Question 1

Explain how the aggregate demand and aggregate supply model can be made more dynamic.

Accepted Answer

We can make the aggregate demand and agg

Question 2

Which of the following is one explanation as to why the aggregate demand curve slopes downward?

Accepted Answer

A) Decreases in the price level raise the interest rate and increase consumption spending. 
B) Decreases in the price level raise the interest rate and increase investment spending. 
C) Decreases in the U.S.price level relative to the price level in other countries lower net exports. 
D) Decreases in the price level raise real wealth and increase consumption spending. 
A) Decreases in the price level raise the interest rate and increase consumption spending. 
B) Decreases in the price level raise the interest rate and increase investment spending. 
C) Decreases in the U.S.price level relative to the price level in other countries lower net exports. 
D) Decreases in the price level raise real wealth and increase consumption spending.

Question 3

In the dynamic aggregated demand and aggregate supply model,if AD shifts faster than AS

Accepted Answer

A) inflation occurs. 
B) deflation occurs. 
C) stagflation occurs. 
D) disinflation occurs. 
A) inflation occurs. 
B) deflation occurs. 
C) stagflation occurs. 
D) disinflation occurs.

Question 4

When the economy enters a recession,your employer is unlikely to reduce your wages because ________ during a recession.

Accepted Answer

A) output and input prices generally fall 
B) lower wages reduce productivity and morale 
C) output prices always fall 
D) output prices generally fall and input prices generally rise 
A) output and input prices generally fall 
B) lower wages reduce productivity and morale 
C) output prices always fall 
D) output prices generally fall and input prices generally rise

Question 5

Full-employment GDP is also known as

Accepted Answer

A) realized GDP. 
B) potential GDP. 
C) politico-economic GDP. 
D) balanced-budget GDP. 
A) realized GDP. 
B) potential GDP. 
C) politico-economic GDP. 
D) balanced-budget GDP.

Question 6

Workers and firms both expect that prices will be 3% higher next year than they are this year.As a result

Accepted Answer

A) workers will be willing to take lower wages next year. 
B) the purchasing power of wages will rise if wages increase by 3%. 
C) the short-run aggregate supply curve will shift to the left as wages increase. 
D) aggregate demand will increase by 3% 
A) workers will be willing to take lower wages next year. 
B) the purchasing power of wages will rise if wages increase by 3%. 
C) the short-run aggregate supply curve will shift to the left as wages increase. 
D) aggregate demand will increase by 3%

Question 7

Figure 15-3
  
-Refer to Figure 15-3.Suppose the economy is at point A.If the economy experiences a supply shock,where will the eventual short-run equilibrium be?

Accepted Answer

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

Question 8

Figure 15-4
  
-Refer to Figure 15-4.Given the economy is at point A in year 1,what will happen to the price level 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 9

Which of the following models relies on emphasizing the importance of sticky wages and prices?

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 10

A decrease in the price level results in a(n)________ in the quantity of real GDP demanded because a lower price level ________ consumption,investment,and net exports.

Accepted Answer

A) decrease; increases 
B) increase; increases 
C) decrease; decreases 
D) increase; decreases 
A) decrease; increases 
B) increase; increases 
C) decrease; decreases 
D) increase; decreases

Question 11

If,due to a recession,foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended,this will

Accepted Answer

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

Question 12

Spending on the war in Afghanistan is essentially categorized as government purchases.How do increases in spending on the war in Afghanistan affect the aggregate demand curve?

Accepted Answer

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

Question 13

The automatic mechanism ________ the price level in the case of ________ and ________ the price level in the case of ________.

Accepted Answer

A) raises; recession; lowers; expansion 
B) raises; expansion raises; recession 
C) lowers; expansion; lowers; recession 
D) lowers; recession; raises; expansion 
A) raises; recession; lowers; expansion 
B) raises; expansion raises; recession 
C) lowers; expansion; lowers; recession 
D) lowers; recession; raises; expansion

Question 14

If the economy receives an influx of new workers from immigration

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) we will move up along the long-run aggregate supply curve. 
D) we 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) we will move up along the long-run aggregate supply curve. 
D) we will move down along the long-run aggregate supply curve.

Question 15

Stagflation is often a result of

Accepted Answer

A) a negative supply shock. 
B) a decrease in aggregate demand. 
C) an increase in aggregate demand. 
D) an increase in aggregate supply. 
A) a negative supply shock. 
B) a decrease in aggregate demand. 
C) an increase in aggregate demand. 
D) an increase in aggregate supply.

Question 16

Why are the long-run effects of an increase in aggregate demand on price and output different from the short-run effects?

