Question 1

In the aggregate demand/aggregate supply model,an economy operating below its long-run potential capacity will experience

Accepted Answer

A) falling real wages and resource prices that will increase SRAS,moving the economy back toward full employment. 
B) rising interest rates that will increase SRAS,moving the economy back toward full employment. 
C) inflation that will stimulate additional spending and thereby restore full employment. 
D) a prolonged economic depression unless consumer optimism is increased. 
A) falling real wages and resource prices that will increase SRAS,moving the economy back toward full employment. 
B) rising interest rates that will increase SRAS,moving the economy back toward full employment. 
C) inflation that will stimulate additional spending and thereby restore full employment. 
D) a prolonged economic depression unless consumer optimism is increased.

Question 2

Use the figure below to answer the following question(s).
Figure 10-9
  
-Currently,the economy depicted in Figure 10-9 is in

Accepted Answer

A) long-run equilibrium at point b. 
B) short-run equilibrium at point c. 
C) long-run equilibrium at point a. 
D) short-run equilibrium at point a. 
A) long-run equilibrium at point b. 
B) short-run equilibrium at point c. 
C) long-run equilibrium at point a. 
D) short-run equilibrium at point a.

Question 3

A supply shock is a surprise occurrence that

Accepted Answer

A) shifts the long-run aggregate supply curve to the right. 
B) either increases or decreases short-run aggregate supply and output. 
C) temporarily increases aggregate demand. 
D) temporarily reduces aggregate demand. 
A) shifts the long-run aggregate supply curve to the right. 
B) either increases or decreases short-run aggregate supply and output. 
C) temporarily increases aggregate demand. 
D) temporarily reduces aggregate demand.

Question 4

A currency appreciation will be most likely to

Accepted Answer

A) reduce net exports and therefore increase aggregate demand. 
B) raise net exports and therefore decrease aggregate demand. 
C) reduce net exports and therefore decrease aggregate demand. 
D) raise net exports and therefore increase aggregate demand. 
A) reduce net exports and therefore increase aggregate demand. 
B) raise net exports and therefore decrease aggregate demand. 
C) reduce net exports and therefore decrease aggregate demand. 
D) raise net exports and therefore increase aggregate demand.

Question 5

Which of the following will most likely cause an increase in the long-run aggregate supply curve?

Accepted Answer

A) a reduction in the general level of prices 
B) an increase in the general level of prices 
C) an improvement in technology that substantially reduces the cost of generating energy 
D) an increase in taxes that makes it more expensive for Americans to import crude oil 
A) a reduction in the general level of prices 
B) an increase in the general level of prices 
C) an improvement in technology that substantially reduces the cost of generating energy 
D) an increase in taxes that makes it more expensive for Americans to import crude oil

Question 6

In the aggregate demand/aggregate supply model,when the output of an economy is less than its long-run potential,the economy will experience

Accepted Answer

A) declining real wages and interest rates that will stimulate employment and real output. 
B) rising interest rates that will stimulate aggregate demand and restore full employment. 
C) a budget surplus that will stimulate demand and,thereby,help restore full employment. 
D) rising real wages and real interest rates that will restore equilibrium at a higher price level. 
A) declining real wages and interest rates that will stimulate employment and real output. 
B) rising interest rates that will stimulate aggregate demand and restore full employment. 
C) a budget surplus that will stimulate demand and,thereby,help restore full employment. 
D) rising real wages and real interest rates that will restore equilibrium at a higher price level.

Question 7

Suppose the economy is in long-run equilibrium.In a short span of time,there is a large influx of skilled immigrants,a major new discovery of oil,and a major new technological advance in electricity production.In the short run,we would expect

Accepted Answer

A) the price level to rise and real GDP to fall. 
B) the price level to fall and real GDP to rise. 
C) the price level and real GDP both to stay the same. 
D) All of the above are possible. 
A) the price level to rise and real GDP to fall. 
B) the price level to fall and real GDP to rise. 
C) the price level and real GDP both to stay the same. 
D) All of the above are possible.

Question 8

If the exchange rate value of the dollar depreciates relative to other currencies,we would expect

Accepted Answer

A) U.S.exports to decrease. 
B) U.S.exports to increase. 
C) U.S.imports to increase. 
D) aggregate demand in the United States to decrease. 
A) U.S.exports to decrease. 
B) U.S.exports to increase. 
C) U.S.imports to increase. 
D) aggregate demand in the United States to decrease.

Question 9

An improvement in technology would shift which of the following curve(s)?

Accepted Answer

A) aggregate demand and short-run aggregate supply 
B) only the short-run aggregate supply 
C) only the aggregate demand 
D) short-run and long-run aggregate supply 
A) aggregate demand and short-run aggregate supply 
B) only the short-run aggregate supply 
C) only the aggregate demand 
D) short-run and long-run aggregate supply

Question 10

Use the figure below to answer the following question(s).
Figure 10-9
  
-The output of the economy depicted in Figure 10-9 is

Accepted Answer

A) equal to the full-employment output level. 
B) less than the full-employment output level. 
C) greater than the full-employment output level. 
D) sustainable in the long run. 
A) equal to the full-employment output level. 
B) less than the full-employment output level. 
C) greater than the full-employment output level. 
D) sustainable in the long run.

Question 11

If there is an unanticipated increase in aggregate demand,which of the following is most likely to occur?

Accepted Answer

A) a reduction in the price level 
B) an increase in the rate of unemployment 
C) an increase in employment 
D) an expansion in the federal budget deficit 
A) a reduction in the price level 
B) an increase in the rate of unemployment 
C) an increase in employment 
D) an expansion in the federal budget deficit

Question 12

If the general level of prices is higher than business decision makers anticipated when they entered into long-term contracts for raw materials and other resources,which of the following is most likely to occur?

Accepted Answer

A) a recession 
B) output less than the economy's long-run potential 
C) a sharp reduction in imports 
D) an unemployment rate that is less than the economy's natural rate of unemployment 
A) a recession 
B) output less than the economy's long-run potential 
C) a sharp reduction in imports 
D) an unemployment rate that is less than the economy's natural rate of unemployment

Question 13

Which of the following will most likely be an unanticipated economic change?

Accepted Answer

A) higher oil prices resulting from a revolution in an oil-exporting country 
B) this year's increase in the labor force 
C) a constant increase in the general level of prices over a lengthy period of time 
D) an increase in prime-age workers as a proportion of the labor force 
A) higher oil prices resulting from a revolution in an oil-exporting country 
B) this year's increase in the labor force 
C) a constant increase in the general level of prices over a lengthy period of time 
D) an increase in prime-age workers as a proportion of the labor force

Question 14

If an economy is growing,but experiences no inflation,this means

Accepted Answer

A) aggregate demand increased,but aggregate supply did not. 
B) aggregate supply increased,but aggregate demand did not. 
C) aggregate demand and aggregate supply increased by the same amount. 
D) aggregate demand and aggregate supply decreased by the same amount. 
A) aggregate demand increased,but aggregate supply did not. 
B) aggregate supply increased,but aggregate demand did not. 
C) aggregate demand and aggregate supply increased by the same amount. 
D) aggregate demand and aggregate supply decreased by the same amount.

Question 15

In the short run,equilibrium output in the goods and services market may be either above or below the full-employment level,but in the long run,it

Accepted Answer

A) must be less than full-employment output. 
B) must be greater than full-employment output. 
C) will move to full-employment output. 
D) depends on aggregate demand,not just long-run aggregate supply. 
A) must be less than full-employment output. 
B) must be greater than full-employment output. 
C) will move to full-employment output. 
D) depends on aggregate demand,not just long-run aggregate supply.

Question 16

Since the end of World War II,the U.S.has almost always had rising prices and an upward trend in real GDP.To explain this

Accepted Answer

A) it is only necessary that long-run aggregate supply shifts right over time. 
B) it is only necessary that aggregate demand shifts right over time. 
C) both aggregate demand and long-run aggregate supply must be shifting right and aggregate demand must shift farther. 
D) None of the above cases would produce rising prices and growing real GDP over time. 
A) it is only necessary that long-run aggregate supply shifts right over time. 
B) it is only necessary that aggregate demand shifts right over time. 
C) both aggregate demand and long-run aggregate supply must be shifting right and aggregate demand must shift farther. 
D) None of the above cases would produce rising prices and growing real GDP over time.

