Question 1

Workers often have ________ contracts and so their wages are ________.

Accepted Answer

A)  long-term; flexible 
B)  long-term; sticky 
C)  short-term; sticky 
D)  short-term; flexible 
A)  long-term; flexible 
B)  long-term; sticky 
C)  short-term; sticky 
D)  short-term; flexible

Question 2

Figure 9.2
  
-Refer to Figure 9.2. A movement from point a to point b could be caused by a(n)

Accepted Answer

A)  increase in government spending. 
B)  decrease in the price of oil. 
C)  decrease in taxes. 
D)  decrease in short-run aggregate supply. 
A)  increase in government spending. 
B)  decrease in the price of oil. 
C)  decrease in taxes. 
D)  decrease in short-run aggregate supply.

Question 3

Draw an aggregate supply and aggregate demand graph which shows the economy producing an output which exceeds potential output in the short run, and the adjustment that will occur as the economy adjusts to long-run equilibrium.

Accepted Answer

In the short run, the economy is at the

Question 4

Output in the long run is determined by which of the two following factors when an economy operates at full employment?

Accepted Answer

A)  capital and supply 
B)  imports and exports 
C)  capital and labor 
D)  the "real" GDP and purchases 
A)  capital and supply 
B)  imports and exports 
C)  capital and labor 
D)  the "real" GDP and purchases

Question 5

What are the four components of aggregate demand?

Accepted Answer

consumption spending

Question 6

Assuming a long-run aggregate supply curve, a decrease in taxes results in ________ in output and ________ in price level.

Accepted Answer

A)  a decrease; a decrease 
B)  no change; an increase 
C)  no change; a decrease 
D)  an increase; no change 
A)  a decrease; a decrease 
B)  no change; an increase 
C)  no change; a decrease 
D)  an increase; no change

Question 7

The relationship between the level of prices and the quantity of real GDP supplied is known as

Accepted Answer

A)  aggregate supply. 
B)  market supply. 
C)  aggregate demand. 
D)  market demand. 
A)  aggregate supply. 
B)  market supply. 
C)  aggregate demand. 
D)  market demand.

Question 8

If the multiplier = 2.5, the MPC would be

Accepted Answer

A)  0.25. 
B)  0.4. 
C)  0.6. 
D)  0.75. 
A)  0.25. 
B)  0.4. 
C)  0.6. 
D)  0.75.

Question 9

Decreases in taxes shift the aggregate demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 10

Suppose consumer tastes and preferences shift from tacos to pizzas. In the short run, these changing tastes will result in pizza restaurants ________ pizza prices and taco restaurants ________ taco prices.

Accepted Answer

A)  increasing; decreasing 
B)  decreasing; increasing 
C)  decreasing; decreasing 
D)  increasing; increasing 
A)  increasing; decreasing 
B)  decreasing; increasing 
C)  decreasing; decreasing 
D)  increasing; increasing

Question 11

One reason the aggregate demand curve is downward sloping is because of the

Accepted Answer

A)  interest rate effect. 
B)  welfare effect. 
C)  price effect. 
D)  tariff effect. 
A)  interest rate effect. 
B)  welfare effect. 
C)  price effect. 
D)  tariff effect.

Question 12

During an economic boom

Accepted Answer

A)  actual output exceeds potential output. 
B)  potential output exceeds quantity demanded. 
C)  potential output exceeds actual output. 
D)  aggregate demand exceeds aggregate supply. 
A)  actual output exceeds potential output. 
B)  potential output exceeds quantity demanded. 
C)  potential output exceeds actual output. 
D)  aggregate demand exceeds aggregate supply.

Question 13

Higher prices lead to higher levels of real wealth.

Accepted Answer

A) True 
 B)False

Question 14

Figure 9.2
  
-Refer to Figure 9.2. A movement from point a to point d could be caused by a simultaneous ________ and ________.

Accepted Answer

A)  increase in government spending; decrease in the price of oil 
B)  increase in taxes; increase in the price of oil 
C)  decrease in taxes; massive crop failure 
D)  decrease in the money supply; decrease in government spending 
A)  increase in government spending; decrease in the price of oil 
B)  increase in taxes; increase in the price of oil 
C)  decrease in taxes; massive crop failure 
D)  decrease in the money supply; decrease in government spending

Question 15

When there is a recession (a fall in output)and prices are increasing, and this situation is caused by adverse supply shocks, the term economists use to describe it is

Accepted Answer

A)  aggregate shifts. 
B)  stagnation. 
C)  inflation. 
D)  stagflation. 
A)  aggregate shifts. 
B)  stagnation. 
C)  inflation. 
D)  stagflation.

Question 16

The increase in spending that occurs because the demand for investment goods increases when the price level falls is known as the

Accepted Answer

A)  interest rate effect. 
B)  international trade effect. 
C)  price effect. 
D)  wealth effect. 
A)  interest rate effect. 
B)  international trade effect. 
C)  price effect. 
D)  wealth effect.

Question 17

Recall the Application about the factors involved in causing recessions, and the causes of recessions in the United States from 1893 to 1990 to answer the following question(s).
-According to this Application, the recession in 1991 was caused by

Accepted Answer

A)  increasing oil prices which resulted in a decrease in aggregate supply. 
B)  the government cutting back on aggregate demand to reduce inflation. 
C)  an decrease in aggregate supply resulting from U.S. bank collapses. 
D)  massive immigration from Europe to the United States. 
A)  increasing oil prices which resulted in a decrease in aggregate supply. 
B)  the government cutting back on aggregate demand to reduce inflation. 
C)  an decrease in aggregate supply resulting from U.S. bank collapses. 
D)  massive immigration from Europe to the United States.