Accepted Answer

The long-run effects differ from the sho

Question 17

Starting from long-run equilibrium,use the basic aggregate demand and aggregate supply diagram to show what happens in both the long run and the short run when there is a decline in wealth.

Accepted Answer

@#IMG-DLM& Before the decline in demand,the econom

Question 18

The ________ curve has a positive slope because as prices of final goods and services rise,prices of inputs rise more slowly.

Accepted Answer

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

Question 19

Because of the slope of the aggregate demand curve,we can say that

Accepted Answer

A) a decrease in the price level leads to a lower level of real GDP demanded. 
B) an increase in the price level leads to no change in the level of real GDP demanded. 
C) a decrease in the price level leads to a higher level of real GDP demanded. 
D) an increase in the price level leads to a higher level of real GDP demanded. 
A) a decrease in the price level leads to a lower level of real GDP demanded. 
B) an increase in the price level leads to no change in the level of real GDP demanded. 
C) a decrease in the price level leads to a higher level of real GDP demanded. 
D) an increase in the price level leads to a higher level of real GDP demanded.

Question 20

Which of the following would not be considered a positive addition to household wealth?

Accepted Answer

A) the equity in one's home 
B) 1,000 shares of Microsoft stock 
C) a credit card balance 
D) the balance in your checking account 
A) the equity in one's home 
B) 1,000 shares of Microsoft stock 
C) a credit card balance 
D) the balance in your checking account

Explain how the aggregate demand and aggregate supply model can be made more dynamic.

Which of the following is one explanation as to why the aggregate demand curve slopes downward?

In the dynamic aggregated demand and aggregate supply model,if AD shifts faster than AS

When the economy enters a recession,your employer is unlikely to reduce your wages because ________ during a recession.

Full-employment GDP is also known as

Workers and firms both expect that prices will be 3% higher next year than they are this year.As a result

Figure 15-3 -Refer to Figure 15-3.Suppose the economy is at point A.If the economy experiences a supply shock,where will the eventual short-run equilibrium be?

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

Which of the following models relies on emphasizing the importance of sticky wages and prices?

A decrease in the price level results in a(n) in the quantity of real GDP demanded because a lower price level consumption,investment,and net exports.

If,due to a recession,foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended,this will

Spending on the war in Afghanistan is essentially categorized as government purchases.How do increases in spending on the war in Afghanistan affect the aggregate demand curve?

The automatic mechanism the price level in the case of and the price level in the case of .

If the economy receives an influx of new workers from immigration

Stagflation is often a result of

Why are the long-run effects of an increase in aggregate demand on price and output different from the short-run effects?

Starting from long-run equilibrium,use the basic aggregate demand and aggregate supply diagram to show what happens in both the long run and the short run when there is a decline in wealth.

The ________ curve has a positive slope because as prices of final goods and services rise,prices of inputs rise more slowly.

Because of the slope of the aggregate demand curve,we can say that

Which of the following would not be considered a positive addition to household wealth?

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

Explain how the aggregate demand and aggregate supply model can be made more dynamic.

Which of the following is one explanation as to why the aggregate demand curve slopes downward?

In the dynamic aggregated demand and aggregate supply model,if AD shifts faster than AS

When the economy enters a recession,your employer is unlikely to reduce your wages because ________ during a recession.

Full-employment GDP is also known as

Workers and firms both expect that prices will be 3% higher next year than they are this year.As a result

Figure 15-3 -Refer to Figure 15-3.Suppose the economy is at point A.If the economy experiences a supply shock,where will the eventual short-run equilibrium be?

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

Which of the following models relies on emphasizing the importance of sticky wages and prices?

A decrease in the price level results in a(n)________ in the quantity of real GDP demanded because a lower price level ________ consumption,investment,and net exports.

If,due to a recession,foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended,this will

Spending on the war in Afghanistan is essentially categorized as government purchases.How do increases in spending on the war in Afghanistan affect the aggregate demand curve?

The automatic mechanism ________ the price level in the case of ________ and ________ the price level in the case of ________.

If the economy receives an influx of new workers from immigration

Stagflation is often a result of

Why are the long-run effects of an increase in aggregate demand on price and output different from the short-run effects?

Starting from long-run equilibrium,use the basic aggregate demand and aggregate supply diagram to show what happens in both the long run and the short run when there is a decline in wealth.

The ________ curve has a positive slope because as prices of final goods and services rise,prices of inputs rise more slowly.

Because of the slope of the aggregate demand curve,we can say that

Which of the following would not be considered a positive addition to household wealth?

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

A decrease in the price level results in a(n) in the quantity of real GDP demanded because a lower price level consumption,investment,and net exports.

The automatic mechanism the price level in the case of and the price level in the case of .