Question 1

Figure 15-3
  
-Refer to Figure 15-3.Which of the points in the above graph are possible short-run equilibria?

Accepted Answer

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

Question 2

Monetarism is a school of thought put forth by ________,who argued that the economy would most likely be at potential GDP.

Accepted Answer

A) Karl Marx 
B) Milton Friedman 
C) Finn Kydland and Edward Prescott 
D) Robert Lucas and Thomas Sargent 
A) Karl Marx 
B) Milton Friedman 
C) Finn Kydland and Edward Prescott 
D) Robert Lucas and Thomas Sargent

Question 3

The recession of 2007-2009 made many consumers pessimistic about their future incomes.How does this increased pessimism 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 4

Figure 15-3
  
-Refer to Figure 15-3.Suppose the economy is at point C.If government spending decreases in the economy,where will the eventual long-run equilibrium be?

Accepted Answer

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

Question 5

Changes in ________ do not affect the level of aggregate supply in the long run.

Accepted Answer

A) technology 
B) the number of workers in the economy 
C) the price level 
D) the amount of accumulated capital equipment 
A) technology 
B) the number of workers in the economy 
C) the price level 
D) the amount of accumulated capital equipment

Question 6

German automobile exports were hurt in 2008 as a result of the recession.How would this decrease in exports have affected Germany's aggregate demand curve?

Accepted Answer

A) The aggregate demand curve would have shifted to the right. 
B) The aggregate demand curve would not have shifted, but there would have been a movement up the aggregate demand curve. 
C) The aggregate demand curve would not have shifted, but there would have been a movement down the aggregate demand curve. 
D) The aggregate demand curve would have shifted to the left. 
A) The aggregate demand curve would have shifted to the right. 
B) The aggregate demand curve would not have shifted, but there would have been a movement up the aggregate demand curve. 
C) The aggregate demand curve would not have shifted, but there would have been a movement down the aggregate demand curve. 
D) The aggregate demand curve would have shifted to the left.

Question 7

The long-run aggregate supply curve shows the relationship between the ________ and ________.

Accepted Answer

A) inflation rate; quantity of real GDP demanded 
B) real interest rate; quantity of real GDP supplied 
C) nominal interest rate; quantity of real GDP supplied 
D) price level; quantity of real GDP supplied 
A) inflation rate; quantity of real GDP demanded 
B) real interest rate; quantity of real GDP supplied 
C) nominal interest rate; quantity of real GDP supplied 
D) price level; quantity of real GDP supplied

Question 8

Why does the short-run aggregate supply curve shift to the left in the long run,following an increase 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

When the price level falls from 135 to 120,the aggregate level of GDP supplied falls from $140 billion to $125 billion.This ________ relationship represents the ________ relationship between GDP 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 10

Stagflation occurs when short-run aggregate supply decreases.

Accepted Answer

A) True 
 B)False

Question 11

In the dynamic aggregate demand and aggregate supply model,what is the result of aggregate demand increasing faster than potential real GDP?

Accepted Answer

Aggregate demand inc

Question 12

Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico which subsequently drove up natural gas,gasoline,and heating oil prices.Three years later,once the refining capacity was restored,these prices came back down.The restoration of refining capacity should

Accepted Answer

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

Question 13

Figure 15-1
  
-Refer to Figure 15-1.Ceteris paribus,an increase in government spending 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.

Question 14

At a long-run macroeconomic equilibrium,real GDP is always equal to potential GDP.

Accepted Answer

A) True 
 B)False

Question 15

Figure 15-3
  
-Refer to Figure 15-3.Suppose the economy is at point A.If government spending increases in the economy,where will the eventual long-run equilibrium be?

Accepted Answer

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

Question 16

If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run,the economy would experience

Accepted Answer

A) stagflation. 
B) long-run economic decline. 
C) hyperinflation. 
D) an increase in the natural rate of unemployment. 
A) stagflation. 
B) long-run economic decline. 
C) hyperinflation. 
D) an increase in the natural rate of unemployment.

Question 17

Use the dynamic model of aggregate demand and supply to illustrate a situation where aggregate demand and short-run aggregate supply are both increasing from year 1 to year 2,resulting in a higher price level and higher level of real GDP at macroeconomic equilibrium in year 2.

Accepted Answer

@#IMG-DLM& AD₁,SRAS₁ and LRAS₁ all represent year

Question 18

How do lower taxes affect aggregate demand?

Accepted Answer

A) They increase disposable income, consumption, and aggregate demand. 
B) They reduce disposable income, consumption, and aggregate demand. 
C) They increase corporate investment and aggregate demand. 
D) They increase aggregate supply and thus increase aggregate demand as well. 
A) They increase disposable income, consumption, and aggregate demand. 
B) They reduce disposable income, consumption, and aggregate demand. 
C) They increase corporate investment and aggregate demand. 
D) They increase aggregate supply and thus increase aggregate demand as well.

