Question 1

The long-run aggregate supply curve represents:

Accepted Answer

A)  potential output in the economy. 
B)  the level of output possible if the economy is operating at full capacity. 
C)  a production function for the entire economy. 
D)  All of these are true. 
A)  potential output in the economy. 
B)  the level of output possible if the economy is operating at full capacity. 
C)  a production function for the entire economy. 
D)  All of these are true. D

Question 2

In the long run, aggregate supply:

Accepted Answer

A)  is dictated by the fixed costs of inputs. 
B)  is fixed. 
C)  is determined by the prices of final goods and services. 
D)  steadily increases. 
A)  is dictated by the fixed costs of inputs. 
B)  is fixed. 
C)  is determined by the prices of final goods and services. 
D)  steadily increases. B

Question 3

Widespread adoption of mobile phones over the last 20 years has caused the _______ aggregate supply curve to _______.

Accepted Answer

A)  long-run; shift to the right 
B)  long-run; shift to the left 
C)  short-run; shift to the left 
D)  long-run; remain fixed 
A)  long-run; shift to the right 
B)  long-run; shift to the left 
C)  short-run; shift to the left 
D)  long-run; remain fixed A

Question 4

Consumption spending is _______ the overall price level.

Accepted Answer

A)  negatively related to 
B)  positively related to 
C)  equal to 
D)  not correlated with 
A)  negatively related to 
B)  positively related to 
C)  equal to 
D)  not correlated with

Question 5

A rise in the overall price level means that:

Accepted Answer

A)  a given number of dollars will buy fewer real goods and services. 
B)  output has decreased. 
C)  the cost of living has gone down. 
D)  None of these are true. 
A)  a given number of dollars will buy fewer real goods and services. 
B)  output has decreased. 
C)  the cost of living has gone down. 
D)  None of these are true.

Question 6

Sticky wages occur because:

Accepted Answer

A)  the government intervenes in the labor market. 
B)  the market for labor is competitive. 
C)  some wages can only be changed at the end of contracts, as opposed to final good prices, which can change anytime. 
D)  All of these are true. 
A)  the government intervenes in the labor market. 
B)  the market for labor is competitive. 
C)  some wages can only be changed at the end of contracts, as opposed to final good prices, which can change anytime. 
D)  All of these are true.

Question 7

Suppose the BLS announces that price levels throughout the economy have increased. What response would we expect to see in the AD/AS model?

Accepted Answer

A)  The long-run aggregate supply curve would shift to the left. 
B)  The aggregate demand curve would shift to the left. 
C)  The short-run aggregate supply curve would shift to the left. 
D)  None of these are true. 
A)  The long-run aggregate supply curve would shift to the left. 
B)  The aggregate demand curve would shift to the left. 
C)  The short-run aggregate supply curve would shift to the left. 
D)  None of these are true.

Question 8

Government spending tends to:

Accepted Answer

A)  increase when the price level rises. 
B)  increase when the price level falls. 
C)  be unaffected by changes in the price level. 
D)  decrease when the price level falls. 
A)  increase when the price level rises. 
B)  increase when the price level falls. 
C)  be unaffected by changes in the price level. 
D)  decrease when the price level falls.

Question 9

The long-run aggregate supply curve would shift to the right if:

Accepted Answer

A)  technology became more advanced. 
B)  faster 5G mobile technology was widely adopted. 
C)  the growth rate of the labor force increased. 
D)  All of these would shift the long-run aggregate supply curve to the right. 
A)  technology became more advanced. 
B)  faster 5G mobile technology was widely adopted. 
C)  the growth rate of the labor force increased. 
D)  All of these would shift the long-run aggregate supply curve to the right.

Question 10

Higher interest rates:

Accepted Answer

A)  make it more expensive to borrow. 
B)  make it less expensive to borrow. 
C)  make it easier to get a loan. 
D)  do not change the cost of getting a loan. 
A)  make it more expensive to borrow. 
B)  make it less expensive to borrow. 
C)  make it easier to get a loan. 
D)  do not change the cost of getting a loan.