Question 17

Figure 10-18
  
-Based on Figure 10-18,when the aggregate demand curve is in the position AD₁,the economy's position of long-run equilibrium corresponds to point

Accepted Answer

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

Question 18

Which of the following factors contributed to the 2008 economic recession in the United States?

Accepted Answer

A) Housing wealth fell causing consumers to become more pessimistic about the economy. 
B) The stock market plummeted causing the real wealth of Americans to decrease. 
C) As the recession spread to other countries,falling incomes abroad depressed aggregate demand in the United States even more. 
D) All of the above. 
A) Housing wealth fell causing consumers to become more pessimistic about the economy. 
B) The stock market plummeted causing the real wealth of Americans to decrease. 
C) As the recession spread to other countries,falling incomes abroad depressed aggregate demand in the United States even more. 
D) All of the above.

Question 19

With regard to the business cycle,most modern economists believe that

Accepted Answer

A) once a recession starts,market forces are incapable of preventing the economy from plunging deeper and deeper into a depression. 
B) market economies will experience lengthy periods of recession pretty much regardless of what policy makers do. 
C) the economy's self-corrective mechanism will quickly restore full employment regardless of the choices made by policy makers. 
D) lower real interest rates and reductions in real resource prices will help direct an economy out of recession. 
A) once a recession starts,market forces are incapable of preventing the economy from plunging deeper and deeper into a depression. 
B) market economies will experience lengthy periods of recession pretty much regardless of what policy makers do. 
C) the economy's self-corrective mechanism will quickly restore full employment regardless of the choices made by policy makers. 
D) lower real interest rates and reductions in real resource prices will help direct an economy out of recession.

Question 20

Use the figure below to answer the following question(s).
Figure 10-6
  
-Given the aggregate demand and aggregate supply curves for the economy depicted in Figure 10-6,the economy's current output and price level are

Accepted Answer

A) output Y₁ and price level P₂. 
B) output Y₂ and price level P₁. 
C) output Y₁ and price level P₃. 
D) output Y₂ and price level P₃. 
A) output Y₁ and price level P₂. 
B) output Y₂ and price level P₁. 
C) output Y₁ and price level P₃. 
D) output Y₂ and price level P₃.

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

In the aggregate demand/aggregate supply model,an economy operating below its long-run potential capacity will experience

Use the figure below to answer the following question(s). Figure 10-9 -Currently,the economy depicted in Figure 10-9 is in

A supply shock is a surprise occurrence that

A currency appreciation will be most likely to

Which of the following will most likely cause an increase in the long-run aggregate supply curve?

In the aggregate demand/aggregate supply model,when the output of an economy is less than its long-run potential,the economy will experience

Suppose the economy is in long-run equilibrium.In a short span of time,there is a large influx of skilled immigrants,a major new discovery of oil,and a major new technological advance in electricity production.In the short run,we would expect

If the exchange rate value of the dollar depreciates relative to other currencies,we would expect

An improvement in technology would shift which of the following curve(s)?

Use the figure below to answer the following question(s). Figure 10-9 -The output of the economy depicted in Figure 10-9 is

If there is an unanticipated increase in aggregate demand,which of the following is most likely to occur?

If the general level of prices is higher than business decision makers anticipated when they entered into long-term contracts for raw materials and other resources,which of the following is most likely to occur?

Which of the following will most likely be an unanticipated economic change?

If an economy is growing,but experiences no inflation,this means

In the short run,equilibrium output in the goods and services market may be either above or below the full-employment level,but in the long run,it

Since the end of World War II,the U.S.has almost always had rising prices and an upward trend in real GDP.To explain this

Figure 10-18 -Based on Figure 10-18,when the aggregate demand curve is in the position AD₁,the economy's position of long-run equilibrium corresponds to point

Which of the following factors contributed to the 2008 economic recession in the United States?

With regard to the business cycle,most modern economists believe that

Use the figure below to answer the following question(s). Figure 10-6 -Given the aggregate demand and aggregate supply curves for the economy depicted in Figure 10-6,the economy's current output and price level are

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

Filters