44.One reason the aggregate demand curve slopes downward is due to the fact that if the pricelevel falls, real money balances rise, all else constant, interest rates will fall causing an increase in consumption and investment.A) TrueB) FalsePoints Earned:1.0/1.0Correct Answer(s):True
45.Assuming that natural gas for firm X is an important input to the production process, an increase in the availability of natural gas that lowers the price of natural gas, will result in a leftward shift of firm X's supply curve.Points Earned:1.0/1.0Correct Answer(s):False46.According to the lecture on the cyclical properties of the aggregate supply curve, I argued that aggregate demand side policy works better, in terms of influencing output, when the economy is operating at near full employment output relative to when the economy is operating at levels of output well below full employment.Points Earned:1.0/1.0Correct Answer(s):False47.If labor markets become “loose” and wages fall, all else constant, the short run aggregate supply curve will shift to the left.Points Earned:1.0/1.0Correct Answer(s):False48.
The more 'sticky' nominal wages and other input costs are, the steeper the slope of the aggregate supply curve and therefore, the less effective demand side policies in terms of effecting real output.A) TrueB) FalsePoints Earned:0.0/1.0Correct Answer(s):False49.If the US economy is growing faster that the rest of the world, then we would expect a surge in US exports.Points Earned:1.0/1.0Correct Answer(s):False50.Suppose that expected inflation is 5% and thus, nominal wages rise, along with all other input prices by 5%. Suppose also, that actual inflation over this period was only 2%. In termsof the behavior of the short-run aggregate supply curve, it would shift up given the expectations of higher inflation and then shift downward to adjust for the actual rate of inflation.Points Earned:1.0/1.0Correct Answer(s):True51.The more sensitive consumption is to real wealth, the steeper the aggregate demand curve.
Points Earned:0.0/1.0Correct Answer(s):False52.During the Great Recession, we argued that the aggregate expenditure curve shifted downward and the short-run aggregate supply curve and the aggregate demand both shiftedto the left.A) TrueB) FalsePoints Earned:1.0/1.0Correct Answer(s):True53.Anything that shifts the investment demand curve to the right will also shift the aggregate demand curve to the right.Points Earned:1.0/1.0Correct Answer(s):True