Question 1

An increase in exports decreases aggregate demand.

Accepted Answer

A) True 
 B)False

Question 2

Using an aggregate demand graph,illustrate the impact of an increase in the growth rate of U.S.GDP relative to the growth rate of foreign GDP.

Accepted Answer

@#IMG-DLM& The increase in the growth rate of U.S.

Question 3

Figure 15-2
  
-Refer to Figure 15-2.Ceteris paribus,a decrease in the price level would be represented by a movement from

Accepted Answer

A) SRAS₁ to SRAS₂. 
B) SRAS₂ to SRAS₁. 
C) point A to point B. 
D) point B to point A. 
A) SRAS₁ to SRAS₂. 
B) SRAS₂ to SRAS₁. 
C) point A to point B. 
D) point B to point A.

Question 4

Figure 15-4
  
-Refer to Figure 15-4.Given the economy is at point A in year 1,what is the inflation rate between year 1 and year 2?

Accepted Answer

A) 0.9% 
B) 1.8% 
C) 2.7% 
D) 3.0% 
A) 0.9% 
B) 1.8% 
C) 2.7% 
D) 3.0%

Question 5

When the price of oil rises unexpectedly,the equilibrium price level ________ and the unemployment rate ________ in the short run.

Accepted Answer

A) rises; falls 
B) rises; rises 
C) falls; falls 
D) falls; rises 
A) rises; falls 
B) rises; rises 
C) falls; falls 
D) falls; rises

Question 6

The new classical model has as its central idea that

Accepted Answer

A) wage and price stickiness explains fluctuations in real GDP. 
B) workers and firms have rational expectations. 
C) the Federal Reserve should adopt a monetary growth rule. 
D) shifts in aggregate demand have no impact on real GDP. 
A) wage and price stickiness explains fluctuations in real GDP. 
B) workers and firms have rational expectations. 
C) the Federal Reserve should adopt a monetary growth rule. 
D) shifts in aggregate demand have no impact on real GDP.

Question 7

Declines in spending on residential construction are often due to increases in interest rates.The collapse in residential construction prior to and during the recession of 2007-2009 was due more to ________ than to higher interest rates.

Accepted Answer

A) the financial crisis that began in 2007 
B) the rapid inflation of the early 2000s 
C) increases in the price of lumber 
D) rising wages in the construction industry 
A) the financial crisis that began in 2007 
B) the rapid inflation of the early 2000s 
C) increases in the price of lumber 
D) rising wages in the construction industry

Question 8

All of the following are assumptions made by the dynamic model of aggregate demand and aggregate supply except

Accepted Answer

A) aggregate demand and potential real GDP decrease continuously. 
B) the aggregate demand curve shifts to the right during most periods. 
C) potential real GDP increases continuously. 
D) the short-run aggregate supply curve shifts to the right except during periods when workers and firms expect higher wages. 
A) aggregate demand and potential real GDP decrease continuously. 
B) the aggregate demand curve shifts to the right during most periods. 
C) potential real GDP increases continuously. 
D) the short-run aggregate supply curve shifts to the right except during periods when workers and firms expect higher wages.

Question 9

All of the following would be considered a positive addition to household wealth except

Accepted Answer

A) the equity in one's home 
B) 500 shares of Google stock 
C) the balance in your savings account 
D) a credit card balance 
A) the equity in one's home 
B) 500 shares of Google stock 
C) the balance in your savings account 
D) a credit card balance

Question 10

Figure 15-3
  
-Refer to Figure 15-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y₁ represents potential GDP.

Accepted Answer

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

Question 11

In the dynamic aggregated demand and aggregate supply model,inflation occurs if

Accepted Answer

A) AD shifts faster than SRAS. 
B) AD shifts slower than SRAS. 
C) SRAS shifts faster than AD. 
D) LRAS shifts faster than AD. 
A) AD shifts faster than SRAS. 
B) AD shifts slower than SRAS. 
C) SRAS shifts faster than AD. 
D) LRAS shifts faster than AD.

Question 12

According to the real business cycle model,________ in aggregate demand ________ GDP.

Accepted Answer

A) increases; decrease 
B) increases; increase 
C) increases; do not affect 
D) decreases; increase 
A) increases; decrease 
B) increases; increase 
C) increases; do not affect 
D) decreases; increase

Question 13

The level of real GDP in the long run is

Accepted Answer

A) potential GDP. 
B) affected by changes in the price level. 
C) determined solely by aggregate demand. 
D) the same as the level of nominal GDP in the long run. 
A) potential GDP. 
B) affected by changes in the price level. 
C) determined solely by aggregate demand. 
D) the same as the level of nominal GDP in the long run.

Question 14

Figure 15-4
  
-Refer to Figure 15-4.Given the economy is at point A in year 1,what will happen to the unemployment rate in year 2?

Accepted Answer

A) It will rise. 
B) It will fall. 
C) It will remain constant. 
D) not enough information to answer the question 
A) It will rise. 
B) It will fall. 
C) It will remain constant. 
D) not enough information to answer the question

Question 15

New classical macroeconomic theory emphasizes the role of "sticky" prices in the economy.

