Principles of Macroeconomics Chapter 13 Exam Questions with Answers

Principles of Macroeconomics: Chapter 13 Exam Questions with Answers aggregate demand - Correct Answers: the total demand for final good and services in an economy aggregate supply - Correct Answers: the total supply of final goods and services in an economy aggregate demand (AD) - Correct Answers: consumption (C) + investment (I) + government (G) + net exports (NX) wealth - Correct Answers: value of one's accumulated assets wealth effect - Correct Answers: change in the quantity of aggregate demand that results from wealth changes due to price-level changes; one out of three reasons for the inverse relationship between the quantity of aggregate demand and the price level interest rate effect - Correct Answers: occurs when a change in the price level leads to a change in interest rates and, therefore, in the quantity if aggregate demand; one out of three reasons for the inverse relationship between the quantity of aggregate demand and the price level international trade effect - Correct Answers: occurs when a change in the price level leads to a change in the quantity of net exports demanded; one out of three reasons for the inverse relationship between the quantity of aggregate demand and the price level causes of aggregate demand shifts - Correct Answers: changes in real wealth, expected income, expected future prices, foreign income and wealth, and the value of the dollar supply shock - Correct Answers: a surprise event that changes a firm's production costs; one of three factors that shift only short-run aggregate supply expected future returns - Correct Answers: higher ____ lead to a lower quantity of aggregate supply; one of three factors that shift only short-run aggregate supply corrections of past errors in expectations - Correct Answers: when workers renegotiate their wages upward, this action reduces short-run aggregate supply; one of three factors that shift only short-run aggregate supply equilibrium - Correct Answers: LRAS=SRAS=AD real GDP produced (Y) - Correct Answers: =C+I+G+NX