Exam 8: The Business Cycle

Using Figure 8.7,a shift in aggregate demand from AD₄ to AD₅ is most likely to cause

Which of the following is an explanation for why the AD curve slopes downward?

In Figure 8.5,if equilibrium real output is Q₁ and full-employment real output is Q₂,an appropriate monetarist policy lever would be to increase

What are the differences between classical theory and what Keynes believed?

According to the classical view,the economy will not self-adjust to deviations from its long-term growth trend.

Using Figure 8.2,a decrease in real output resulting from the profit effect would be depicted as a movement from point

Using Figure 8.5,if the equilibrium real output is Q₂ then

Choose the letter below that best represents the type of shift that would occur in the following situation in the United States: During the Great Depression,most other countries suffered similarly long and deep losses of output and employment,which in turn meant fewer purchases of U.S.goods and services.(See Figure 8.6. )

Keynesian levers include

The aggregate demand curve is downward-sloping because,other things being equal,

In the early 1900s,which of the following was not true?

Assume you have $1,000 in a savings account at the beginning of the year and the price level is equal to 100.If the price level is equal to 92 at the end of the year,the real value of your savings is closest to

Changes in real GDP are best used to measure

Using Figure 8.7,a shift in aggregate demand from AD₁ to AD₂ is most likely to cause

Supply-side theories of the business cycle focus on how improper incentives lead to the unwillingness of producers to supply more goods and services at existing prices.

Based upon a Keynesian viewpoint,to stimulate the economy the government should do all of the following except

Which group of economists believes that there is a natural rate of output that is relatively immune to short-run fluctuations in aggregate demand?

If aggregate demand decreases and aggregate supply decreases,the level of real output will

A laissez faire policy approach during a recession would advocate

In Figure 8.1,an increase in government spending,ceteris paribus,is best represented as a movement from point