56. The aggregate supply curve a. is irelevant for determining macroeconomic equ

Question

56. The aggregate supply curve a. is irelevant for determining macroeconomic equilibrium. b. shows the various amounts of real output that the cconomy will produce of a particular good. c. has a negative slope. d. shifts with changes in consumer spending, investment, government spending, and net exports e. relates total output of the economy at alternative price levels 57. Demand-pull inflation is caused by a(n) a. increase in aggregate supply b. increase in aggregate demand. e. increase in the demand for a particular good. d. decrease in the supply of a particular good e. decrease in aggregate demand 58 A reduction in resource prices tends to be associated with a a. rightward shift of the aggregate supply curve. b. movement up the aggregate supply curve. c. rightward shift of the aggregate demand curve. d. movement up the aggregate demand curve. e. leftward shift of the aggregate supply curve. 59 Which of the following is not one of the four components of the aggregate expenditures of an economy? a. Govemment spending b. Consumption e. Capitalistic spending d. Net exports e. Investment 60 Other things equa, investment spending declines when a, interest rates are lowered b. firms operate at full capacity. c. profit expectations are rising. d. capacity utilization is low. e. the cost of capital falls

Explanation / Answer

(56) (b)

(57) (b)

When aggregate demand increases, AD curve shifts rightward, increasing the price level (causing inflation) and increasing real GDP.

(58) (a)

Lower input prices, lower cost of production, so firms increase output and aggregate supply rises, shifting AS curve rightward.

(59) (c)

Aggregate expenditure = Consumption + Investment + Government spending + Net exports

(60) (b)

Investment spending falls when interest rate (cost of capital) rises and/or the firm is near or at its full capacity.

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