Accepted Answer

A) True 
 B)False

Question 16

Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

Accepted Answer

A) Output will decrease. 
B) Prices will increase. 
C) Unemployment will rise. 
D) Short-run aggregate supply will shift to the right. 
A) Output will decrease. 
B) Prices will increase. 
C) Unemployment will rise. 
D) Short-run aggregate supply will shift to the right.

Question 17

During 2008,oil price increases

Accepted Answer

A) shifted the short-run aggregate supply curve farther to the left than similar increases had 30 years earlier. 
B) shifted the aggregate demand curve farther to the right than similar increases had 30 years earlier. 
C) did not shift the short-run aggregate supply curve as far to the left as similar increases had 30 years earlier. 
D) shifted the aggregate demand curve farther to the left than similar increases had 30 years earlier. 
A) shifted the short-run aggregate supply curve farther to the left than similar increases had 30 years earlier. 
B) shifted the aggregate demand curve farther to the right than similar increases had 30 years earlier. 
C) did not shift the short-run aggregate supply curve as far to the left as similar increases had 30 years earlier. 
D) shifted the aggregate demand curve farther to the left than similar increases had 30 years earlier.

Question 18

The short-run aggregate supply curve has a

Accepted Answer

A) negative slope. 
B) positive slope. 
C) slope equal to infinity. 
D) slope equal to zero. 
A) negative slope. 
B) positive slope. 
C) slope equal to infinity. 
D) slope equal to zero.

Question 19

Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

Accepted Answer

A) falling oil prices 
B) increases in housing prices 
C) the financial crisis 
D) a decline in government spending 
A) falling oil prices 
B) increases in housing prices 
C) the financial crisis 
D) a decline in government spending

Question 20

Figure 15-1
  
-Refer to Figure 15-1.Ceteris paribus,a decrease in the value of the domestic currency relative to foreign currencies would be represented by a movement from

Accepted Answer

A) AD₁ to AD₂. 
B) AD₂ to AD₁. 
C) point A to point B. 
D) point B to point A. 
A) AD₁ to AD₂. 
B) AD₂ to AD₁. 
C) point A to point B. 
D) point B to point A.

An increase in exports decreases aggregate demand.

Using an aggregate demand graph,illustrate the impact of an increase in the growth rate of U.S.GDP relative to the growth rate of foreign GDP.

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,a decrease in the price level would be represented by a movement from

Figure 15-4 -Refer to Figure 15-4.Given the economy is at point A in year 1,what is the inflation rate between year 1 and year 2?

When the price of oil rises unexpectedly,the equilibrium price level and the unemployment rate in the short run.

The new classical model has as its central idea that

Declines in spending on residential construction are often due to increases in interest rates.The collapse in residential construction prior to and during the recession of 2007-2009 was due more to ________ than to higher interest rates.

All of the following are assumptions made by the dynamic model of aggregate demand and aggregate supply except

All of the following would be considered a positive addition to household wealth except

Figure 15-3 -Refer to Figure 15-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y₁ represents potential GDP.

In the dynamic aggregated demand and aggregate supply model,inflation occurs if

According to the real business cycle model, in aggregate demand GDP.

The level of real GDP in the long run is

Figure 15-4 -Refer to Figure 15-4.Given the economy is at point A in year 1,what will happen to the unemployment rate in year 2?

New classical macroeconomic theory emphasizes the role of "sticky" prices in the economy.

Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

During 2008,oil price increases

The short-run aggregate supply curve has a

Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in the value of the domestic currency relative to foreign currencies would be represented by a movement from

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 15: Aggregate Demand and Aggregate Supply Analysis

An increase in exports decreases aggregate demand.

Using an aggregate demand graph,illustrate the impact of an increase in the growth rate of U.S.GDP relative to the growth rate of foreign GDP.

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,a decrease in the price level would be represented by a movement from

Figure 15-4 -Refer to Figure 15-4.Given the economy is at point A in year 1,what is the inflation rate between year 1 and year 2?

When the price of oil rises unexpectedly,the equilibrium price level ________ and the unemployment rate ________ in the short run.

The new classical model has as its central idea that

Declines in spending on residential construction are often due to increases in interest rates.The collapse in residential construction prior to and during the recession of 2007-2009 was due more to ________ than to higher interest rates.

All of the following are assumptions made by the dynamic model of aggregate demand and aggregate supply except

All of the following would be considered a positive addition to household wealth except

Figure 15-3 -Refer to Figure 15-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y₁ represents potential GDP.

In the dynamic aggregated demand and aggregate supply model,inflation occurs if

According to the real business cycle model,________ in aggregate demand ________ GDP.

The level of real GDP in the long run is

Figure 15-4 -Refer to Figure 15-4.Given the economy is at point A in year 1,what will happen to the unemployment rate in year 2?

New classical macroeconomic theory emphasizes the role of "sticky" prices in the economy.

Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

During 2008,oil price increases

The short-run aggregate supply curve has a

Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in the value of the domestic currency relative to foreign currencies would be represented by a movement from

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

When the price of oil rises unexpectedly,the equilibrium price level and the unemployment rate in the short run.

According to the real business cycle model, in aggregate demand GDP.