Question 11

Which of the following would likely cause the aggregate demand curve to shift to the right?

Accepted Answer

A)  Increased income taxes 
B)  Decreased corporate income taxes 
C)  Decreased consumer confidence 
D)  Decreased government spending 
A)  Increased income taxes 
B)  Decreased corporate income taxes 
C)  Decreased consumer confidence 
D)  Decreased government spending

Question 12

The wealth effect explains the _______ relationship that exists between consumer spending and overall _______.

Accepted Answer

A)  negative; price level 
B)  positive; price level 
C)  negative; asset valuation 
D)  positive; asset valuation 
A)  negative; price level 
B)  positive; price level 
C)  negative; asset valuation 
D)  positive; asset valuation

Question 13

If the government does not react to a recession:

Accepted Answer

A)  the economy will fail to return to its long-run equilibrium. 
B)  the economy will recover, but much more slowly. 
C)  voters and consumers are likely to be happy with less government interference. 
D)  the downturn will spread to other countries. 
A)  the economy will fail to return to its long-run equilibrium. 
B)  the economy will recover, but much more slowly. 
C)  voters and consumers are likely to be happy with less government interference. 
D)  the downturn will spread to other countries.

Question 14

Which of the following statements is true about the aggregate demand curve?

Accepted Answer

A)  It shows the relationship between the overall price level and the level of total demand. 
B)  It maps to the price level on the horizontal axis and output on the vertical axis. 
C)  It is upward-sloping, unlike the individual demand curve. 
D)  It shows the relationship between the price of goods and services and the level of total demand. 
A)  It shows the relationship between the overall price level and the level of total demand. 
B)  It maps to the price level on the horizontal axis and output on the vertical axis. 
C)  It is upward-sloping, unlike the individual demand curve. 
D)  It shows the relationship between the price of goods and services and the level of total demand.

Question 15

A decrease in a nation's level of capital would cause the _______ aggregate supply curve to shift to the _______.

Accepted Answer

A)  long-run; right 
B)  long-run; left 
C)  short-run; right 
D)  None of these shifts would occur. 
A)  long-run; right 
B)  long-run; left 
C)  short-run; right 
D)  None of these shifts would occur.

Question 16

Which of the following is a decision a firm would make in the short run?

Accepted Answer

A)  How much to pay in rent 
B)  How many employees to hire 
C)  How much to pay employees 
D)  How much to produce 
A)  How much to pay in rent 
B)  How many employees to hire 
C)  How much to pay employees 
D)  How much to produce

Question 17

The U.S. government cut the top corporate income tax rate from 35 percent to 21 percent through the 2017 Tax Cuts and Jobs Act. This legislation:

Accepted Answer

A)  prompted a downward movement along the aggregate demand curve. 
B)  shifted the aggregate demand curve to the right. 
C)  shifted the aggregate demand curve to the left. 
D)  prompted an upward movement along the aggregate demand curve. 
A)  prompted a downward movement along the aggregate demand curve. 
B)  shifted the aggregate demand curve to the right. 
C)  shifted the aggregate demand curve to the left. 
D)  prompted an upward movement along the aggregate demand curve.

Question 18

Net exports is measured as:

Accepted Answer

A)  exports minus imports. 
B)  imports minus exports. 
C)  imports divided by exports. 
D)  imports plus exports. 
A)  exports minus imports. 
B)  imports minus exports. 
C)  imports divided by exports. 
D)  imports plus exports.

Question 19

The government can boost the economy out of a recession by:

Accepted Answer

A)  increasing government spending. 
B)  announcing that the public should save their money. 
C)  setting price ceilings on most goods to help people afford them. 
D)  None of these actions can boost an economy out of a recession. 
A)  increasing government spending. 
B)  announcing that the public should save their money. 
C)  setting price ceilings on most goods to help people afford them. 
D)  None of these actions can boost an economy out of a recession.

Question 20

Stagflation is difficult to recover from because:

Accepted Answer

A)  wages are sticky downward. 
B)  input prices increase with output prices. 
C)  fewer workers will want to join the labor force. 
D)  prices tend to fall more quickly than they rise. 
A)  wages are sticky downward. 
B)  input prices increase with output prices. 
C)  fewer workers will want to join the labor force. 
D)  prices tend to fall more quickly than they rise.

The long-run aggregate supply curve represents:

In the long run, aggregate supply:

Widespread adoption of mobile phones over the last 20 years has caused the _ aggregate supply curve to _.

Consumption spending is _______ the overall price level.

A rise in the overall price level means that:

Sticky wages occur because:

Suppose the BLS announces that price levels throughout the economy have increased. What response would we expect to see in the AD/AS model?

Government spending tends to:

The long-run aggregate supply curve would shift to the right if:

Higher interest rates:

Which of the following would likely cause the aggregate demand curve to shift to the right?

The wealth effect explains the _ relationship that exists between consumer spending and overall _.

If the government does not react to a recession:

Which of the following statements is true about the aggregate demand curve?

A decrease in a nation's level of capital would cause the _ aggregate supply curve to shift to the _.

Which of the following is a decision a firm would make in the short run?

The U.S. government cut the top corporate income tax rate from 35 percent to 21 percent through the 2017 Tax Cuts and Jobs Act. This legislation:

Net exports is measured as:

The government can boost the economy out of a recession by:

Stagflation is difficult to recover from because:

Economicsand Life

Specializationand Exchange

Markets

Elasticity

Efficiency

Governmentintervention

Measuringgdp

Thecost of Living

Unemploymentand the Labor Market

Economicgrowth

Aggregateexpenditures

Fiscalpolicy

Thebasics of Finance

Moneyand the Monetary System

Inflation

Financialcrisis

Open-Marketmacroeconomics

Developmenteconomics

Filters

Exam 12: Aggregatedemand and Aggregate Supply

The long-run aggregate supply curve represents:

In the long run, aggregate supply:

Widespread adoption of mobile phones over the last 20 years has caused the _______ aggregate supply curve to _______.

Consumption spending is _______ the overall price level.

A rise in the overall price level means that:

Sticky wages occur because:

Suppose the BLS announces that price levels throughout the economy have increased. What response would we expect to see in the AD/AS model?

Government spending tends to:

The long-run aggregate supply curve would shift to the right if:

Higher interest rates:

Which of the following would likely cause the aggregate demand curve to shift to the right?

The wealth effect explains the _______ relationship that exists between consumer spending and overall _______.

If the government does not react to a recession:

Which of the following statements is true about the aggregate demand curve?

A decrease in a nation's level of capital would cause the _______ aggregate supply curve to shift to the _______.

Which of the following is a decision a firm would make in the short run?

The U.S. government cut the top corporate income tax rate from 35 percent to 21 percent through the 2017 Tax Cuts and Jobs Act. This legislation:

Net exports is measured as:

The government can boost the economy out of a recession by:

Stagflation is difficult to recover from because:

Economicsand Life

Specializationand Exchange

Markets

Elasticity

Efficiency

Governmentintervention

Measuringgdp

Thecost of Living

Unemploymentand the Labor Market

Economicgrowth

Aggregateexpenditures

Fiscalpolicy

Thebasics of Finance

Moneyand the Monetary System

Inflation

Financialcrisis

Open-Marketmacroeconomics

Developmenteconomics

Filters

Widespread adoption of mobile phones over the last 20 years has caused the _ aggregate supply curve to _.

The wealth effect explains the _ relationship that exists between consumer spending and overall _.

A decrease in a nation's level of capital would cause the _ aggregate supply curve to shift to the _.