Question

An increase in foreign prices relative to the price level in the 

U.S. will cause: U.S. net exports to rise. 

US aggregate demand to fall. 

U.S.net exports to fall

If you are looking at a graph where a cumulative upward sloping curve plots the relationship between price level and output for suppliers, you are looking at a 

aggregate demand curve graph. 

aggregate supply curve graph. 

microeconomic supply graph.

The economy has shifted and the quantity of the real GDP supplied has increased. What has potentially happened to aggregate price levels? 

Potentially the price levels have decreased to a lower aggregate price level and if the wages are sticky, businesses have hired more employees as labor has become cheaper. 

Potentially the price levels have increased to a higher aggregate price level and if the wages are sticky, businesses have hired more employees as labor has become cheaper. 

Potentially the price levels have increased to a higher aggregate price level and if the wages are sticky, businesses have fired some employees as labor has become too expensive.

If real GDP is greater than potential GDP then 

the unemployment rate is low and prices levels are rising. 

the unemployment rate is at the natural rate and price levels are lowering. 

the unemployment rate is high and price levels are stable.

Cyclical unemployment is shown on the aggregate demand aggregate supply (AD-AS) diagram by 

how close the economy is to potential or full employment level of GDP. 

the duration of the recession 

how much the AD curve has moved past potential or full employment.

If the government saw that consumer confidence was high, what step can it take to shift the AD to the left? 

The Federal Reserve can increase interest rates. 

Government can increase its spending 

Congress can pass tax cuts.

 In the long run, the least important cause of shifts the aggregate supply curve is 

technological change. 

change in consumer spending. 

change in productivity.

Answer 1

1) Answer: US net exports to fall

Net exports = Export - Import

If the foreign prices are lower compared to the US price, then it simply implies that the US consumers will get cheaper goods in foreign market as compared to the US market. Thus they will prefer to import more foreign goods and thus from the above formula, net export will fall.

Please post the other questions separately. Thanks and good luck :)