Question 1

The 2002-2008 OPEC price increases caused by conflict in the Middle East caused the aggregate

Accepted Answer

A)  demand curve to shift outward. 
B)  demand curve to shift inward. 
C)  supply curve to shift outward. 
D)  supply curve to shift inward. 
A)  demand curve to shift outward. 
B)  demand curve to shift inward. 
C)  supply curve to shift outward. 
D)  supply curve to shift inward.

Question 2

Using aggregate demand and aggregate supply analysis,explain why increases in oil did not lead to stagflation in 2006-2008 but did lead to stagflation in the 1970s and early 1980s.

Accepted Answer

In the 1970s the increases in oil prices

Question 3

When an inflationary gap exists,the job prospects of new college graduates are

Accepted Answer

A)  very dim. 
B)  somewhat encouraging. 
C)  worse in comparison to a recessionary gap. 
D)  excellent. 
A)  very dim. 
B)  somewhat encouraging. 
C)  worse in comparison to a recessionary gap. 
D)  excellent.

Question 4

Recessionary gaps usually lead to

Accepted Answer

A)  structural unemployment. 
B)  cyclical unemployment. 
C)  seasonal unemployment. 
D)  frictional unemployment. 
A)  structural unemployment. 
B)  cyclical unemployment. 
C)  seasonal unemployment. 
D)  frictional unemployment.

Question 5

Educational reforms that result in improved reading and math skills of high school graduates as they enter the labor force would do what to the aggregate supply curve?

Accepted Answer

A)  Shift it outward. 
B)  Shift it inward. 
C)  Move the economy up along the curve. 
D)  Move the economy down along the curve. 
A)  Shift it outward. 
B)  Shift it inward. 
C)  Move the economy up along the curve. 
D)  Move the economy down along the curve.

Question 6

The underlying cause of inflation is

Accepted Answer

A)  labor unions demanding higher wages. 
B)  businesses charging higher prices. 
C)  government raising taxes. 
D)  increasing aggregate demand. 
A)  labor unions demanding higher wages. 
B)  businesses charging higher prices. 
C)  government raising taxes. 
D)  increasing aggregate demand.

Question 7

One reason the oversimplified multiplier is incorrect is that inflation

Accepted Answer

A)  increases the multiplier by increasing investment spending. 
B)  increases the multiplier by increasing consumer spending. 
C)  decreases the multiplier by increasing net exports. 
D)  decreases the multiplier by decreasing consumer spending. 
A)  increases the multiplier by increasing investment spending. 
B)  increases the multiplier by increasing consumer spending. 
C)  decreases the multiplier by increasing net exports. 
D)  decreases the multiplier by decreasing consumer spending.

Question 8

A vertical aggregate supply curve increases the size of the multiplier effect.

Accepted Answer

A) True 
 B)False

Question 9

The slope of the aggregate supply curve increases as output increases because

Accepted Answer

A)  the cost of resource-use increases as potential is reached. 
B)  consumers are willing to pay more as output expands. 
C)  firms substitute capital for labor as prices increase. 
D)  firms substitute capital for labor as capacity is reached. 
A)  the cost of resource-use increases as potential is reached. 
B)  consumers are willing to pay more as output expands. 
C)  firms substitute capital for labor as prices increase. 
D)  firms substitute capital for labor as capacity is reached.

Question 10

Figure 10-5  
-In Figure 10-5,which graph best illustrates the situation of an economy reacting to an inflationary gap through an increase in wage levels?

Accepted Answer

A)  (1) 
B)  (2) 
C)  (3) 
D)  (4) 
A)  (1) 
B)  (2) 
C)  (3) 
D)  (4)

Question 11

Many economists describe the 2007-2009 period in the United States as being a condition of a(n)

Accepted Answer

A)  deflationary gap. 
B)  recessionary gap. 
C)  inflationary gap. 
D)  reflationary gap. 
A)  deflationary gap. 
B)  recessionary gap. 
C)  inflationary gap. 
D)  reflationary gap.

Question 12

Wage increases are resisted by firms because they decrease profits.

Accepted Answer

A) True 
 B)False

Question 13

Figure 10-2  
-In Figure 10-2,which segment of the aggregate supply curve has the largest multiplier effect?

Accepted Answer

A)  AB 
B)  BC 
C)  CD 
D)  DG 
A)  AB 
B)  BC 
C)  CD 
D)  DG

Question 14

An inflationary gap exists when consumers

Accepted Answer

A)  are saving more than businesses are investing. 
B)  and businesses are purchasing less than the economy is capable of producing. 
C)  and businesses are demanding more than the economy is capable of producing. 
D)  and businesses are demanding less than the full employment level of output. 
A)  are saving more than businesses are investing. 
B)  and businesses are purchasing less than the economy is capable of producing. 
C)  and businesses are demanding more than the economy is capable of producing. 
D)  and businesses are demanding less than the full employment level of output.

