Econ 111 exam 4 questions n answers
rated A+ 2025/2026
During recessions - correct answer ✔✔workers are laid off, factories are idle, firms may find
they are unable to sell all they produce
which of the following effects helps to explain the downward slope of the aggregate demand
curve? - correct answer ✔✔the exchange rate effect, wealth effect, and interest rate effect
in the context of aggregate demand and aggregate supply, the wealth effect refers to the idea
that, when the price level decreases, the real wealth of households - correct answer
✔✔increases and as a result consumption spending increases. This effect contributes to the
downward slope of the aggregate-supply curve
the initial impact of an increase in an investment tax credit is to shift - correct answer
✔✔aggregate demand right
The sticky wage theory of the short run aggregate supply curve says that the quantity of output
firms supply will increase if - correct answer ✔✔the price level is higher than expected making
production more profitable
The sticky price theory of the short run aggregate supply curve says that when the price level is
higher than expected some firms will have - correct answer ✔✔lower than desired prices which
leads to an increase in the aggregate quantity of goods and services supplied
The misperceptions theory of the short-run aggregate supply curve says that the quantity of
output supplied will increase if the price level - correct answer ✔✔increases by more than
expected so that firms believe the relative price of their output has increased
rated A+ 2025/2026
During recessions - correct answer ✔✔workers are laid off, factories are idle, firms may find
they are unable to sell all they produce
which of the following effects helps to explain the downward slope of the aggregate demand
curve? - correct answer ✔✔the exchange rate effect, wealth effect, and interest rate effect
in the context of aggregate demand and aggregate supply, the wealth effect refers to the idea
that, when the price level decreases, the real wealth of households - correct answer
✔✔increases and as a result consumption spending increases. This effect contributes to the
downward slope of the aggregate-supply curve
the initial impact of an increase in an investment tax credit is to shift - correct answer
✔✔aggregate demand right
The sticky wage theory of the short run aggregate supply curve says that the quantity of output
firms supply will increase if - correct answer ✔✔the price level is higher than expected making
production more profitable
The sticky price theory of the short run aggregate supply curve says that when the price level is
higher than expected some firms will have - correct answer ✔✔lower than desired prices which
leads to an increase in the aggregate quantity of goods and services supplied
The misperceptions theory of the short-run aggregate supply curve says that the quantity of
output supplied will increase if the price level - correct answer ✔✔increases by more than
expected so that firms believe the relative price of their output has increased
