Question 1

Figure 15-2
  
-Refer to Figure 15-2.Ceteris paribus,an increase in productivity 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 2

An increase in disposable income will shift the aggregate demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 3

On the long-run aggregate supply curve

Accepted Answer

A) a decrease in the price level decreases the level of potential GDP. 
B) a decrease in the price level increases the aggregate quantity of GDP supplied. 
C) a decrease in the price level decreases the aggregate quantity of GDP supplied. 
D) a decrease in the price level has no effect on the aggregate quantity of GDP supplied. 
A) a decrease in the price level decreases the level of potential GDP. 
B) a decrease in the price level increases the aggregate quantity of GDP supplied. 
C) a decrease in the price level decreases the aggregate quantity of GDP supplied. 
D) a decrease in the price level has no effect on the aggregate quantity of GDP supplied.

Question 4

Why does the short-run aggregate supply curve slope upward?

Accepted Answer

The short-run aggregate supply curve slo

Question 5

Proponents of the ________ model argue that the short-run supply curve is vertical.

Accepted Answer

A) the monetarist model 
B) the new classical model 
C) the real business cycle model 
D) the new Keynesian model 
A) the monetarist model 
B) the new classical model 
C) the real business cycle model 
D) the new Keynesian model

Question 6

Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy.As a result

Accepted Answer

A) the long-run aggregate supply curve will shift to the right. 
B) the long-run aggregate supply curve will shift to the left. 
C) the economy will move up along the long-run aggregate supply curve. 
D) the economy will move down along the long-run aggregate supply curve. 
A) the long-run aggregate supply curve will shift to the right. 
B) the long-run aggregate supply curve will shift to the left. 
C) the economy will move up along the long-run aggregate supply curve. 
D) the economy will move down along the long-run aggregate supply curve.

Question 7

The short-run aggregate supply curve has a(n)________ slope because as prices of ________ rise,prices of ________ rise more slowly.

Accepted Answer

A) positive; final goods and services; inputs 
B) infinite; final goods and services; inputs 
C) positive; inputs; final goods and services 
D) infinite; inputs; final goods and services 
A) positive; final goods and services; inputs 
B) infinite; final goods and services; inputs 
C) positive; inputs; final goods and services 
D) infinite; inputs; final goods and services

Question 8

Why does the short-run aggregate supply curve shift to the right in the long run,following a decrease in aggregate demand?

Accepted Answer

A) Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices. 
B) Workers and firms adjust their expectations of wages and prices downward and they push for higher wages and prices. 
C) Workers and firms adjust their expectations of wages and prices upward and they push for higher wages and prices. 
D) Workers and firms adjust their expectations of wages and prices upward and they accept lower wages and prices. 
A) Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices. 
B) Workers and firms adjust their expectations of wages and prices downward and they push for higher wages and prices. 
C) Workers and firms adjust their expectations of wages and prices upward and they push for higher wages and prices. 
D) Workers and firms adjust their expectations of wages and prices upward and they accept lower wages and prices.

Question 9

FedEx plays such a large role in moving packages around the country that there is usually a close relationship between fluctuations in FedEx's business and fluctuations in GDP.Some economists refer to this relationship as the

Accepted Answer

A) shipping cycle. 
B) FedEx indicator. 
C) overnight delivery index. 
D) package prognostication process. 
A) shipping cycle. 
B) FedEx indicator. 
C) overnight delivery index. 
D) package prognostication process.

Question 10

Using the aggregate supply and demand model,illustrate what happens in the long run when the economy suffers a supply shock.Begin your analysis by assuming the economy has suffered the supply shock in the short run,but has not yet adjusted to it in the long run.

Accepted Answer

@#IMG-DLM& The economy is at point B with the pric

Question 11

In September of 2007,the Federal Reserve Board Open Market Committee voted to lower interest rates for the first time that year.Explain how lower interest rates affect the aggregate demand curve.

Accepted Answer

Reducing the interest rate lowers the co

Question 12

Briefly describe monetarism and the monetary growth rule.