Question 15

When equilibrium GDP is below potential GDP,jobs are plentiful and unemployment is low.

Accepted Answer

A) True 
 B)False

Question 16

GDP in excess of potential GDP will shift the aggregate supply curve to the left and the price level will increase.

Accepted Answer

A) True 
 B)False

Question 17

If the price level decreases,what will happen to the level of real GDP supplied?

Accepted Answer

A)  It will usually decrease. 
B)  It will usually increase. 
C)  Nothing. 
D)  It will decrease at first and then increase. 
A)  It will usually decrease. 
B)  It will usually increase. 
C)  Nothing. 
D)  It will decrease at first and then increase.

Question 18

An improvement in productivity will usually increase profits.

Accepted Answer

A) True 
 B)False

Question 19

When equilibrium GDP is greater than potential GDP,jobs are plentiful and labor is in great demand.

Accepted Answer

A) True 
 B)False

Question 20

If aggregate quantity demanded exceeds aggregate quantity supplied,we can expect an unplanned

Accepted Answer

A)  depletion of inventories,causing firms to raise prices. 
B)  depletion of inventories,causing firms to lower prices. 
C)  accumulation of inventories,causing firms to raise prices. 
D)  accumulation of inventories,causing firms to lower prices. 
A)  depletion of inventories,causing firms to raise prices. 
B)  depletion of inventories,causing firms to lower prices. 
C)  accumulation of inventories,causing firms to raise prices. 
D)  accumulation of inventories,causing firms to lower prices.

The 2002-2008 OPEC price increases caused by conflict in the Middle East caused the aggregate

Using aggregate demand and aggregate supply analysis,explain why increases in oil did not lead to stagflation in 2006-2008 but did lead to stagflation in the 1970s and early 1980s.

When an inflationary gap exists,the job prospects of new college graduates are

Recessionary gaps usually lead to

Educational reforms that result in improved reading and math skills of high school graduates as they enter the labor force would do what to the aggregate supply curve?

The underlying cause of inflation is

One reason the oversimplified multiplier is incorrect is that inflation

A vertical aggregate supply curve increases the size of the multiplier effect.

The slope of the aggregate supply curve increases as output increases because

Figure 10-5 -In Figure 10-5,which graph best illustrates the situation of an economy reacting to an inflationary gap through an increase in wage levels?

Many economists describe the 2007-2009 period in the United States as being a condition of a(n)

Wage increases are resisted by firms because they decrease profits.

Figure 10-2 -In Figure 10-2,which segment of the aggregate supply curve has the largest multiplier effect?

An inflationary gap exists when consumers

When equilibrium GDP is below potential GDP,jobs are plentiful and unemployment is low.

GDP in excess of potential GDP will shift the aggregate supply curve to the left and the price level will increase.

If the price level decreases,what will happen to the level of real GDP supplied?

An improvement in productivity will usually increase profits.

When equilibrium GDP is greater than potential GDP,jobs are plentiful and labor is in great demand.

If aggregate quantity demanded exceeds aggregate quantity supplied,we can expect an unplanned

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

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Exam 10: Bringing In The Supply Side Unemployment and Inflation

The 2002-2008 OPEC price increases caused by conflict in the Middle East caused the aggregate

Using aggregate demand and aggregate supply analysis,explain why increases in oil did not lead to stagflation in 2006-2008 but did lead to stagflation in the 1970s and early 1980s.

When an inflationary gap exists,the job prospects of new college graduates are

Recessionary gaps usually lead to

Educational reforms that result in improved reading and math skills of high school graduates as they enter the labor force would do what to the aggregate supply curve?

The underlying cause of inflation is

One reason the oversimplified multiplier is incorrect is that inflation

A vertical aggregate supply curve increases the size of the multiplier effect.

The slope of the aggregate supply curve increases as output increases because

Figure 10-5 -In Figure 10-5,which graph best illustrates the situation of an economy reacting to an inflationary gap through an increase in wage levels?

Many economists describe the 2007-2009 period in the United States as being a condition of a(n)

Wage increases are resisted by firms because they decrease profits.

Figure 10-2 -In Figure 10-2,which segment of the aggregate supply curve has the largest multiplier effect?

An inflationary gap exists when consumers

When equilibrium GDP is below potential GDP,jobs are plentiful and unemployment is low.

GDP in excess of potential GDP will shift the aggregate supply curve to the left and the price level will increase.

If the price level decreases,what will happen to the level of real GDP supplied?

An improvement in productivity will usually increase profits.

When equilibrium GDP is greater than potential GDP,jobs are plentiful and labor is in great demand.

If aggregate quantity demanded exceeds aggregate quantity supplied,we can expect an unplanned

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters