Question 1

An increase in the long-run aggregate supply curve shifts

Accepted Answer

A) both LRAS and AD to the right. 
B) both LRAS and SRAS to the right. 
C) both LRAS and AD to the left. 
D) only LRAS to the right. 
A) both LRAS and AD to the right. 
B) both LRAS and SRAS to the right. 
C) both LRAS and AD to the left. 
D) only LRAS to the right.

Question 2

Figure 10-18
  
-As shown in Figure 10-18,and assuming the aggregate demand curve shifts from AD₁ to AD₂,the full-employment level of real GDP is

Accepted Answer

A) $10 billion. 
B) $4 billion. 
C) $100 billion. 
D) unable to be determined. 
A) $10 billion. 
B) $4 billion. 
C) $100 billion. 
D) unable to be determined.

Question 3

Under which of the following conditions will a change in government purchases have the greatest effect on the economy in the short run?

Accepted Answer

A) The aggregate demand curve is relatively flat. 
B) The aggregate demand curve is relatively steep. 
C) The short-run aggregate supply curve is relatively flat. 
D) The aggregate demand curve is vertical. 
E) The short-run aggregate supply curve is vertical. 
A) The aggregate demand curve is relatively flat. 
B) The aggregate demand curve is relatively steep. 
C) The short-run aggregate supply curve is relatively flat. 
D) The aggregate demand curve is vertical. 
E) The short-run aggregate supply curve is vertical.

Question 4

Which one of the following factors will most likely cause an increase in aggregate demand?

Accepted Answer

A) an increase in the expected inflation rate 
B) an increase in the real interest rate 
C) a decrease in net exports due to falling incomes abroad 
D) a technological development that decreases the cost of producing computer chips 
A) an increase in the expected inflation rate 
B) an increase in the real interest rate 
C) a decrease in net exports due to falling incomes abroad 
D) a technological development that decreases the cost of producing computer chips

Question 5

Which of the following contributed to the crisis of 2008?

Accepted Answer

A) a doubling of the price of imported oil during 2007-2008 
B) a sharp increase in the price of housing during 2008 
C) inclement weather in 2008 
D) falling resource prices and a reduction in the cost of production 
A) a doubling of the price of imported oil during 2007-2008 
B) a sharp increase in the price of housing during 2008 
C) inclement weather in 2008 
D) falling resource prices and a reduction in the cost of production

Question 6

Within the AD/AS model,which one of the following adjustments will cause the economy to return to its long-run capacity when output is temporarily greater than the economy's long-run potential?

Accepted Answer

A) Lower wage rates and resource prices reduce short-run aggregate supply. 
B) Lower interest rates increase aggregate demand and,thereby,stimulate output. 
C) Higher wage rates and resource prices reduce short-run aggregate supply. 
D) A decrease in prices reduces aggregate demand. 
A) Lower wage rates and resource prices reduce short-run aggregate supply. 
B) Lower interest rates increase aggregate demand and,thereby,stimulate output. 
C) Higher wage rates and resource prices reduce short-run aggregate supply. 
D) A decrease in prices reduces aggregate demand.

Question 7

Which of the following will most likely occur in the United States as the result of an unexpected rapid growth in real income in Japan and Europe?

Accepted Answer

A) a short-run increase in U.S.employment and output 
B) a short-run decrease in U.S.employment and output 
C) a short-run decline in prices in the United States 
D) a reduction in the natural rate of unemployment in the United States 
A) a short-run increase in U.S.employment and output 
B) a short-run decrease in U.S.employment and output 
C) a short-run decline in prices in the United States 
D) a reduction in the natural rate of unemployment in the United States

Question 8

Figure 10-18
  
-Given the shift of the aggregate demand curve from AD₁ to AD₂ in Figure 10-18,the real GDP and price level (CPI)in long-run equilibrium will be

Accepted Answer

A) $10 billion and 200. 
B) $4 billion and 150. 
C) $10 billion and 150. 
D) $10 billion and 100. 
A) $10 billion and 200. 
B) $4 billion and 150. 
C) $10 billion and 150. 
D) $10 billion and 100.

Question 9

Within the framework of the AD/AS model,in the long run,output

Accepted Answer

A) will exceed the economy's long-run capacity. 
B) will be less than the economy's long-run capacity. 
C) will converge toward the economy's long-run capacity. 
D) must equal approximately 95 percent of the economy's long-run capacity. 
A) will exceed the economy's long-run capacity. 
B) will be less than the economy's long-run capacity. 
C) will converge toward the economy's long-run capacity. 
D) must equal approximately 95 percent of the economy's long-run capacity.

Question 10

Which of the following is most likely to throw an economy into a recession?

Accepted Answer

A) a reduction in the real interest rate 
B) an unanticipated increase in short-run aggregate supply 
C) an unanticipated increase in aggregate demand 
D) an unanticipated reduction in aggregate demand 
A) a reduction in the real interest rate 
B) an unanticipated increase in short-run aggregate supply 
C) an unanticipated increase in aggregate demand 
D) an unanticipated reduction in aggregate demand

Question 11

An economic contraction caused by a shift in aggregate demand causes prices to

Accepted Answer

A) rise in the short run,and rise even more in the long run. 
B) rise in the short run,and fall back to their original level in the long run. 
C) fall in the short run,and fall even more in the long run. 
D) fall in the short run,and rise back to their original level in the long run. 
A) rise in the short run,and rise even more in the long run. 
B) rise in the short run,and fall back to their original level in the long run. 
C) fall in the short run,and fall even more in the long run. 
D) fall in the short run,and rise back to their original level in the long run.

Question 12

Figure 10-18
  
-Beginning in Figure 10-18 from long-run equilibrium at point E₁,the aggregate demand curve shifts to AD₂.The economy's path to a new long-run equilibrium is represented by a movement from

Accepted Answer

A) E₃ to E₁ to E₂. 
B) E₁ to E₃ to E₂. 
C) E₂ to E₁ to E₂. 
D) E₁ to E₂ to E₃. 
A) E₃ to E₁ to E₂. 
B) E₁ to E₃ to E₂. 
C) E₂ to E₁ to E₂. 
D) E₁ to E₂ to E₃.

Question 13

If a reduction in stock prices reduces the real wealth of Americans,the

Accepted Answer

A) aggregate demand curve will shift to the left. 
B) long-run aggregate supply will shift to the left. 
C) general price level will increase. 
D) aggregate demand curve will shift to the right. 
A) aggregate demand curve will shift to the left. 
B) long-run aggregate supply will shift to the left. 
C) general price level will increase. 
D) aggregate demand curve will shift to the right.

Question 14

Use the figure below to answer the following question(s).
Figure 10-2
  
-At which point in Figure 10-2 is the economy at long-run equilibrium?

Accepted Answer

A) J 
B) F 
C) G 
D) H 
A) J 
B) F 
C) G 
D) H

Question 15

Use the figure below to answer the following question(s).
Figure 10-17
  
-Suppose an economy is currently operating at output Y₁ associated with AD₁ and SRAS₁,shown in Figure 10-17.Initially,the output of this economy is

Accepted Answer

A) above its potential,and the rate of unemployment is greater than the natural rate. 
B) below its potential,and the rate of unemployment is greater than the natural rate. 
C) above its potential,and the rate of unemployment is less than the natural rate. 
D) below its potential,and the rate of unemployment is less than the natural rate. 
A) above its potential,and the rate of unemployment is greater than the natural rate. 
B) below its potential,and the rate of unemployment is greater than the natural rate. 
C) above its potential,and the rate of unemployment is less than the natural rate. 
D) below its potential,and the rate of unemployment is less than the natural rate.

Question 16

Within the framework of the AD/AS model,if consumers and investors become more pessimistic about the future direction of the economy,this will lead to a(n)

Accepted Answer

A) increase in aggregate demand. 
B) decrease in aggregate demand. 
C) increase in long-run aggregate supply (LRAS shifts to the right). 
D) reduction in the natural rate of unemployment. 
A) increase in aggregate demand. 
B) decrease in aggregate demand. 
C) increase in long-run aggregate supply (LRAS shifts to the right). 
D) reduction in the natural rate of unemployment.

