Question 1

The Solow growth rate is the rate of economic growth given existing:

Accepted Answer

A)  capital. 
B)  labor. 
C)  technology. 
D)  capital, labor, and technology. 
A)  capital. 
B)  labor. 
C)  technology. 
D)  capital, labor, and technology.

Question 2

Expected increases in the price of oil are the most costly to deal with.

Accepted Answer

A) True 
 B)False

Question 3

The short-run aggregate supply curve slopes upward because prices and wages are sticky.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following scenarios could result in a recession?

Accepted Answer

A)  Aggregate demand decreases, and wages are flexible. 
B)  Aggregate demand decreases, and wages are sticky. 
C)  Aggregate demand increases, and wages are flexible. 
D)  Aggregate demand increases, and wages are sticky. 
A)  Aggregate demand decreases, and wages are flexible. 
B)  Aggregate demand decreases, and wages are sticky. 
C)  Aggregate demand increases, and wages are flexible. 
D)  Aggregate demand increases, and wages are sticky.

Question 5

During the Great Depression, the U.S. aggregate demand curve:

Accepted Answer

A)  shifted outward. 
B)  shifted inward. 
C)  became steeper. 
D)  became flatter. 
A)  shifted outward. 
B)  shifted inward. 
C)  became steeper. 
D)  became flatter.

Question 6

A positive real shock causes a shift to the right of the long-run aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 7

An unexpected outward shift of the economy's AD curve will cause real GDP growth to increase in:

Accepted Answer

A)  the short run only. 
B)  the long run only. 
C)  both the short run and the long run. 
D)  neither the short run nor the long run. 
A)  the short run only. 
B)  the long run only. 
C)  both the short run and the long run. 
D)  neither the short run nor the long run.

Question 8

Use the following to answer questions: Figure: Aggregate Demand  
-(Figure: Aggregate Demand) Point A on this aggregate demand curve represents a real GDP growth rate of:

Accepted Answer

A)  2%. 
B)  3%. 
C)  5%. 
D)  7%. 
A)  2%. 
B)  3%. 
C)  5%. 
D)  7%.

Question 9

In the AD-AS model with SRAS included, prices and wages are assumed to be perfectly flexible in the short run.

Accepted Answer

A) True 
 B)False

Question 10

In the equation $\vec { M } + \vec { v } = \vec { P } + \vec { Y } _ { R }$ , what does $\bar { P }$
Stand for?

Accepted Answer

A)  production 
B)  growth in production 
C)  prices 
D)  inflation 
A)  production 
B)  growth in production 
C)  prices 
D)  inflation

Question 11

Graphically, a positive real shock causes a shift of the:

Accepted Answer

A)  AD curve to the right. 
B)  AD curve to the left. 
C)  LRAS curve to the right. 
D)  LRAS curve to the left. 
A)  AD curve to the right. 
B)  AD curve to the left. 
C)  LRAS curve to the right. 
D)  LRAS curve to the left.

Question 12

Use the following to answer questions: Figure: Three AD Curves  
-(Figure: Three AD Curves) In the accompanying diagram, the economy's long-run growth rate following a positive money shock would be:

Accepted Answer

A)  2%. 
B)  3%. 
C)  4%. 
D)  6%. 
A)  2%. 
B)  3%. 
C)  4%. 
D)  6%.

Question 13

Holding everything else constant, an increase in the growth rate of the money supply will cause the aggregate demand curve to:

Accepted Answer

A)  shift inward. 
B)  shift outward. 
C)  not shift at all. 
D)  shift randomly. 
A)  shift inward. 
B)  shift outward. 
C)  not shift at all. 
D)  shift randomly.

Question 14

How has the role of agricultural production changed in the Indian economy?

Accepted Answer

A)  It has become a greater part of GDP, due to technological advances. 
B)  It has remained about 40% of GDP, but has doubled in yield. 
C)  It has fallen to about 20% of GDP due to economic diversification. 
D)  It is now only 1% of GDP. 
A)  It has become a greater part of GDP, due to technological advances. 
B)  It has remained about 40% of GDP, but has doubled in yield. 
C)  It has fallen to about 20% of GDP due to economic diversification. 
D)  It is now only 1% of GDP.

Question 15

Money is neutral in both the short run and long run in the AD-AS model when prices and wages are completely flexible.

Accepted Answer

A) True 
 B)False

Question 16

If prices are perfectly flexible, the economy will always be growing:

Accepted Answer

A)  at its potential rate. 
B)  above its potential rate. 
C)  below its potential rate. 
D)  near its potential rate. 
A)  at its potential rate. 
B)  above its potential rate. 
C)  below its potential rate. 
D)  near its potential rate.

