Keynesian) Income-Expenditure model shows Aggregate Supply (AS) and Aggregate Demand (AD) curves that always intersect at the point where output (Y) is at full employment (YF). True/False?
- True or false? The economy-wide demand curve for input A will be more elastic the more elastic consumer demand is for products that use input A.
- Answer true or false: An increase in demand is reflected as a rightward (outward) shift of the demand curve and is caused by an increase in price.
- The aggregate demand curve slopes down because of the inverse relationship between price level and real output (GDP). True or false?
- Cost-push inflation can be described as a rightward shift of the aggregate supply curve. True or false?
- A decrease in the currency exchange rate would shift the aggregate demand curve rightward, resulting in a higher equilibrium income and price level in the long run. a. True b. False
- True or False. 1) In an open economy aggregate demand or aggregate expenditures is C + I + G. 2) A trade deficit lowers the demand for a country's goods. 3) The US has not run a trade surplus for over 20 years. 4) The US is the world's largest exporte
- The aggregate demand curve shows a positive relationship between price level and equilibrium. a. True b. False
- True or false? Contractionary fiscal policy seeks to shift the aggregate demand curve to the right.
- State true or false and justify your answer: A contractionary fiscal policy shifts the aggregate demand curve leftward.
- State true or false: The equilibrium price level and the equilibrium level of real GDP occur at the intersection of the aggregate demand curve and the aggregate supply curve.
- True or false? A demand curve that is flatter (has a less steep slope) is relatively more elastic than a demand curve that has a steeper slope.
- True or false? A rightward shift in the supply curve, assuming no change in the demand curve, will increase the price and decrease the quantity demanded.
- State whether true or false. An increase in real consumer income will shift both the supply and demand curves.
- Which statement is false? a. A rightward shift of the long-run aggregate supply curve represents economic growth. b. If an economy is in a depression, an increase in output will have no effect on the aggregate price level. c. If an economy faces a horizon
- True or false? An increase in demand shifts the demand curve to the right, increasing the equilibrium price.
- True or false? A monopolistic firm's demand curve is less elastic than a purely competitive firm's demand curve.
- TRUE or FALSE: The aggregate demand curve shows a positive relationship between price level and equilibrium.
- Because individual demand curves slope down, the aggregate demand curve slopes up. a. True. b. False.
- True or false? Keynes thought that during an economic slowdown, unemployment could be reduced by increasing aggregate demand.
- The shape of the aggregate supply curve matters to one's view of the ability of government to change Real GDP by way of demand-side fiscal policy and monetary policy. True or false. Explain.
- True or false? A change in expectations could shift either the demand curve or the supply curve.
- True or False: During the Great Depression, taxes were lowered to increase aggregate demand.
- True or false? An increase in price expectations shifts the long-run aggregate supply curve to the left.
- The market demand curve is simply the horizontal sum of the individual demand curves. a. True. b. False.
- If aggregate demand is $2,000 billion and aggregate supply is $2,300 billion, the price level will rise. True or false?
- True or False: A decrease in the currency exchange rate would shift the aggregate demand curve rightward, resulting in a higher equilibrium income and price level in the long-run.
- True or False: The flatter the demand curve passing through a given point, the less elastic the demand curve at that point.
- Excess demand in a market economy would force prices down. True False
- Movement along the demand and supply curves is referred to as "a change in demand and supply," while a shift in the demand and supply curves is referred to as "a change in quantity demanded and supplied." O True O False
- True or false? A firm's demand for labor is the upward-sloping portion of the MRP curve for labor.
- True or false? If a firm is facing a downward sloping demand curve, the firm's total revenue and price are directly correlated.
- The intersection of aggregate supply and aggregate demand determines the equilibrium price level and equilibrium real output. a. True. b. False.
- 1. Consumer surplus can be measured as the area between the demand curve and the supply curve. a. True b. False 2. An increase in price increases consumer surplus. a. True b. False 3. Implicit costs
- Positive aggregate demand shock(change of taste in leisure-consumption) results in the shift of labor demand curve to the right direction and thus increase both in employment and in real wage. True False Explain.
- True or false? The aggregate supply/aggregate demand model includes equilibrium in goods, assets, and labor markets.
