Question 1

Use sticky wage theory to explain why an increase in the expected price level shifts the aggregate supply curve.

Accepted Answer

When people expect the price l

Question 2

Make a list of things that would shift the aggregate demand curve to the right.

Accepted Answer

Examples (and variations on examples) in

Question 3

Explain the short run and long run effects on output and prices of a recession overseas causing foreigners to buy fewer SA goods.Create a chart to demonstrate the effects.

Accepted Answer

When a recession overseas causes foreign

Question 4

Most economists believe that classical macroeconomic theory is a good description of the economy

Accepted Answer

A) in neither the short nor long run. 
B) in the short run and in the long run. 
C) in the short run, but not in the long run. 
D) in the long run, but not in the short run. 
A) in neither the short nor long run. 
B) in the short run and in the long run. 
C) in the short run, but not in the long run. 
D) in the long run, but not in the short run.

Question 5

Which of the following will cause stagflation?

Accepted Answer

A) An increase in the money supply (which shifts the economy's aggregate demand curve to the right). 
B) An increase in oil prices (which shifts the economy's aggregate supply curve to the left). 
C) A decrease in the money supply (which shifts the economy's aggregate demand curve to the right). 
D) Technical progress (which shifts the economy's aggregate supply curve to the right). 
A) An increase in the money supply (which shifts the economy's aggregate demand curve to the right). 
B) An increase in oil prices (which shifts the economy's aggregate supply curve to the left). 
C) A decrease in the money supply (which shifts the economy's aggregate demand curve to the right). 
D) Technical progress (which shifts the economy's aggregate supply curve to the right).

Question 6

A rise in price expectations that causes wages to rise causes the short run aggregate supply curve to shift to the left.

Accepted Answer

A) True 
 B)False

Question 7

The natural rate of output is the amount of real GDP produced when

Accepted Answer

A) the economy is at the natural rate of unemployment. 
B) the economy is at the natural rate of investment. 
C) the economy is at the natural rate of aggregate demand. 
D) there is no unemployment. 
A) the economy is at the natural rate of unemployment. 
B) the economy is at the natural rate of investment. 
C) the economy is at the natural rate of aggregate demand. 
D) there is no unemployment.

Question 8

Suppose the price level falls, but suppliers only notice that the price of their particular product has fallen.Thinking there has been a fall in the relative price of their product, they cut back on production.This is a demonstration of the

Accepted Answer

A) misperceptions theory of the short run aggregate supply curve. 
B) classical dichotomy theory of the short run aggregate supply curve. 
C) sticky price theory of the short run aggregate supply curve. 
D) sticky wage theory of the short run aggregate supply curve. 
A) misperceptions theory of the short run aggregate supply curve. 
B) classical dichotomy theory of the short run aggregate supply curve. 
C) sticky price theory of the short run aggregate supply curve. 
D) sticky wage theory of the short run aggregate supply curve.

Question 9

Economists refer to fluctuations in output as the "business cycle" because movements in output are regular and predictable.

Accepted Answer

A) True 
 B)False

Question 10

Figure 1
  
-Refer to the Figure above.Suppose the economy is operating in a recession such as point B.If policymakers allow the economy to adjust to the long run natural rate on its own, people will

Accepted Answer

A) reduce their price expectations and the short run aggregate supply will shift to the right. 
B) raise their price expectations and aggregate demand will shift to the left. 
C) raise their price expectations and the short run aggregate supply will shift to the left. 
D) reduce their price expectations and aggregate demand will shift to the right. 
A) reduce their price expectations and the short run aggregate supply will shift to the right. 
B) raise their price expectations and aggregate demand will shift to the left. 
C) raise their price expectations and the short run aggregate supply will shift to the left. 
D) reduce their price expectations and aggregate demand will shift to the right.

Question 11

When studying the short run, the assumption of money neutrality is

Accepted Answer

A) not appropriate. 
B) increasingly important. 
C) still relevant, but the classical dichotomy no longer holds. 
D) Both b and c are correct. 
A) not appropriate. 
B) increasingly important. 
C) still relevant, but the classical dichotomy no longer holds. 
D) Both b and c are correct.

Question 12

Explain the short run and long run effects on output and prices of technological improvements.Create a chart to demonstrate the effects.

Accepted Answer

When a technological improvement raises

Question 13

When we say that economic fluctuations are "irregular and unpredictable," we mean that

Accepted Answer

A) the relationship between output and unemployment is erratic and difficult to characterize. 
B) when one macroeconomic variable that measures income or spending is falling, other macroeconomic variables that measure income or spending are likely to be rising. 
C) recessions do not occur at regular intervals. 
D) All of the above are correct. 
A) the relationship between output and unemployment is erratic and difficult to characterize. 
B) when one macroeconomic variable that measures income or spending is falling, other macroeconomic variables that measure income or spending are likely to be rising. 
C) recessions do not occur at regular intervals. 
D) All of the above are correct.

Question 14

List and discuss three key facts about economic fluctuations.

Accepted Answer

Three key facts about economic fluctuati

Question 15

Explain how an increase in the price level changes interest rates.How does this change in interest rates lead to changes in investment and net exports?

Accepted Answer

When the price level increases, the purc

Question 16

If policy makers choose to try to move the economy out of a recession, they should use their policy tools to decrease aggregate demand.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not a determinant of long run aggregate supply?

Accepted Answer

A) The level of skills in the workforce. 
B) The price level. 
C) Technology. 
D) The quantity of capital. 
A) The level of skills in the workforce. 
B) The price level. 
C) Technology. 
D) The quantity of capital.

