Exploring Macroeconomics
8th Edition
ISBN: 9781544337722
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
expand_more
expand_more
format_list_bulleted
Question
Chapter 14, Problem 2P
To determine
(a)
To fill:
The blanks in the given sentences.
To determine
(b)
To fill:
The blanks in the given statement.
To determine
(c)
To fill:
The blanks in the given statement.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Which of the following is true of the change in the quantity of aggregate output demanded?
a.The change in the quantity of aggregate output demanded depends only on how much the aggregate expenditure line shifts.
b.The change in the quantity of aggregate output demanded depends only on the change in investment demand.
c.The change in the quantity of aggregate output demanded depends only on the change in government spending.
d.The change in the quantity of aggregate output demanded depends only on the change in interest rates.
Consider the table on the right, which shows business
investment in inventories for each quarter from the first
quarter of 2007 to the first quarter of 2012, measured in
millions of 2007 dollars. Provide a macroeconomic
explanation for this pattern. (Hint: When did the recession
during this period begin and end?)
The negative growth of inventories indicates a period of
OA. inflation since inventories needed to be reduced
in the face of increasing storage cost
OB. recession because demand was met by drawing
down past inventories and production did not
increase.
OC. recovery since inventories needed to be used to
meet demand.
OD. recession because inventories increased due to
lack of demand
Year
2007
2008
2009
2010
2011
2012
2013
Quarter
Q1
308889
Q2
Q3
Q4
R288828
Q1
Q2
Q3
Q4
Q1
228892889
Q2
Q3
Q4
Q1
Q2
Inventory
Investment
(millions of
2007 dollars)
$3360
- 2822
15,570
19,644
6061
9512
11,856
4699
-2364
7779
-4807
- 4807
2663
2508
4841
-6805
8965
12,153
6462
2179
2061
7298
14,091
3875…
According to the interest rate effect, when the price falls, the interest rate
Orises and the quantity of real GDP demanded increases.
is not affected.
Orises and the quantity of real GDP demanded decreases.
Ofalls and the quantity of real GDP demanded increases.
Chapter 14 Solutions
Exploring Macroeconomics
Knowledge Booster
Similar questions
- Answer the question based on the following information: For transactions, households and businesses want to hold an amount of money equal to one-half of nominal GDP. The table shows the amounts of money they want to hold as an asset at various interest rates. If nominal GDP is $300 and the supply of money is $250, the equilibrium interest rate will be Interest Rate Amount of Money Demanded as an Asset 10% $20 8 40 6 60 4 80 2 100 Multiple Choice 4 percent. 10 percent. 6 percent. 8 percent. 2 percent.arrow_forwardEconomics Assess the following statements whether are true or false? Justify your answer making reference to the objectives of the policy maker and please answer the question in 5 lines a. Economic policy should aim to limit firm-level volatility ( b. Economic policy should aim to limit macro-level volatilityarrow_forwardDescribe how different parts of the economy may have experienced shifts and changes in supply and demand. Provide at least 4 examples.arrow_forward
- What is the relationship between the price level and the following components of aggregate demand? a. There is (a negative/ no / a positive) relationship between the price level and consumption. b. There is (a negative/no/ a positive) relationship between the price level and investment. c. There is (a negative/no/ a positive) relationship between the price level and government spending. d. There is (a negative/no/ a positive) relationship between the price level and net exports.arrow_forwardDetermine whether each of the following, other factors held constant, would, in the short run, lead to an increase, a decrease, or no change in the level of real GDP demanded: a. A decrease in government purchases b. An increase in net taxes c. A reduction in transfer payments d. A decrease in the marginal propensity to consume.arrow_forwardWhat are the determinants of the Consumption element of Aggregate Demand?  It’s crucial to explain and use examples please!arrow_forward
- What is supply side economics and what is the general assessment of the efficacy of supply-side economics?arrow_forwardWhich of the following correctly describes how a decrease in the price level affects consumption spending? Select one: a. A decrease in the price level raises real wealth, which causes consumption to increase. b. A decrease in the price level decreases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. c. A decrease in the price level increases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. d. A decrease in the price level lowers real wealth, which causes consumption to decrease.arrow_forwardOne explanation for the negative slope of the aggregate demand curve is the "wealth effect" (aka the "real‑balances" effect). What is this effect? a. As inflation occurs, consumers buy fewer goods and services because the value of their accumulated wealth declines. b. Interest rates increase when prices rise as consumers try to borrow larger amounts of money to maintain their consumption. The higher interest rate discourages spending. c. As inflation occurs, the purchasing power of consumers increases as accumulated wealth increases in value. d. For normal goods, people buy more of a product if their income increases. According to the wealth effect, what happens as the price level falls? a. Consumption spending decreases and investment spending increases. b. Consumption spending decreases. c. Consumption spending increases and investment spending decreases. d. Consumption and investment spending increase. e. Consumption and investment spending…arrow_forward
- Which of the following would not cause shift in the investment demand curve as the above graph shows? Select one: a. Business taxes b. Expectations c. Changes in real interest rates d. Acquisition, maintenance, and operating costs e. Technological changearrow_forwardThe following table shows a money demand schedule, which is the quantity of money demanded at various price levels (P). Fill in the Value of Money column in the following table. Quantity of Money Demanded (Billions of dollars) 1.5 Price Level (P) Value of Money (1/P) 1.00 1.33 2.0 2.00 3.5 4.00 7.0 Now consider the relationship between the price level and the quantity of money that people demand. The lower the price level, the money the typical transaction requires, and the money people will wish to hold in the form of currency or demand deposits. Assume that the Fed initially fixes the quantity of money supplied at $3.5 billion. Use the orange line (square symbol) to plot the initial money supply (MS1) set by the Fed. Then, referring to the previous table, use the blue connected points (circle symbol) to graph the money demand curve.arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Macroeconomics: Principles and Policy (MindTap Co...EconomicsISBN:9781305280601Author:William J. Baumol, Alan S. BlinderPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Macroeconomics: Principles and Policy (MindTap Co...
Economics
ISBN:9781305280601
Author:William J. Baumol, Alan S. Blinder
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning