Chapter 12

Question 1

Real balances effect

Answer 1

as price kebel falls ourchasing piwer increases

Question 2

Interest effect

Answer 2

as price level foes down, it losers interest, and causes more spending

Question 3

Forighn puechases effect

Answer 3

as price level goes down the cost of exports are cheaper to foreign countries increasing net exports.

Question 4

2 components involved in changed in aggregate demand

Answer 4

change in determinants and multiplier effect

Question 5

Determinants of aggregate demand

Answer 5

C I G X

Question 6

relationship between AD and government spending

Answer 6

direct

Question 7

Dollar Depreciation

Answer 7

exports increase and imports decrease

Question 8

Dollar appreciation

Answer 8

decrease in exports and increase of imports

Question 9

Immediate short run

Answer 9

input and output are fixed

Question 10

Short run

Answer 10

inputs are fixed but outputs are flexible

Question 11

Long run

Answer 11

both input and output are flexible

Question 12

Determinants of AS

Answer 12

Domestic resource prices and imported resources prices

Question 13

Decreases in AD

Answer 13

fear of price wars, menu costs, wage contracts, efficiency wages, and minimum wage