Question 1

Suppose a booming stock market encourages consumption spending to rise dramatically. What would be the MOST likely short-run impact?

Accepted Answer

A)  inflation and falling real GDP 
B)  inflation and rising real GDP 
C)  a recession and rising prices 
D)  a recession and falling prices 
A)  inflation and falling real GDP 
B)  inflation and rising real GDP 
C)  a recession and rising prices 
D)  a recession and falling prices

Question 2

A rise in real GDP is associated with increased employment.

Accepted Answer

A) True 
 B)False

Question 3

Which of these will NOT shift the aggregate supply curve to the left?

Accepted Answer

A)  an increase in the minimum wage 
B)  a decrease in corporate taxes 
C)  an increase in the price of crude oil 
D)  an increase in the legislated amount of paid vacation 
A)  an increase in the minimum wage 
B)  a decrease in corporate taxes 
C)  an increase in the price of crude oil 
D)  an increase in the legislated amount of paid vacation

Question 4

According to the textbook, what brought the United States out of the Great Depression?

Accepted Answer

A)  an increase in investment 
B)  an increase in consumption 
C)  a decrease in the interest rate 
D)  an increase in spending on World War II 
A)  an increase in investment 
B)  an increase in consumption 
C)  a decrease in the interest rate 
D)  an increase in spending on World War II

Question 5

(Figure: Shifting SRAS and AD)   What economic event is represented if full-employment GDP occurs at point a?

Accepted Answer

A)  recession 
B)  demand-pull inflation 
C)  cost-push inflation 
D)  deflation 
A)  recession 
B)  demand-pull inflation 
C)  cost-push inflation 
D)  deflation

Question 6

Aggregate supply is the

Accepted Answer

A)  real GDP that firms will produce at varying price levels. 
B)  total supply over a span of several years. 
C)  amount of goods, but not services, firms supply at various price levels. 
D)  amount of output that is sold at each price level. 
A)  real GDP that firms will produce at varying price levels. 
B)  total supply over a span of several years. 
C)  amount of goods, but not services, firms supply at various price levels. 
D)  amount of output that is sold at each price level.

Question 7

The collapse of housing prices in 2006-2011 caused aggregate demand to fall when homeowners increased their savings to offset the drop in the value of their homes.

Accepted Answer

A) True 
 B)False

Question 8

Demand-pull inflation scenarios took place in the

Accepted Answer

A)  1930s for the United States and from 1985 to 1995 for Japan. 
B)  1960s for the United States and from 1985 to 1995 for Japan. 
C)  1930s for both the United States and Japan. 
D)  1960s for both the United States and Japan. 
A)  1930s for the United States and from 1985 to 1995 for Japan. 
B)  1960s for the United States and from 1985 to 1995 for Japan. 
C)  1930s for both the United States and Japan. 
D)  1960s for both the United States and Japan.

Question 9

How do changes in inflation expectations impact the short-run aggregate supply curve and the long-run aggregate supply curve?

Accepted Answer

A)  Expectations that inflation will rise will cause short-run and long-run aggregate supply to increase. 
B)  Expectations that inflation will rise will cause short-run and long-run aggregate supply to decrease. 
C)  Expectations that inflation will rise will cause movements along both curves but would cause neither curve to shift. 
D)  Expectations that inflation will rise will cause short-run aggregate supply to decrease and long-run aggregate supply to remain constant. 
A)  Expectations that inflation will rise will cause short-run and long-run aggregate supply to increase. 
B)  Expectations that inflation will rise will cause short-run and long-run aggregate supply to decrease. 
C)  Expectations that inflation will rise will cause movements along both curves but would cause neither curve to shift. 
D)  Expectations that inflation will rise will cause short-run aggregate supply to decrease and long-run aggregate supply to remain constant.

Question 10

A vertical aggregate supply curve represents full employment in the long run.

Accepted Answer

A) True 
 B)False

Question 11

Which item is NOT a determinant of aggregate demand?

Accepted Answer

A)  consumption 
B)  investment 
C)  government saving 
D)  government spending 
A)  consumption 
B)  investment 
C)  government saving 
D)  government spending

Question 12

(Figure: Determining Aggregate Equilibrium Levels)   Equilibrium output is _____ units, and the equilibrium price level is _____.

Accepted Answer

A)  100; $3,000 
B)  2,000; $130 
C)  3,000; $100 
D)  5,000; $160 
A)  100; $3,000 
B)  2,000; $130 
C)  3,000; $100 
D)  5,000; $160

Question 13

In the long run, attempts to expand beyond an economy's natural rate of unemployment tend to result in

Accepted Answer

A)  increased inflation. 
B)  increased output. 
C)  both increased output and increased inflation. 
D)  neither increased output nor increased inflation. 
A)  increased inflation. 
B)  increased output. 
C)  both increased output and increased inflation. 
D)  neither increased output nor increased inflation.

Question 14

If a pill is discovered that allows people to work twice as fast as they would ordinarily work, then the aggregate supply curve will

Accepted Answer

A)  shift to the left. 
B)  shift to the right. 
C)  become vertical. 
D)  not change. 
A)  shift to the left. 
B)  shift to the right. 
C)  become vertical. 
D)  not change.

Question 15

A falling aggregate price level _____ demand for a country's exports and therefore _____ output demanded.

Accepted Answer

A)  increases; increases 
B)  increases; reduces 
C)  reduces; increases 
D)  reduces; reduces 
A)  increases; increases 
B)  increases; reduces 
C)  reduces; increases 
D)  reduces; reduces

Question 16

The long-run aggregate supply curve is positively sloped.

