Question 1

What is stagflation? How would stagflation appear in the AD-AS model?

Accepted Answer

The answer of What is stagflation? How would stagflation appear...

Question 2

Which of the following changes will lead to an increase in both the price level and the quantity of output in an economy?

Accepted Answer

A) a rise in aggregate demand 
B) a rise in aggregate supply 
C) a fall in aggregate demand 
D) a fall in aggregate supply 
A) a rise in aggregate demand 
B) a rise in aggregate supply 
C) a fall in aggregate demand 
D) a fall in aggregate supply

Question 3

The relationship between the aggregate price level and aggregate output demanded gives the aggregate demand curve a _____ slope.

Accepted Answer

A) positive 
B) positive. 
C) vertical 
D) vertical. 
E) horizontal
F)horizontal.
G)negative.
H)negative 
A) positive 
B) positive. 
C) vertical 
D) vertical. 
E) horizontal
F)horizontal.
G)negative.
H)negative

Question 4

The point where the long-run aggregate supply curve intersects the horizontal axis is:

Accepted Answer

A) the point that reflects the economy's actual output 
B) the point that reflects the economy's actual output. 
C) the economy's potential output 
D) the economy's potential output. 
E) the level of real GDP the economy would produce if all prices were flexible and wages were fixed
F)the level of real GDP the economy would produce if all prices were flexible and wages were fixed.
G)impossible to attain
H)impossible to attain. 
A) the point that reflects the economy's actual output 
B) the point that reflects the economy's actual output. 
C) the economy's potential output 
D) the economy's potential output. 
E) the level of real GDP the economy would produce if all prices were flexible and wages were fixed
F)the level of real GDP the economy would produce if all prices were flexible and wages were fixed.
G)impossible to attain
H)impossible to attain.

Question 5

In 2019, cardamom prices in India fell by nearly 16%. How does this affect net exports and aggregate expenditure in India?

Accepted Answer

A) Exports rise, net exports rise, and aggregate expenditure rises. 
B) Exports rise, net exports fall, and aggregate expenditure falls. 
C) Exports fall, net exports fall, and aggregate expenditure falls. 
D) Exports fall, net exports rise, and aggregate expenditure rises. 
A) Exports rise, net exports rise, and aggregate expenditure rises. 
B) Exports rise, net exports fall, and aggregate expenditure falls. 
C) Exports fall, net exports fall, and aggregate expenditure falls. 
D) Exports fall, net exports rise, and aggregate expenditure rises.

Question 6

During the Great Depression, the U.S. economy moved _____ along its _____ curve.

Accepted Answer

A) rightward; aggregate demand 
B) rightward; aggregate demand. 
C) rightward; short-run aggregate supply. 
D) rightward; short-run aggregate supply 
E) leftward; aggregate demand.
F)leftward; aggregate demand
G)leftward; short-run aggregate supply.
H)leftward; short-run aggregate supply 
A) rightward; aggregate demand 
B) rightward; aggregate demand. 
C) rightward; short-run aggregate supply. 
D) rightward; short-run aggregate supply 
E) leftward; aggregate demand.
F)leftward; aggregate demand
G)leftward; short-run aggregate supply.
H)leftward; short-run aggregate supply

Question 7

(Figure: Shifts of the AD-AS Curves) Use Figure: Shifts of the AD-AS Curves. An increase in wages in the short run is illustrated by panel:

Accepted Answer

A) (a) 
B) (a). 
C) (b). 
D) (b) 
E) (c).
F)(c)
G)(d)
H)(d). 
A) (a) 
B) (a). 
C) (b). 
D) (b) 
E) (c).
F)(c)
G)(d)
H)(d).

Question 8

(Figure: Shifts of the AD-AS Curves) Use Figure: Shifts of the AD-AS Curves. A short-run decrease in investment spending is illustrated by panel:

Accepted Answer

A) (a) 
B) (a). 
C) (b). 
D) (b) 
E) (c).
F)(c)
G)(d)
H)(d). 
A) (a) 
B) (a). 
C) (b). 
D) (b) 
E) (c).
F)(c)
G)(d)
H)(d).

Question 9

Prices of rubber and steel (inputs in the production process) rise in the world markets. Ceteris paribus, which of the graphs shows the correct effect on the AD-AS framework in countries that import rubber and steel?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 10

The aggregate supply curve shows the relationship between the price level and the:

Accepted Answer

A) equilibrium GDP in the economy. 
B) total quantity of output that suppliers collectively produce. 
C) total quantity of output that buyers collectively plan to purchase. 
D) potential GDP in the economy. 
A) equilibrium GDP in the economy. 
B) total quantity of output that suppliers collectively produce. 
C) total quantity of output that buyers collectively plan to purchase. 
D) potential GDP in the economy.

Question 11

Which graph correctly depicts the very short-run aggregate supply curve?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 12

When the government raises government spending by $325 million, what is the final effect on GDP if the multiplier is 2?

Accepted Answer

The answer of When the government raises government spending by...

Question 13

When the government increases spending, a multiplier effect will:

Accepted Answer

A) cause a movement to the left along the same AD curve. 
B) cause a movement to the right along the same AD curve. 
C) shift the AD curve further to the left than the effect of the spending. 
D) shift the AD curve further to the right than the effect of the spending. 
A) cause a movement to the left along the same AD curve. 
B) cause a movement to the right along the same AD curve. 
C) shift the AD curve further to the left than the effect of the spending. 
D) shift the AD curve further to the right than the effect of the spending.

