Question 1

Which of the following, other things the same, would make the price level decrease and real GDP increase?

Accepted Answer

A) long-run aggregate supply shifts right 
B) long-run aggregate supply shifts left 
C) aggregate demand shifts right 
D) aggregate demand shifts left 
A) long-run aggregate supply shifts right 
B) long-run aggregate supply shifts left 
C) aggregate demand shifts right 
D) aggregate demand shifts left

Question 2

During 2003-2007, the price of crude oil increased substantially on the world market. Other things constant, how will an unanticipated increase in oil prices influence the general level of prices and real output of oil-importing nations such as the United States and Japan?

Accepted Answer

A) Both real output and the general level of prices will decrease. 
B) Both real output and the general level of prices will increase. 
C) Real output will increase, and the general level of prices will decrease. 
D) Real output will decrease, and the general level of prices will increase. 
A) Both real output and the general level of prices will decrease. 
B) Both real output and the general level of prices will increase. 
C) Real output will increase, and the general level of prices will decrease. 
D) Real output will decrease, and the general level of prices will increase.

Question 3

The short-run effects of a favorable supply shock will include

Accepted Answer

A) an increase in the general level of prices and a decrease in real output. 
B) an increase in the general level of prices and an increase in real output. 
C) a decrease in the general level of prices and a decrease in real output. 
D) a decrease in the general level of prices and an increase in real output. 
A) an increase in the general level of prices and a decrease in real output. 
B) an increase in the general level of prices and an increase in real output. 
C) a decrease in the general level of prices and a decrease in real output. 
D) a decrease in the general level of prices and an increase in real output.

Question 4

Figure 10-18  
-Based on Figure 10-18, when the aggregate demand curve is in the position AD1, the economy's position of long-run equilibrium corresponds to point

Accepted Answer

A) E1. 
B) E2. 
C) E3. 
D) E1 or E2. 
A) E1. 
B) E2. 
C) E3. 
D) E1 or E2.

Question 5

When the economy is operating at an output rate below its full-employment level, the

Accepted Answer

A) actual level of unemployment will exceed the natural rate of unemployment. 
B) current rate of output will tend to persist into the future. 
C) strong demand for resources will cause resource prices to rise. 
D) actual unemployment rate will be less than the natural rate of unemployment. 
A) actual level of unemployment will exceed the natural rate of unemployment. 
B) current rate of output will tend to persist into the future. 
C) strong demand for resources will cause resource prices to rise. 
D) actual unemployment rate will be less than the natural rate of unemployment.

Question 6

Within the AD/AS model, which one of the following adjustments will cause the economy to return to its long-run capacity when output is temporarily greater than the economy's long-run potential?

Accepted Answer

A) Lower wage rates and resource prices reduce short-run aggregate supply. 
B) Lower interest rates increase aggregate demand and, thereby, stimulate output. 
C) Higher wage rates and resource prices reduce short-run aggregate supply. 
D) A decrease in prices reduces aggregate demand. 
A) Lower wage rates and resource prices reduce short-run aggregate supply. 
B) Lower interest rates increase aggregate demand and, thereby, stimulate output. 
C) Higher wage rates and resource prices reduce short-run aggregate supply. 
D) A decrease in prices reduces aggregate demand.

Question 7

How will an unanticipated decrease in aggregate demand influence equilibrium output in the goods and services market?

Accepted Answer

A) Output will increase, and the general level of prices will fall. 
B) Output will increase, and the general level of prices will rise. 
C) Output will decrease, and the general level of prices will rise. 
D) Output will decrease, and the general level of prices will fall. 
A) Output will increase, and the general level of prices will fall. 
B) Output will increase, and the general level of prices will rise. 
C) Output will decrease, and the general level of prices will rise. 
D) Output will decrease, and the general level of prices will fall.

Question 8

Which of the following would cause prices to fall and output to rise in the short run?

Accepted Answer

A) Short-run aggregate supply shifts right. 
B) Short-run aggregate supply shifts left. 
C) Aggregate demand shifts right. 
D) Aggregate demand shifts left. 
A) Short-run aggregate supply shifts right. 
B) Short-run aggregate supply shifts left. 
C) Aggregate demand shifts right. 
D) Aggregate demand shifts left.

Question 9

Which of the following will most likely increase long-run aggregate supply?

Accepted Answer

A) an increase in the rate of investment 
B) an increase in resource prices 
C) an increase in the minimum wage 
D) an increase in the expected inflation rate 
A) an increase in the rate of investment 
B) an increase in resource prices 
C) an increase in the minimum wage 
D) an increase in the expected inflation rate

Which of the following, other things the same, would make the price level decrease and real GDP increase?

During 2003-2007, the price of crude oil increased substantially on the world market. Other things constant, how will an unanticipated increase in oil prices influence the general level of prices and real output of oil-importing nations such as the United States and Japan?

The short-run effects of a favorable supply shock will include

Figure 10-18 -Based on Figure 10-18, when the aggregate demand curve is in the position AD₁, the economy's position of long-run equilibrium corresponds to point

When the economy is operating at an output rate below its full-employment level, the

Within the AD/AS model, which one of the following adjustments will cause the economy to return to its long-run capacity when output is temporarily greater than the economy's long-run potential?

How will an unanticipated decrease in aggregate demand influence equilibrium output in the goods and services market?

Which of the following would cause prices to fall and output to rise in the short run?

Which of the following will most likely increase long-run aggregate supply?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Exam 10: Dynamic Change, Economic Fluctuations, and the Ad-As Model

Which of the following, other things the same, would make the price level decrease and real GDP increase?

During 2003-2007, the price of crude oil increased substantially on the world market. Other things constant, how will an unanticipated increase in oil prices influence the general level of prices and real output of oil-importing nations such as the United States and Japan?

The short-run effects of a favorable supply shock will include

Figure 10-18 -Based on Figure 10-18, when the aggregate demand curve is in the position AD1, the economy's position of long-run equilibrium corresponds to point

When the economy is operating at an output rate below its full-employment level, the

Within the AD/AS model, which one of the following adjustments will cause the economy to return to its long-run capacity when output is temporarily greater than the economy's long-run potential?

How will an unanticipated decrease in aggregate demand influence equilibrium output in the goods and services market?

Which of the following would cause prices to fall and output to rise in the short run?

Which of the following will most likely increase long-run aggregate supply?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Figure 10-18 -Based on Figure 10-18, when the aggregate demand curve is in the position AD₁, the economy's position of long-run equilibrium corresponds to point