Question 19

Figure 15-1
  
-Refer to Figure 15-1.Ceteris paribus,an increase in the growth rate of domestic GDP relative to the growth rate of foreign GDP 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.

Question 20

An increase in the price level shifts the aggregate demand curve to the left.

Accepted Answer

A) True 
 B)False

Figure 15-3 -Refer to Figure 15-3.Which of the points in the above graph are possible short-run equilibria?

Monetarism is a school of thought put forth by ________,who argued that the economy would most likely be at potential GDP.

The recession of 2007-2009 made many consumers pessimistic about their future incomes.How does this increased pessimism affect the aggregate demand curve?

Figure 15-3 -Refer to Figure 15-3.Suppose the economy is at point C.If government spending decreases in the economy,where will the eventual long-run equilibrium be?

Changes in ________ do not affect the level of aggregate supply in the long run.

German automobile exports were hurt in 2008 as a result of the recession.How would this decrease in exports have affected Germany's aggregate demand curve?

The long-run aggregate supply curve shows the relationship between the and .

Why does the short-run aggregate supply curve shift to the left in the long run,following an increase in aggregate demand?

When the price level falls from 135 to 120,the aggregate level of GDP supplied falls from $140 billion to $125 billion.This relationship represents the relationship between GDP and the price level.

Stagflation occurs when short-run aggregate supply decreases.

In the dynamic aggregate demand and aggregate supply model,what is the result of aggregate demand increasing faster than potential real GDP?

Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico which subsequently drove up natural gas,gasoline,and heating oil prices.Three years later,once the refining capacity was restored,these prices came back down.The restoration of refining capacity should

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,an increase in government spending would be represented by a movement from

At a long-run macroeconomic equilibrium,real GDP is always equal to potential GDP.

Figure 15-3 -Refer to Figure 15-3.Suppose the economy is at point A.If government spending increases in the economy,where will the eventual long-run equilibrium be?

If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run,the economy would experience

Use the dynamic model of aggregate demand and supply to illustrate a situation where aggregate demand and short-run aggregate supply are both increasing from year 1 to year 2,resulting in a higher price level and higher level of real GDP at macroeconomic equilibrium in year 2.

How do lower taxes affect aggregate demand?

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,an increase in the growth rate of domestic GDP relative to the growth rate of foreign GDP would be represented by a movement from

An increase in the price level shifts the aggregate demand curve to the left.

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 15-3 -Refer to Figure 15-3.Which of the points in the above graph are possible short-run equilibria?

Monetarism is a school of thought put forth by ________,who argued that the economy would most likely be at potential GDP.

The recession of 2007-2009 made many consumers pessimistic about their future incomes.How does this increased pessimism affect the aggregate demand curve?

Figure 15-3 -Refer to Figure 15-3.Suppose the economy is at point C.If government spending decreases in the economy,where will the eventual long-run equilibrium be?

Changes in ________ do not affect the level of aggregate supply in the long run.

German automobile exports were hurt in 2008 as a result of the recession.How would this decrease in exports have affected Germany's aggregate demand curve?

The long-run aggregate supply curve shows the relationship between the ________ and ________.

Why does the short-run aggregate supply curve shift to the left in the long run,following an increase in aggregate demand?

When the price level falls from 135 to 120,the aggregate level of GDP supplied falls from $140 billion to $125 billion.This ________ relationship represents the ________ relationship between GDP and the price level.

Stagflation occurs when short-run aggregate supply decreases.

In the dynamic aggregate demand and aggregate supply model,what is the result of aggregate demand increasing faster than potential real GDP?

Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico which subsequently drove up natural gas,gasoline,and heating oil prices.Three years later,once the refining capacity was restored,these prices came back down.The restoration of refining capacity should

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,an increase in government spending would be represented by a movement from

At a long-run macroeconomic equilibrium,real GDP is always equal to potential GDP.

Figure 15-3 -Refer to Figure 15-3.Suppose the economy is at point A.If government spending increases in the economy,where will the eventual long-run equilibrium be?

If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run,the economy would experience

Use the dynamic model of aggregate demand and supply to illustrate a situation where aggregate demand and short-run aggregate supply are both increasing from year 1 to year 2,resulting in a higher price level and higher level of real GDP at macroeconomic equilibrium in year 2.

How do lower taxes affect aggregate demand?

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,an increase in the growth rate of domestic GDP relative to the growth rate of foreign GDP would be represented by a movement from

An increase in the price level shifts the aggregate demand curve to the left.

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 long-run aggregate supply curve shows the relationship between the and .

When the price level falls from 135 to 120,the aggregate level of GDP supplied falls from $140 billion to $125 billion.This relationship represents the relationship between GDP and the price level.