Question 17

Which of the following would be most likely to cause an increase in current aggregate demand in the United States?

Accepted Answer

A) increased fear that the U.S.economy was going into a recession 
B) an increase in the real interest rate 
C) sharp increase in the value of stocks owned by Americans 
D) a recession in Canada,Mexico,and Western Europe 
A) increased fear that the U.S.economy was going into a recession 
B) an increase in the real interest rate 
C) sharp increase in the value of stocks owned by Americans 
D) a recession in Canada,Mexico,and Western Europe

Question 18

A rise in the price of oil would be most likely to cause which of the following in the United States?

Accepted Answer

A) an economic boom 
B) an economic slowdown or recession 
C) a decrease in the general level of prices 
D) an increase in aggregate demand 
A) an economic boom 
B) an economic slowdown or recession 
C) a decrease in the general level of prices 
D) an increase in aggregate demand

Question 19

Use the figure below to answer the following question(s).
Figure 10-10
  
-Figure 10-10 indicates the output of the economy,y₁,is

Accepted Answer

A) less than the economy's long-run capacity. 
B) equal to the economy's long-run capacity. 
C) greater than the economy's long-run capacity. 
D) unattainable,even in the short run. 
A) less than the economy's long-run capacity. 
B) equal to the economy's long-run capacity. 
C) greater than the economy's long-run capacity. 
D) unattainable,even in the short run.

Question 20

Which of the following shifts short-run,but not long-run aggregate supply to the right?

Accepted Answer

A) a decrease in the actual rate of inflation 
B) a decrease in the expected rate of inflation 
C) a decrease in the capital stock 
D) a drought in the Midwest agricultural areas. 
A) a decrease in the actual rate of inflation 
B) a decrease in the expected rate of inflation 
C) a decrease in the capital stock 
D) a drought in the Midwest agricultural areas.

Exam 10: Dynamic Change, economic Fluctuations, and the Ad-As Model

An increase in the long-run aggregate supply curve shifts

Figure 10-18 -As shown in Figure 10-18,and assuming the aggregate demand curve shifts from AD₁ to AD₂,the full-employment level of real GDP is

Under which of the following conditions will a change in government purchases have the greatest effect on the economy in the short run?

Which one of the following factors will most likely cause an increase in aggregate demand?

Which of the following contributed to the crisis of 2008?

Within the AD/AS model,which one of the following adjustments will cause the economy to return to its long-run capacity when output is temporarily greater than the economy's long-run potential?

Which of the following will most likely occur in the United States as the result of an unexpected rapid growth in real income in Japan and Europe?

Figure 10-18 -Given the shift of the aggregate demand curve from AD₁ to AD₂ in Figure 10-18,the real GDP and price level (CPI)in long-run equilibrium will be

Within the framework of the AD/AS model,in the long run,output

Which of the following is most likely to throw an economy into a recession?

An economic contraction caused by a shift in aggregate demand causes prices to

Figure 10-18 -Beginning in Figure 10-18 from long-run equilibrium at point E₁,the aggregate demand curve shifts to AD₂.The economy's path to a new long-run equilibrium is represented by a movement from

If a reduction in stock prices reduces the real wealth of Americans,the

Use the figure below to answer the following question(s). Figure 10-2 -At which point in Figure 10-2 is the economy at long-run equilibrium?

Use the figure below to answer the following question(s). Figure 10-17 -Suppose an economy is currently operating at output Y₁ associated with AD₁ and SRAS₁,shown in Figure 10-17.Initially,the output of this economy is

Within the framework of the AD/AS model,if consumers and investors become more pessimistic about the future direction of the economy,this will lead to a(n)

Which of the following would be most likely to cause an increase in current aggregate demand in the United States?

A rise in the price of oil would be most likely to cause which of the following in the United States?

Use the figure below to answer the following question(s). Figure 10-10 -Figure 10-10 indicates the output of the economy,y₁,is

Which of the following shifts short-run,but not long-run aggregate supply to the right?

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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