Question : 21) In a macro model with a constant price level, : 1384393

 

 

21) In a macro model with a constant price level, an increase in autonomous desired consumption will cause the AE curve to shift

A) downward and the AD curve to shift to the left.

B) downward and the AD curve to shift to the right.

C) upward and the AD curve to shift to the left.

D) upward and the AD curve to shift to the right.

E) upward and a movement to the right along the AD curve.

Answer:  D

Diff: 2

Topic:  23.1b. relationship between AE and AD curves

Skill:  Applied

User2:  Qualitative

 

22) In a macro model with a constant price level, an increase in government purchases will cause the AE curve to shift

A) downward and the AD curve to shift to the right.

B) downward and the AD curve to shift to the left.

C) downward and a movement to the right along the AD curve.

D) upward and the AD curve to shift to the left.

E) upward and the AD curve to shift to the right.

Answer:  E

Diff: 2

Topic:  23.1b. relationship between AE and AD curves

Skill:  Applied

User2:  Qualitative

 

23) On a graph that shows the derivation of the AD curve, an exogenous change in the price level causes

A) a shift in the AE curve and a movement along the AD curve.

B) a shift in both the AE and AD curves.

C) a movement along the AE curve and a shift in the AD curve.

D) a movement along the AE curve but not along the AD curve.

E) a movement along both the AE and AD curves.

Answer:  A

Comment:  An algorithmic version of this question appears in MyEconLab

Diff: 2

Topic:  23.1b. relationship between AE and AD curves

Skill:  Recall

User2:  Qualitative

 

24) Which of the following would likely cause an upward parallel shift in the AE curve and a rightward shift in the AD curve?

A) an increase in the business confidence of firms

B) a reduction in government purchases

C) an increase in the MPC

D) a decrease in the price level

E) an increase in the price level

Answer:  A

Diff: 2

Topic:  23.1b. relationship between AE and AD curves

Skill:  Applied

User2:  Qualitative

25) Which of the following would likely cause a downward shift in the AE curve and a movement upward along the AD curve?

A) a decrease in the business confidence of firms

B) a reduction in government purchases

C) a decrease in the MPC

D) a decrease in the price level

E) an increase in the price level

Answer:  E

Diff: 2

Topic:  23.1b. relationship between AE and AD curves

Skill:  Applied

Objective:  NEW

User2:  Qualitative

 

26) Which of the following would likely cause a downward parallel shift in the AE curve and a leftward shift in the AD curve?

A) an increase in the business confidence of firms

B) a reduction in government purchases

C) an decrease in the MPC

D) a decrease in the price level

E) an increase in the price level

Answer:  B

Diff: 2

Topic:  23.1b. relationship between AE and AD curves

Skill:  Applied

User2:  Qualitative

 

FIGURE 23-1

 

27) Refer to Figure 23-1. Assume the economy is initially in equilibrium with desired aggregate expenditure equal to real GDP at point V. The price level is . The corresponding point on the aggregate demand curve is point

A) A.

B) B.

C) C.

D) D.

E) E.

Answer:  B

Diff: 1

Topic:  23.1b. relationship between AE and AD curves

Skill:  Applied

User1:  Graph

User2:  Qualitative

28) Refer to Figure 23-1. Assume the economy is initially in equilibrium with desired aggregate expenditure equal to real GDP at point V. The price level is . Other things being equal, exogenous changes in the price level will cause

A) movement along the aggregate expenditure curve and shifts of the AD curve.

B) movement along the aggregate expenditure curve and movement along the aggregate demand curve .

C) shifts of the AE curve and shifts of the AD curve.

D) shifts of the AE curve and movement along the aggregate demand curve .

E) no change in either the AE curve or the AD curve.

Answer:  D

Diff: 2

Topic:  23.1b. relationship between AE and AD curves

Skill:  Applied

User1:  Graph

User2:  Qualitative

 

29) Refer to Figure 23-1. Assume the economy is initially in equilibrium with desired aggregate expenditure equal to real GDP at point V. The price level is . Now, suppose there is an exogenous rise in the price level to . Which of the following statements describes the likely macroeconomic effects?

A) The AE curve shifts to , a new equilibrium is established at point U, and the AD curve shifts from to , and equilibrium from point B to point D.

B) The AE curve shifts to , a new equilibrium is established at point W, and the economy moves from point B to point C along .

C) The AE curve shifts to , a new equilibrium is established at point U, and the economy moves from point B to point A along

D) The AE curve shifts to , a new equilibrium is established at point W, and the AD curve shifts from to , and equilibrium moves from point B to point D.

Answer:  C

Comment:  An algorithmic version of this question appears in MyEconLab

Diff: 3

Topic:  23.1b. relationship between AE and AD curves

Skill:  Applied

User1:  Graph

User2:  Qualitative

30) Refer to Figure 23-1. Assume the economy is initially in equilibrium with desired aggregate expenditure equal to real GDP at point V. The price level is . Now, suppose there is an increase in desired investment and no change in the price level. Which of the following statements describes the likely macroeconomic effects?

A) The AE curve shifts up to , the AD curve shifts to , and a new equilibrium is established at point C, with real GDP at .

B) The AE curve shifts down to , the AD curve shifts to , and a new equilibrium is established at point F, with real GDP at .

C) The AE curve shifts to , the AD curve shifts to , and a new equilibrium is established at point E, with real GDP at .

D) The AE curve shifts to , the AD curve shifts to , and a new equilibrium is established at point F, with real GDP at .

E) The AE curve shifts to , the AD curve shifts to , and a new equilibrium is established at point E, with real GDP at .

Answer:  E

Diff: 2

Topic:  23.1b. relationship between AE and AD curves

Skill:  Applied

User1:  Graph

User2:  Qualitative