Accepted Answer

Monetarism refers to the macroeconomic t

Question 13

When the price level rises from 110 to 115,the aggregate level of GDP supplied rises from $80 billion to $120 billion.This ________ relationship represents the ________ relationship between the quantity of real GDP firms are willing to supply and the price level.

Accepted Answer

A) negative; short-run 
B) positive; short-run 
C) negative; long-run 
D) positive; long-run 
A) negative; short-run 
B) positive; short-run 
C) negative; long-run 
D) positive; long-run

Question 14

If the U.S.dollar increases in value relative to other currencies,how does this affect the aggregate demand curve?

Accepted Answer

A) This will move the economy up along a stationary aggregate demand curve. 
B) This will move the economy down along a stationary aggregate demand curve. 
C) This will shift the aggregate demand curve to the left. 
D) This will shift the aggregate demand curve to the right. 
A) This will move the economy up along a stationary aggregate demand curve. 
B) This will move the economy down along a stationary aggregate demand curve. 
C) This will shift the aggregate demand curve to the left. 
D) This will shift the aggregate demand curve to the right.

Question 15

Proponents of the real business cycle model argue that the short-run aggregate supply curve is

Accepted Answer

A) flat. 
B) positively sloped. 
C) vertical. 
D) negatively sloped. 
A) flat. 
B) positively sloped. 
C) vertical. 
D) negatively sloped.

Question 16

There has been a decrease in investment.As a result,real GDP will ________ in the short run,and ________ in the long run.

Accepted Answer

A) increase; increases further 
B) increase; decrease to its initial value 
C) decrease; decrease further 
D) decrease; increase to its initial level 
A) increase; increases further 
B) increase; decrease to its initial value 
C) decrease; decrease further 
D) decrease; increase to its initial level

Question 17

The main result of the monetarist model is that

Accepted Answer

A) workers and firms have rational expectations. 
B) the quantity of money should be increased at a constant rate. 
C) productivity shocks explain fluctuations in real GDP. 
D) the economy is slow to adjust to sticky wages and prices. 
A) workers and firms have rational expectations. 
B) the quantity of money should be increased at a constant rate. 
C) productivity shocks explain fluctuations in real GDP. 
D) the economy is slow to adjust to sticky wages and prices.

Question 18

Studies have shown that

Accepted Answer

A) firms often cut nominal wages during recessions and allow inflation to gradually increase real wages. 
B) firms are reluctant to cut nominal wages during recessions but instead increase workers' nominal wages and allow inflation to gradually increase real wages. 
C) firms are reluctant to cut nominal wages during recessions but instead freeze workers' nominal wages and allow inflation to gradually reduce real wages. 
D) firms often freeze workers' nominal wages during a recession and keep the wages frozen well after the recession has ended. 
A) firms often cut nominal wages during recessions and allow inflation to gradually increase real wages. 
B) firms are reluctant to cut nominal wages during recessions but instead increase workers' nominal wages and allow inflation to gradually increase real wages. 
C) firms are reluctant to cut nominal wages during recessions but instead freeze workers' nominal wages and allow inflation to gradually reduce real wages. 
D) firms often freeze workers' nominal wages during a recession and keep the wages frozen well after the recession has ended.

Question 19

The real business cycle model focuses on how

Accepted Answer

A) wage and price stickiness explains fluctuations in real GDP. 
B) the labor theory of value is the best measure of value of a good or service. 
C) the Federal Reserve should adopt a monetary growth rule. 
D) productivity shocks explain fluctuations in real GDP. 
A) wage and price stickiness explains fluctuations in real GDP. 
B) the labor theory of value is the best measure of value of a good or service. 
C) the Federal Reserve should adopt a monetary growth rule. 
D) productivity shocks explain fluctuations in real GDP.

Question 20

Short-run macroeconomic equilibrium occurs when

Accepted Answer

A) aggregate demand and short-run aggregate supply intersect. 
B) the equilibrium lies on the long-run aggregate supply curve. 
C) structural and frictional unemployment equal zero. 
D) A and B 
A) aggregate demand and short-run aggregate supply intersect. 
B) the equilibrium lies on the long-run aggregate supply curve. 
C) structural and frictional unemployment equal zero. 
D) A and B

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,an increase in productivity would be represented by a movement from

An increase in disposable income will shift the aggregate demand curve to the right.

On the long-run aggregate supply curve

Why does the short-run aggregate supply curve slope upward?

Proponents of the ________ model argue that the short-run supply curve is vertical.

Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy.As a result

The short-run aggregate supply curve has a(n) slope because as prices of rise,prices of rise more slowly.

Why does the short-run aggregate supply curve shift to the right in the long run,following a decrease in aggregate demand?

FedEx plays such a large role in moving packages around the country that there is usually a close relationship between fluctuations in FedEx's business and fluctuations in GDP.Some economists refer to this relationship as the

Using the aggregate supply and demand model,illustrate what happens in the long run when the economy suffers a supply shock.Begin your analysis by assuming the economy has suffered the supply shock in the short run,but has not yet adjusted to it in the long run.

In September of 2007,the Federal Reserve Board Open Market Committee voted to lower interest rates for the first time that year.Explain how lower interest rates affect the aggregate demand curve.

Briefly describe monetarism and the monetary growth rule.

When the price level rises from 110 to 115,the aggregate level of GDP supplied rises from $80 billion to $120 billion.This relationship represents the relationship between the quantity of real GDP firms are willing to supply and the price level.

If the U.S.dollar increases in value relative to other currencies,how does this affect the aggregate demand curve?

Proponents of the real business cycle model argue that the short-run aggregate supply curve is

There has been a decrease in investment.As a result,real GDP will in the short run,and in the long run.

The main result of the monetarist model is that

Studies have shown that

The real business cycle model focuses on how

Short-run macroeconomic equilibrium occurs when

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

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,an increase in productivity would be represented by a movement from

An increase in disposable income will shift the aggregate demand curve to the right.

On the long-run aggregate supply curve

Why does the short-run aggregate supply curve slope upward?

Proponents of the ________ model argue that the short-run supply curve is vertical.

Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy.As a result

The short-run aggregate supply curve has a(n)________ slope because as prices of ________ rise,prices of ________ rise more slowly.

Why does the short-run aggregate supply curve shift to the right in the long run,following a decrease in aggregate demand?

FedEx plays such a large role in moving packages around the country that there is usually a close relationship between fluctuations in FedEx's business and fluctuations in GDP.Some economists refer to this relationship as the

Using the aggregate supply and demand model,illustrate what happens in the long run when the economy suffers a supply shock.Begin your analysis by assuming the economy has suffered the supply shock in the short run,but has not yet adjusted to it in the long run.

In September of 2007,the Federal Reserve Board Open Market Committee voted to lower interest rates for the first time that year.Explain how lower interest rates affect the aggregate demand curve.

Briefly describe monetarism and the monetary growth rule.

When the price level rises from 110 to 115,the aggregate level of GDP supplied rises from $80 billion to $120 billion.This ________ relationship represents the ________ relationship between the quantity of real GDP firms are willing to supply and the price level.

If the U.S.dollar increases in value relative to other currencies,how does this affect the aggregate demand curve?

Proponents of the real business cycle model argue that the short-run aggregate supply curve is

There has been a decrease in investment.As a result,real GDP will ________ in the short run,and ________ in the long run.

The main result of the monetarist model is that

Studies have shown that

The real business cycle model focuses on how

Short-run macroeconomic equilibrium occurs when

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

The short-run aggregate supply curve has a(n) slope because as prices of rise,prices of rise more slowly.

When the price level rises from 110 to 115,the aggregate level of GDP supplied rises from $80 billion to $120 billion.This relationship represents the relationship between the quantity of real GDP firms are willing to supply and the price level.

There has been a decrease in investment.As a result,real GDP will in the short run,and in the long run.