- In the long-run, an increase in aggregate demand increases the price level, but not real GDP. a. True b. False
- State true or false and justify your answer: Not only do changes in demand induce relatively wide fluctuations in price when supply is inelastic, but changes in supply induce relatively wide fluctuations in price when demand is inelastic.
- True or false? The American Recovery and Reinvestment Act was designed to push aggregate demand to the right.
- True or False: A "change in quantity demanded" is a shift of the entire demand curve to the right or the left.
- State True or False: The economy must be composed of price-setting firms for the short-run aggregate supply curve to be upward sloping.
- If the market demand curve for a good is a downward-sloping line, its price elasticity is constant. a. True. b. False.
- Either a decrease in the nominal money supply by the Federal Reserve, all else held constant, or an increase in the price level, all else held constant, will shift the aggregate demand (AD) curve to the left. True False Explain.
- If unplanned inventories are rising, aggregate supply exceeds aggregate demand. a. True. b. False.
- True or false? Aggregate demand will shift to the right if government purchases increase.
- A firm's long-run demand for labor is more wage-elastic than its short-run demand for labor. True or false?
- With a completely elastic supply curve, we cannot be sure whether consumer surplus generate in market rises or falls when demand in that market increases. True False
- With a completely elastic supply curve, we cannot be sure whether consumer surplus generate in market rises or falls when demand in that market increases. True or false?
- The long-run aggregate supply curve can never shift. True or false?
- TRUE OR FALSE: The right demand shift results into an increase in equilibrium price. The price down of necessity goods results in increases of both demand and total revenue. The price down for long
- True or false? If the demand curve faced by a firm is downward sloping and the market price of the product is above the marginal cost of production, not enough of the economy's resources are being allocated to producing the good.
- Either an increase in the nominal money supply by the Federal Reserve, all else held constant, or a decrease in the price level, all else held constant, will shift the aggregate demand (AD) curve to the left. True False Explain.
- True or false? Whenever the economy enters a recession, its long-run aggregate supply curve shifts to the left.
- A recessionary gap is associated with rising inflation as firms moderate price increases to try to attract more demand. - True - False
- True or false? According to the classical model of the aggregate economy, changes in aggregate demand have no effect on the amount of output produced, and only the average price level may be affected.
- A change in the aggregate price level moves the economy along a given aggregate supply curve. True False
- True or False: If labor and capital are complements in production, then the long-run labor demand curve is less elastic than the short-run labor demand curve. Explain your answer.
- True or False: If demand shifts to the left, given supply, then the equilibrium price and the equilibrium quantity will fall.
- State true or false and justify your answer: The crowding-out effect of the public debt may be dampened if the investment-demand curve is shifting to the right.
- True or false? If a firm is facing a downward sloping demand curve, a price cut will reduce total revenue.
- Either a decrease in the nominal money supply by the federal reserve, all else held constant, or an increase in the price level, all else held constant, will shift the aggregate demand curve to the left. True or false?
- True or false? In general, long-run price elasticity of demand is more elastic than short-run price elasticity of demand.
- Either a decrease in the nominal money supply by the Federal Reserve, all else held constant, or an increase in the price level, all else held constant, will shift the aggregate demand (AD) curve to the left. (a) True (b) False.
- True or false? One reason the aggregate demand curve slopes downward is the real wealth effect: a decrease in the price level increases the value of money holdings and consumer spending rises.
- True or False: In a competitive market, if there is a surplus, this causes the supply curve to shift leftward, and this will eliminate the surplus.
- True or false? Consumer surplus is illustrated as the area below a demand curve but above market price.
- The flatter the demand curve passing through a given point, the less elastic the demand curve at that point. a. True b. False
- True or false? A competitive firm faces a downward-sloping demand curve for its product.
- If labor is a regressive factor, then a firm's long-run demand for labor may or may not be downward sloping. True or false?
- True or false? A change in the price of inputs could shift either the demand curve or the supply curve.
- The long run aggregate supply curve is a horizontal line at the preferred rate of inflation. True or False.
- True or false? Research has shown that raising taxes shifts the aggregate demand curve to the left.
- True or false? Aggregate demand will shift to the right if taxes go up.
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