Question 14

The exchange rate effect is the:

Accepted Answer

A) inverse relationship between prices and quantity of output demanded. 
B) positive relationship between prices and quantity of output demanded. 
C) inverse relationship between real interest rates and net exports. 
D) positive relationship between real interest rates and net exports. 
A) inverse relationship between prices and quantity of output demanded. 
B) positive relationship between prices and quantity of output demanded. 
C) inverse relationship between real interest rates and net exports. 
D) positive relationship between real interest rates and net exports.

Question 15

You are an analyst preparing a forecast of the effects of macroeconomic changes in the economy. Which graph shows the correct effect on prices and GDP when the government engages in contractionary fiscal policy?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 16

In 2009, during the financial crisis, the government of Thailand introduced a stimulus package, including such measures as free education, irrigation projects, government sponsored training, and revamping of roads. Ceteris paribus, which of the graphs shows the correct effect of this stimulus package on the AD-AS framework in Thailand?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 17

The higher the GDP deflator in an economy, the:
(i) higher the purchasing power of the currency.
(ii) lower the real wealth in the economy.
(iii) higher the real wealth in an economy.
(iv) more expensive the country's exports.

Accepted Answer

A) (i) only 
B) (i), (ii), (iii), and (iv) 
C) (ii) and (iv) 
D) (i), (iii), and (iv) 
A) (i) only 
B) (i), (ii), (iii), and (iv) 
C) (ii) and (iv) 
D) (i), (iii), and (iv)

Question 18

Explain the international trade effect on net exports when prices fall in the economy.

Accepted Answer

The answer of Explain the international trade effect on net...

Question 19

When the Federal Reserve reduces interest rates lower than would be expected given its standard response to inflation, then this is evidence of:

Accepted Answer

A) an inflation-induced response. 
B) an output-induced response. 
C) a market-induced response. 
D) contractionary monetary policy. 
A) an inflation-induced response. 
B) an output-induced response. 
C) a market-induced response. 
D) contractionary monetary policy.

Question 20

Assuming that prices remain constant, suppose that consumer assets lose value. This will cause a:

Accepted Answer

A) shift of the aggregate demand curve to the left. 
B) shift of the aggregate demand curve to the left 
C) movement up along the aggregate demand curve 
D) movement up along the aggregate demand curve. 
E) shift to the right of the aggregate demand curv.
F)shift to the right of the aggregate demand curv 
G)movement down along the aggregate demand curve
H)movement down along the aggregate demand curve. 
A) shift of the aggregate demand curve to the left. 
B) shift of the aggregate demand curve to the left 
C) movement up along the aggregate demand curve 
D) movement up along the aggregate demand curve. 
E) shift to the right of the aggregate demand curv.
F)shift to the right of the aggregate demand curv 
G)movement down along the aggregate demand curve
H)movement down along the aggregate demand curve.

Exam 33: Aggregate Demand and Aggregate Supply

What is stagflation? How would stagflation appear in the AD-AS model?

Which of the following changes will lead to an increase in both the price level and the quantity of output in an economy?

The relationship between the aggregate price level and aggregate output demanded gives the aggregate demand curve a _____ slope.

The point where the long-run aggregate supply curve intersects the horizontal axis is:

In 2019, cardamom prices in India fell by nearly 16%. How does this affect net exports and aggregate expenditure in India?

During the Great Depression, the U.S. economy moved _____ along its _____ curve.

(Figure: Shifts of the AD-AS Curves) Use Figure: Shifts of the AD-AS Curves. An increase in wages in the short run is illustrated by panel:

(Figure: Shifts of the AD-AS Curves) Use Figure: Shifts of the AD-AS Curves. A short-run decrease in investment spending is illustrated by panel:

Prices of rubber and steel (inputs in the production process) rise in the world markets. Ceteris paribus, which of the graphs shows the correct effect on the AD-AS framework in countries that import rubber and steel?

The aggregate supply curve shows the relationship between the price level and the:

Which graph correctly depicts the very short-run aggregate supply curve?

When the government raises government spending by $325 million, what is the final effect on GDP if the multiplier is 2?

When the government increases spending, a multiplier effect will:

The exchange rate effect is the:

You are an analyst preparing a forecast of the effects of macroeconomic changes in the economy. Which graph shows the correct effect on prices and GDP when the government engages in contractionary fiscal policy?

The higher the GDP deflator in an economy, the: (i) higher the purchasing power of the currency. (ii) lower the real wealth in the economy. (iii) higher the real wealth in an economy. (iv) more expensive the country's exports.

Explain the international trade effect on net exports when prices fall in the economy.

When the Federal Reserve reduces interest rates lower than would be expected given its standard response to inflation, then this is evidence of:

Assuming that prices remain constant, suppose that consumer assets lose value. This will cause a:

The Core Principles of Economics

Demand: Thinking Like a Buyer

Supply: Thinking Like a Seller

Equilibrium: Where Supply Meets Demand

Elasticity: Measuring Responsiveness

When Governments Intervene in Markets

Welfare and Efficiency

Gains From Trade

International Trade

Externalities and Public Goods

Labor Demand and Supply

Wages, Workers, and Management

Inequality, Social Insurance, and Redistribution

Market Structure and Market Power

Entry, Exit, and Long-Run Profitability

Business Strategy

Sophisticated Pricing Strategies

Game Theory and Strategic Choices

Decisions Involving Uncertainty

Decisions With Private Information

Sizing up the Economy Using Gdp

Economic Growth

Unemployment

Inflation and Money

Consumption and Saving

Investment

The Financial Sector

International Finance and the Exchange Rate

Business Cycles

IS-MP Analysis: Interest Rates and Output

Phillips Curve

The Fed Model: Linking Interest Rates, Output, and Inflation

Monetary Policy

Government Spending, Taxes, and Fiscal Policy

Appendix: Aggregate Expenditure and the Multiplier

Filters

During the Great Depression, the U.S. economy moved _ along its _ curve.