Online Test Ch. 11 Quiz

The aggregate demand-aggregate supply model is a variable-price-level model that permits analysis of simultaneous changes in real GDP and the price level.

The aggregate demand curve slopes downward.

A fall in the price level increases the real value of financial assests with fixed money values and, as a result, increases spending by the holders of these assets.

A fall in the price level reduces the demand for money in the economy and drives interest rates upward.

A rise in the price level of an economy (relative to the foreign price levels) tends to increase that economy's exports and to reduce its imports of goods and services.

The higher the price level, the smaller the wealth of consumers and the lower the consumption schedule.

A change in AD is caused by a change in the price level, other things equal.

A fall in excess capacity, or unused existing capital goods, will retard the demand for new capital goods, and therefore reduce AD.

The real balances effect is one of the determinants of AD.

A high level of household indebtedness will tend to increase consumption spending and AD.