Question 18

The short run in macroeconomics is the period in which

Accepted Answer

A)  prices change significantly. 
B)  no contracts or agreements exist to fix prices. 
C)  demand determines output. 
D)  the demand curve is vertical. 
A)  prices change significantly. 
B)  no contracts or agreements exist to fix prices. 
C)  demand determines output. 
D)  the demand curve is vertical.

Question 19

The marginal propensity to save (MPS)is the

Accepted Answer

A)  amount of saving that is later consumed. 
B)  fraction of additional income that is saved. 
C)  part of consumption spending that does not depend on income. 
D)  total amount of income that is saved. 
A)  amount of saving that is later consumed. 
B)  fraction of additional income that is saved. 
C)  part of consumption spending that does not depend on income. 
D)  total amount of income that is saved.

Question 20

When the price level is low, resulting in domestic goods being cheaper than imported foreign goods,

Accepted Answer

A)  consumers hold more money. 
B)  consumers spend less. 
C)  the demand for domestic goods will increase. 
D)  there will be a reduction in import tariffs. 
A)  consumers hold more money. 
B)  consumers spend less. 
C)  the demand for domestic goods will increase. 
D)  there will be a reduction in import tariffs.

Workers often have contracts and so their wages are .

Figure 9.2 -Refer to Figure 9.2. A movement from point a to point b could be caused by a(n)

Draw an aggregate supply and aggregate demand graph which shows the economy producing an output which exceeds potential output in the short run, and the adjustment that will occur as the economy adjusts to long-run equilibrium.

Output in the long run is determined by which of the two following factors when an economy operates at full employment?

What are the four components of aggregate demand?

Assuming a long-run aggregate supply curve, a decrease in taxes results in in output and in price level.

The relationship between the level of prices and the quantity of real GDP supplied is known as

If the multiplier = 2.5, the MPC would be

Decreases in taxes shift the aggregate demand curve to the right.

Suppose consumer tastes and preferences shift from tacos to pizzas. In the short run, these changing tastes will result in pizza restaurants pizza prices and taco restaurants taco prices.

One reason the aggregate demand curve is downward sloping is because of the

During an economic boom

Higher prices lead to higher levels of real wealth.

Figure 9.2 -Refer to Figure 9.2. A movement from point a to point d could be caused by a simultaneous and .

When there is a recession (a fall in output)and prices are increasing, and this situation is caused by adverse supply shocks, the term economists use to describe it is

The increase in spending that occurs because the demand for investment goods increases when the price level falls is known as the

Recall the Application about the factors involved in causing recessions, and the causes of recessions in the United States from 1893 to 1990 to answer the following question(s). -According to this Application, the recession in 1991 was caused by

The short run in macroeconomics is the period in which

The marginal propensity to save (MPS)is the

When the price level is low, resulting in domestic goods being cheaper than imported foreign goods,

Introduction: What Is Economics?

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nation's Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow?

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

Exam 9: Aggregate Demand and Aggregate Supply

Workers often have ________ contracts and so their wages are ________.

Figure 9.2 -Refer to Figure 9.2. A movement from point a to point b could be caused by a(n)

Draw an aggregate supply and aggregate demand graph which shows the economy producing an output which exceeds potential output in the short run, and the adjustment that will occur as the economy adjusts to long-run equilibrium.

Output in the long run is determined by which of the two following factors when an economy operates at full employment?

What are the four components of aggregate demand?

Assuming a long-run aggregate supply curve, a decrease in taxes results in ________ in output and ________ in price level.

The relationship between the level of prices and the quantity of real GDP supplied is known as

If the multiplier = 2.5, the MPC would be

Decreases in taxes shift the aggregate demand curve to the right.

Suppose consumer tastes and preferences shift from tacos to pizzas. In the short run, these changing tastes will result in pizza restaurants ________ pizza prices and taco restaurants ________ taco prices.

One reason the aggregate demand curve is downward sloping is because of the

During an economic boom

Higher prices lead to higher levels of real wealth.

Figure 9.2 -Refer to Figure 9.2. A movement from point a to point d could be caused by a simultaneous ________ and ________.

When there is a recession (a fall in output)and prices are increasing, and this situation is caused by adverse supply shocks, the term economists use to describe it is

The increase in spending that occurs because the demand for investment goods increases when the price level falls is known as the

Recall the Application about the factors involved in causing recessions, and the causes of recessions in the United States from 1893 to 1990 to answer the following question(s). -According to this Application, the recession in 1991 was caused by

The short run in macroeconomics is the period in which

The marginal propensity to save (MPS)is the

When the price level is low, resulting in domestic goods being cheaper than imported foreign goods,

Introduction: What Is Economics?

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nation's Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow?

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

Workers often have contracts and so their wages are .

Assuming a long-run aggregate supply curve, a decrease in taxes results in in output and in price level.

Suppose consumer tastes and preferences shift from tacos to pizzas. In the short run, these changing tastes will result in pizza restaurants pizza prices and taco restaurants taco prices.

Figure 9.2 -Refer to Figure 9.2. A movement from point a to point d could be caused by a simultaneous and .