Accepted Answer

A) True 
 B)False

Question 17

(Figure: Shifting the AD and SRAS)   Assume the economy depicted in the figure is in long-run equilibrium, where the aggregate demand curve is AD0 and the short-run aggregate supply curve is SRAS0. If there is a supply shock, such as a drastic increase in the price of oil, this will cause a _____ and a movement to a short-run equilibrium at point _____.

Accepted Answer

A)  leftward shift to AD1; a 
B)  rightward shift to AD1; c 
C)  rightward shift to SRAS2; c 
D)  leftward shift to SRAS2; a 
A)  leftward shift to AD1; a 
B)  rightward shift to AD1; c 
C)  rightward shift to SRAS2; c 
D)  leftward shift to SRAS2; a

Question 18

(Figure: Determining SRAS Shifts)   If the government raises taxes or increases regulations, the short-run aggregate supply curve will shift from SRAS0 to _____, and the price level will be at _____.

Accepted Answer

A)  SRAS1; P0 
B)  SRAS1; P1 
C)  SRAS2; P1 
D)  SRAS2; P2 
A)  SRAS1; P0 
B)  SRAS1; P1 
C)  SRAS2; P1 
D)  SRAS2; P2

Question 19

Which event will shift the aggregate demand curve to the right?

Accepted Answer

A)  a decrease in exports 
B)  an increase in imports 
C)  a rise in the interest rate 
D)  a new government program implemented to eliminate poverty 
A)  a decrease in exports 
B)  an increase in imports 
C)  a rise in the interest rate 
D)  a new government program implemented to eliminate poverty

Question 20

The short-run aggregate supply curve

Accepted Answer

A)  is vertical because the economy is at full capacity. 
B)  is upward sloping because some costs are slow to rise as output expands. 
C)  is horizontal because input prices do not rise as output rises. 
D)  cannot be generalized because each economy is unique. 
A)  is vertical because the economy is at full capacity. 
B)  is upward sloping because some costs are slow to rise as output expands. 
C)  is horizontal because input prices do not rise as output rises. 
D)  cannot be generalized because each economy is unique.

Suppose a booming stock market encourages consumption spending to rise dramatically. What would be the MOST likely short-run impact?

A rise in real GDP is associated with increased employment.

Which of these will NOT shift the aggregate supply curve to the left?

According to the textbook, what brought the United States out of the Great Depression?

(Figure: Shifting SRAS and AD) What economic event is represented if full-employment GDP occurs at point a?

Aggregate supply is the

The collapse of housing prices in 2006-2011 caused aggregate demand to fall when homeowners increased their savings to offset the drop in the value of their homes.

Demand-pull inflation scenarios took place in the

How do changes in inflation expectations impact the short-run aggregate supply curve and the long-run aggregate supply curve?

A vertical aggregate supply curve represents full employment in the long run.

Which item is NOT a determinant of aggregate demand?

(Figure: Determining Aggregate Equilibrium Levels) Equilibrium output is _ units, and the equilibrium price level is _.

In the long run, attempts to expand beyond an economy's natural rate of unemployment tend to result in

If a pill is discovered that allows people to work twice as fast as they would ordinarily work, then the aggregate supply curve will

A falling aggregate price level _ demand for a country's exports and therefore _ output demanded.

The long-run aggregate supply curve is positively sloped.

(Figure: Determining SRAS Shifts) If the government raises taxes or increases regulations, the short-run aggregate supply curve will shift from SRAS₀ to _, and the price level will be at _.

Which event will shift the aggregate demand curve to the right?

The short-run aggregate supply curve

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

Exam 9: Aggregate Demand and Supply

Suppose a booming stock market encourages consumption spending to rise dramatically. What would be the MOST likely short-run impact?

A rise in real GDP is associated with increased employment.

Which of these will NOT shift the aggregate supply curve to the left?

According to the textbook, what brought the United States out of the Great Depression?

(Figure: Shifting SRAS and AD) What economic event is represented if full-employment GDP occurs at point a?

Aggregate supply is the

The collapse of housing prices in 2006-2011 caused aggregate demand to fall when homeowners increased their savings to offset the drop in the value of their homes.

Demand-pull inflation scenarios took place in the

How do changes in inflation expectations impact the short-run aggregate supply curve and the long-run aggregate supply curve?

A vertical aggregate supply curve represents full employment in the long run.

Which item is NOT a determinant of aggregate demand?

(Figure: Determining Aggregate Equilibrium Levels) Equilibrium output is _____ units, and the equilibrium price level is _____.

In the long run, attempts to expand beyond an economy's natural rate of unemployment tend to result in

If a pill is discovered that allows people to work twice as fast as they would ordinarily work, then the aggregate supply curve will

A falling aggregate price level _____ demand for a country's exports and therefore _____ output demanded.

The long-run aggregate supply curve is positively sloped.

(Figure: Determining SRAS Shifts) If the government raises taxes or increases regulations, the short-run aggregate supply curve will shift from SRAS0 to _____, and the price level will be at _____.

Which event will shift the aggregate demand curve to the right?

The short-run aggregate supply curve

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

(Figure: Determining Aggregate Equilibrium Levels) Equilibrium output is _ units, and the equilibrium price level is _.

A falling aggregate price level _ demand for a country's exports and therefore _ output demanded.

(Figure: Determining SRAS Shifts) If the government raises taxes or increases regulations, the short-run aggregate supply curve will shift from SRAS₀ to _, and the price level will be at _.