Question 17

What are some of the economic effects of a tariff?

Accepted Answer

A)  Wealth is redistributed from wealthy nations to poor nations, and taxes fall. 
B)  Unemployment and inflation rates both fall. 
C)  A decrease in trade reduces the productivity of capital and labor. 
D)  Trade remains the same in the long run, and GDP rises in the nation that enacts the tariff. 
A)  Wealth is redistributed from wealthy nations to poor nations, and taxes fall. 
B)  Unemployment and inflation rates both fall. 
C)  A decrease in trade reduces the productivity of capital and labor. 
D)  Trade remains the same in the long run, and GDP rises in the nation that enacts the tariff.

Question 18

The Smoot-Hawley Tariff of 1930 raised tariff rates on tens of thousands of imported goods, and the results were that:

Accepted Answer

A)  exports rose but imports fell, thereby increasing aggregate demand. 
B)  imports rose but exports fell, thereby reducing aggregate demand. 
C)  both exports and imports rose, thereby increasing aggregate demand. 
D)  both exports and productivity fell, thereby reducing aggregate demand and aggregate supply. 
A)  exports rose but imports fell, thereby increasing aggregate demand. 
B)  imports rose but exports fell, thereby reducing aggregate demand. 
C)  both exports and imports rose, thereby increasing aggregate demand. 
D)  both exports and productivity fell, thereby reducing aggregate demand and aggregate supply.

Question 19

The largest negative shock to aggregate demand in U.S. history took place during the housing crash of 2007.

Accepted Answer

A) True 
 B)False

Question 20

According to the AD-AS model, if the economy is initially at its long-run potential growth rate, then a temporary increase in the growth rate of investment spending will cause:

Accepted Answer

A)  an increase in the real growth rate in the long run. 
B)  an increase in the inflation rate in the long run. 
C)  an increase in both the inflation and real growth rates in the short run. 
D)  no effect on real growth rate or inflation in the short run. 
A)  an increase in the real growth rate in the long run. 
B)  an increase in the inflation rate in the long run. 
C)  an increase in both the inflation and real growth rates in the short run. 
D)  no effect on real growth rate or inflation in the short run.

Exam 13: Business Fluctuations: Aggregate Demand and Supply

The Solow growth rate is the rate of economic growth given existing:

Expected increases in the price of oil are the most costly to deal with.

The short-run aggregate supply curve slopes upward because prices and wages are sticky.

Which of the following scenarios could result in a recession?

During the Great Depression, the U.S. aggregate demand curve:

A positive real shock causes a shift to the right of the long-run aggregate supply curve.

An unexpected outward shift of the economy's AD curve will cause real GDP growth to increase in:

Use the following to answer questions: Figure: Aggregate Demand -(Figure: Aggregate Demand) Point A on this aggregate demand curve represents a real GDP growth rate of:

In the AD-AS model with SRAS included, prices and wages are assumed to be perfectly flexible in the short run.

In the equation M⃗+v⃗=P⃗+Y⃗R\vec { M } + \vec { v } = \vec { P } + \vec { Y } _ { R }M+v=P+YR​ , what does Pˉ\bar { P }Pˉ Stand for?

Graphically, a positive real shock causes a shift of the:

Use the following to answer questions: Figure: Three AD Curves -(Figure: Three AD Curves) In the accompanying diagram, the economy's long-run growth rate following a positive money shock would be:

Holding everything else constant, an increase in the growth rate of the money supply will cause the aggregate demand curve to:

How has the role of agricultural production changed in the Indian economy?

Money is neutral in both the short run and long run in the AD-AS model when prices and wages are completely flexible.

If prices are perfectly flexible, the economy will always be growing:

What are some of the economic effects of a tariff?

The Smoot-Hawley Tariff of 1930 raised tariff rates on tens of thousands of imported goods, and the results were that:

The largest negative shock to aggregate demand in U.S. history took place during the housing crash of 2007.

According to the AD-AS model, if the economy is initially at its long-run potential growth rate, then a temporary increase in the growth rate of investment spending will cause:

The Big Ideas

The Power of Trade and Comparative Advantage

Supply and Demand

Equilibrium: How Supply and Demand Determine Prices

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth, Capital Accumulation and the Economics of Ideas: Catching up Vs the Cutting Edge

Saving, Investment, and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Transmission and Amplification Mechanisms

The Federal Reserve System and Open Market Operations

Monetary Policy

The Federal Budget: Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

In the equation $\vec { M } + \vec { v } = \vec { P } + \vec { Y } _ { R }$ , what does $\bar { P }$ Stand for?