a. In practice in the actual economy, a reduction in aggregate demand reduces real output rather than the price level because 0 output is sticky or inflexible downward as a result of wage contracts, minimum wage laws, and menu costs among other reasons. 0 prices are sticky or inflexible downward as a result of resource scarcity, production costs, and interest rate costs among other reasons. 0 prices are sticky or inflexible downward as a result of wage contracts, minimum wage laws, and menu costs among other reasons. 0 output is sticky or inflexible downward as a result of resource scarcity, production costs, and interest rate costs among other reasons. b. A full-strength multiplier, where price d - ' ' ' - . ffects of an aggregate demand change, applies to a decrease in aggregate demand when the aggregat supply curve is horizontal demand curve is horizontal supply curve is vertical demand curve is vertical 3 a. An upsloping aggregate supply curve weakens the impact of a rightward shift of the aggregate demand curve by O weakening the effect of the mulitplier on the change in aggregate demand. O strengthening the effect of the mulitplier on the change in aggregate demand. O weakening the effect of the mulitplier on the change in aggregate supply. O strengthening the effect of the mulitplier on the change in aggregate supply. b. The effect of this weakened impact is that some of the increase in aggregate demand is absorbed by the higher prices such that real output does not change by the full extent of the change in aggregate demand. some of the increase in aggregate supply is absorbed by the higher prices such that real output does not change by the full extent of the change in aggregate demand. O some of the increase in aggregate demand is absorbed by the higher wages such that revenue does not change by the full extent of the change in aggregate demand. O some of the increase in aggregate supply is absorbed by the higher wages such that revenue does not change by the full extent of the change in aggregate demand.Which of the following will shift the aggregate demand curve to the le? Instructions: You may select more than one answer. Click the box with a Check mark for correct answers and click to empty the box for the wrong answers. a an increase in the incomes of foreign households due to an economic boom overseas a an increase in interest rates a a decrease in personal income taxes by the government a an increase in corporate prot taxes by the government 5 a. The immediate short-run supply curve is horizontal because of O contractual agreements for both input and output prices that span the immediate short-run timeframe and imply that prices do not change during that time. 0 contractual agreements for both input and output prices that span the long-run timeframe and imply that prices do not change. O contractual agreements for labour wages that span the immediate short-run timeframe and imply that wage costs do not change during that time. 0 menu costs that span the immediate short-run timeframe and imply that prices do not change during that time. b. The long-run aggregate supply curve is vertical because the economy's potential output is determined by O the availability and productivity of real resources, not by the price level. 0 the availability and productivity of real resources, not by the output level. 0 changes in wages. and these are unchanged in the long run. 0 changes in price and output that occur in the long run. 1:. The shape ofthe short-run aggregate supply curve is O upsloping because wages adjust more slowly than the price level, increasing profits and output 0 upsloping because wages adjust more rapidly than the price level. 0 horizontal because wages adjust at the same rate as the price level. 0 vertical because wages adjust at the same rate as the price level. d. The short-run aggregate supply curve is relatively at to the left of the full employment output because 0 most resources are already employed. 0 there are large amounts of unused capacity and idle human resources. 0 of menu costs. 0 there are shortages of capital. is. The short-run aggregate supply curve is relatively steep to the right of the full employment output because 0 most resources are already employed. 0 there are large amounts of unused capacity and idle human resources. 0 there are shortages of capital. 0 of menu costs. What effects would each of the following have on aggregate demand or aggregate supply. other things equal? a. A widespread fear among consumers of an impending economic depression (Clickm select} v will; (Clickto sale v b. A new national value added tax on producers based on the value added between the costs of the inputs and the revenue received from their output (Click to sale V will (Click to sale V c. A reduction in interest rates at each price level (Click to sale V will (Click to sale V d. A major increase in spending for health care by the Federal government (Click to sale V will (Click to sale V e. The general expectation of rapid ination in the future (Click to sale V will (Click to sale V f. The complete disintegration of OPEC, causing oil prices to fall by one-half (Clicklso sale V wil (Click to sale V g. A 10 percent across-the-board reduction in personal income tax rates (Click'eo sale V wil (Click to sale V h. A sizable increase in labor productivity (with no change in nominal wages} (Clickm sale V wil (Click to sale V i. A 12 percent increase in nominal wages (with no change in productivity} (Clickm sale V wil (Click to sale V j. An increase in exports that exceeds an increase in imports [not due to tariffs] (Click'eo sale V wil (Click to sale V 2 Match the following descriptions with the correct aggregate supply curve. Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. a. Immediate short run A vertical line. The price level is fixed. Output prices are flexible but input prices are fixed. A horizontal line. An upward-sloping curve. Output is fixed. b. Short run A vertical line. The price level is fixed. Output prices are flexible but input prices are fixed. A horizontal line. An upward-sloping curve. output is fixed. c. Long run 2 A vertical line. ? The price level is fixed. 7 Output prices are flexible but input prices are fixed. ? A horizontal line. ? An upward-sloping curve. 2 Output is fixed