Question

12a.

Canadian net exports decrease. Canadian aggregate demand will ________ and the average price level will ________.

-increase; decrease

-decrease; increase

-decrease; decrease

-increase; increase

b.Market demand curves assume that consumer incomes __________ as quantity demanded increases. For the aggregate demand curve, as quantity demanded changes, it is assumed that consumer incomes

-increase; remain constant

-remain constant; change

-remain constant; remain constant

-increase; change

c.

The aggregate demand curve and a demand curve are similar in each of the following ways except that each curve does which of the following?

-Assumes that the prices of all other goods remain constant as the price of the good varies

-Summarizes the market choices made by many individual buyers

-Represents an inverse relationship between price and quantity variables

-Shows a price variable on the vertical axis

d.

Aggregate supply refers to which of the following?

-Total nominal output of final goods and services, or nominal GDP

-Total real output of final goods and services, or real GDP

-Total nominal output of final goods and services, or real GDP

-Total real output of final goods and services, or nominal GDP

e.

Nominal GDP can increase in each of the following cases except if real GDP _________ and the price level _________.

-decreases; decreases

-increases; increases

-decreases; increases

-increases; decreases

Answer 1

12) a) Net exports are a part of aggregate demand so when they fall, AD decreases and this will cause the price level to decrease. Decrease, decrease

b) Consumer income increases when quantity demanded is seen to be increase. The opposite happens when aggregate demand increases and so income remains unchanged. Increase, remains constant.

c) Price of all other goods are considered constant under demand curve but the aggregate demand uses a general price level for all the goods

d) Aggregate supply is total real output of all the final goods and services

e) If real GDP decreases and price level decreases than nominal GDP decreases as well. Decreases, decreases