Chapter 14 Aggregate Demand and Aggregate Supply

| November 9, 2018

7)
One reason the aggregate demand curve is downward sloping is because of the
A)
interest rate effect.
B)
welfare effect.
C)
price effect.
D)
tariff effect.

8)
The increase in spending that occurs because the demand for investment goods
increases when the price level falls is known as the
A)
interest rate effect.
B)
international trade effect.
C)
price effect.
D)
wealth effect.

9)
The increase in spending that occurs because domestic goods become cheaper
relative to foreign goods when the price level falls is known as the
A)
interest rate effect.
B)
international trade effect.
C)
price effect.
D)
wealth effect.

10)
The purchasing power of money increases as the
A)
demand increases.
B)
unemployment decreases.
C)
price level falls.
D)
production increases.

11)
The purchasing power of money decreases as the
A)
production decreases.
B)
price level increases.
C)
employment increases.
D)
demand increases.

12)
The real value of money ________ as the price level falls.
A)
remains the same
B)
decreases
C)
increases
D)
none of the above

13)
When interest rates are lower, consumers and companies are able to borrow money
cheaply in order to make major purchases. As a result, the demand for goods in
an economy will generally
A)
decrease.
B)
increase.
C)
remain the same.
D)
be minimally affected.

14)
When the price level is low, resulting in domestic goods being cheaper than
imported foreign goods,
A)
consumers hold more money.
B)
consumers spend less.
C)
the demand for domestic goods will increase.
D)
there will be a reduction in import tariffs.

15)
When the price level is low and the demand for domestic goods increases, how
does it affect international trade?
A)
Net exports will decrease.
B)
Net exports will increase.
C)
Prices of all international goods will decrease.
D)
Prices of all international goods will increase.

16)
If home prices are falling, consumers purchasing a home will find their
purchasing power of money has increased. This benefit to consumers is called
the
A)
inflation effect.
B)
wealth effect.
C)
home equity effect.
D)
multiplier effect.

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