1. Disposable income is the primary factor that influences the ______ component of aggregate demand.

consumption

investment

trade deficit

export

2. How do non-price-level factors that change total spending affect the aggregate demand curve?

There is movement along the curve.

The entire curve develops an upward slope.

The entire curve shifts leftward or rightward.

The curve becomes perfectly vertical.

3. The classical school of thought believed that ______.

Keynes's macroeconomic model was correct

Say's law was incorrect

an economy can experience prolonged unemployment

wages and prices adjust quickly to changes in supply and demand

4. Keynes argued that ______ prevents the market solution from working rapidly enough to prevent a recession.

deflation

wage inflexibility ("sticky wages")

low demand

wage and price flexibility

Question 47 1 pts Section 22.3 exhibit 1 Shifts in the Aggregate Demand Curve Price Level Decrease Increase AD, AD. AD, Real GDP An increase in aggregate demand shifts the curve to the right (from AD, to AD.). A decrease in aggregate demand shifts the curve to the left (from AD, to AD,). AD2 (on the right) shows a(n) decrease in the price level increase in the price level decrease in real GDP demanded O increase in real GDP demandedSection 22.4 exhibit 2 The Long-Run Aggregate Supply Curve LRAS PLa B Price Level A change in the price level does not change the PL amount of AGDP supplied in the long run. AGDP HR Real GDP Along the long-run aggregate supply curve, the level of RGDP does not change with a change in the price level. The position of the LRAS curve is determined by the natural rate of output, RGDP, which reflects the levels of capital, land, labor, and technology in the economy. The position of the long-run aggregate supply curve is determined by the O long-run aggregate demand curve O short-run aggregate supply curve natural rate of real output O maximum price level in the economySection 22.5 exhibit 1 Shifts in Both Short-Run and Long-Run Aggregate Supply LRAS, LRAS2 SRAS, SRAS Price Level 0 RGDPMA RGDP NR Real GDP Increases in any of the factors of production-capital, land, labor, or technology-can shift both the LRAS and SRAS curves to the right. Of course, changes that result in decreases in SRAS or LRAS will shift the respective curves to the left. A shift to the right from LRAS1 to LRAS2 represents O a decrease in real GDPNR O a decrease in the price level an increase in the price level O an increase in real GDPNRSection 22.5 exhibit 2 Shifts in Short-Run Aggregate Supply but Not Long-Run Aggregate Supply LRAS SRAS Price Level RGDPNA Real GDP A change in input prices that does not reflect a permanent change in the supply of those inputs will shift the SRAS curve but not the LRAS curve. Likewise, adverse supply shocks, such as those caused by natural disasters, may cause a temporary change that will only impact short-run aggregate supply. Which of the following occurrences likely accounts for the situation shown? O a permanent change in the supply of inputs O a decrease in government regulations O a change in human capital O a negative supply shockSection 22.6 exhibit 1 Long-Run Macroeconomic Equilibrium LRAS SRAS Price Level PL ELA AD AGDPMA Real GDP Long-run macroeconomic equilibrium occurs at the level where short-run aggregate supply and aggregate demand intersect at a point on the long-run aggregate supply curve. At this level, real GDP will equal potential GDP at full employment RGDP Which of the following statements accurately describes the situation shown? O The economy is in a recession. The actual real GDP is the same as the potential real GDP at full employment. O The short-run equilibrium differs from the long-run equilibrium at full employment. O The economy is experiencing stagflation.c. Inationary Gap LRAS Inationary SPAS saw 1; Price Level ,1? AD, RGDPHF Fi'GDP3 Real GDP Which of the following statements accurately describes the economy with an inationary gap? 0 Current output is more than the natural rate of output. 0 The economy is in a recession. 0 Current output is less than the natural rate of output. 0 Current output is the same as the natural rate of output. Section 22.6 exhibit 8 Short-Run Decrease in Aggregate Demand LRAS SRAS Price Level AD, AD, 0 RGDP2 RGDPNR Real GDP A fall in aggregate demand due to a drop in consumer confidence can cause a short-run change in the economy. The decrease in aggregate demand (shown in the movement from E, to e,) causes lower output and higher unemployment in the short run. The aggregate demand curves shifts leftward, such as during the COVID-19 situation in 2020 as shown above, in response to increases in consumption purchases in the economy O decreases in investment spending in the economy an increase in consumer confidence O decreases in real interest rates