Question 18

Which of the following statements is true regarding the long run aggregate supply curve? The long run aggregate supply curve

Accepted Answer

A) is vertical, because an equal change in all prices and wages leaves output unaffected. 
B) is positively sloped, because price expectations and wages tend to be fixed in the long run. 
C) shifts right when the government raises the minimum wage. 
D) shifts left when the natural rate of unemployment falls. 
A) is vertical, because an equal change in all prices and wages leaves output unaffected. 
B) is positively sloped, because price expectations and wages tend to be fixed in the long run. 
C) shifts right when the government raises the minimum wage. 
D) shifts left when the natural rate of unemployment falls.

Question 19

Which of the following explains why production rises in most years?

Accepted Answer

A) Increases in the labour force. 
B) Increases in the capital stock. 
C) Advances in technological knowledge. 
D) All of the above are correct. 
A) Increases in the labour force. 
B) Increases in the capital stock. 
C) Advances in technological knowledge. 
D) All of the above are correct.

Question 20

Figure 1
  
-Refer to the Figure above.Suppose the economy is operating in a recession such as point B.If policymakers wished to move output to its long run natural rate, they should attempt to shift

Accepted Answer

A) aggregate demand to the left. 
B) short run aggregate supply to the left. 
C) aggregate demand to the right. 
D) short run aggregate supply to the right. 
A) aggregate demand to the left. 
B) short run aggregate supply to the left. 
C) aggregate demand to the right. 
D) short run aggregate supply to the right.

Use sticky wage theory to explain why an increase in the expected price level shifts the aggregate supply curve.

Make a list of things that would shift the aggregate demand curve to the right.

Explain the short run and long run effects on output and prices of a recession overseas causing foreigners to buy fewer SA goods.Create a chart to demonstrate the effects.

Most economists believe that classical macroeconomic theory is a good description of the economy

Which of the following will cause stagflation?

A rise in price expectations that causes wages to rise causes the short run aggregate supply curve to shift to the left.

The natural rate of output is the amount of real GDP produced when

Suppose the price level falls, but suppliers only notice that the price of their particular product has fallen.Thinking there has been a fall in the relative price of their product, they cut back on production.This is a demonstration of the

Economists refer to fluctuations in output as the "business cycle" because movements in output are regular and predictable.

Figure 1 -Refer to the Figure above.Suppose the economy is operating in a recession such as point B.If policymakers allow the economy to adjust to the long run natural rate on its own, people will

When studying the short run, the assumption of money neutrality is

Explain the short run and long run effects on output and prices of technological improvements.Create a chart to demonstrate the effects.

When we say that economic fluctuations are "irregular and unpredictable," we mean that

List and discuss three key facts about economic fluctuations.

Explain how an increase in the price level changes interest rates.How does this change in interest rates lead to changes in investment and net exports?

If policy makers choose to try to move the economy out of a recession, they should use their policy tools to decrease aggregate demand.

Which of the following is not a determinant of long run aggregate supply?

Which of the following statements is true regarding the long run aggregate supply curve? The long run aggregate supply curve

Which of the following explains why production rises in most years?

Figure 1 -Refer to the Figure above.Suppose the economy is operating in a recession such as point B.If policymakers wished to move output to its long run natural rate, they should attempt to shift

What Is Economics

Thinking Like an Economist

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade-Off Between Inflation and Unemployment

Supply Side Policies

The Financial Crisis and Sovereign Debt

Common Currency Areas and European Monetary Union

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Exam 15: Aggregate Demand and Aggregate Supply

Use sticky wage theory to explain why an increase in the expected price level shifts the aggregate supply curve.

Make a list of things that would shift the aggregate demand curve to the right.

Explain the short run and long run effects on output and prices of a recession overseas causing foreigners to buy fewer SA goods.Create a chart to demonstrate the effects.

Most economists believe that classical macroeconomic theory is a good description of the economy

Which of the following will cause stagflation?

A rise in price expectations that causes wages to rise causes the short run aggregate supply curve to shift to the left.

The natural rate of output is the amount of real GDP produced when

Suppose the price level falls, but suppliers only notice that the price of their particular product has fallen.Thinking there has been a fall in the relative price of their product, they cut back on production.This is a demonstration of the

Economists refer to fluctuations in output as the "business cycle" because movements in output are regular and predictable.

Figure 1 -Refer to the Figure above.Suppose the economy is operating in a recession such as point B.If policymakers allow the economy to adjust to the long run natural rate on its own, people will

When studying the short run, the assumption of money neutrality is

Explain the short run and long run effects on output and prices of technological improvements.Create a chart to demonstrate the effects.

When we say that economic fluctuations are "irregular and unpredictable," we mean that

List and discuss three key facts about economic fluctuations.

Explain how an increase in the price level changes interest rates.How does this change in interest rates lead to changes in investment and net exports?

If policy makers choose to try to move the economy out of a recession, they should use their policy tools to decrease aggregate demand.

Which of the following is not a determinant of long run aggregate supply?

Which of the following statements is true regarding the long run aggregate supply curve? The long run aggregate supply curve

Which of the following explains why production rises in most years?

Figure 1 -Refer to the Figure above.Suppose the economy is operating in a recession such as point B.If policymakers wished to move output to its long run natural rate, they should attempt to shift

What Is Economics

Thinking Like an Economist

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade-Off Between Inflation and Unemployment

Supply Side Policies

The Financial Crisis and Sovereign Debt

Common Currency Areas and European Monetary Union

Filters