Question 1

A supply shock causes the long-run aggregate supply curve to shift left,decreasing the price level.

Accepted Answer

A) True 
 B)False  False

Question 2

A negative supply shock in the short run causes

Accepted Answer

A)  the aggregate supply curve to shift to the left. 
B)  the price level to fall. 
C)  unemployment to fall. 
D)  equilibrium real GDP to rise. 
A)  the aggregate supply curve to shift to the left. 
B)  the price level to fall. 
C)  unemployment to fall. 
D)  equilibrium real GDP to rise. A

Question 3

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 C

Question 4

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 5

Figure 24-1
  
-Refer to Figure 24-1.Ceteris paribus,an increase 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.

Question 6

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 7

Monetarists believe that the quantity of money should be increased at an increasing rate.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)  unlikely; output and input prices generally fall during recession 
B)  unlikely; lower wages reduce productivity and morale 
C)  likely; output prices always fall during recession 
D)  likely; aggregate demand is vertical in the long run 
A)  unlikely; output and input prices generally fall during recession 
B)  unlikely; lower wages reduce productivity and morale 
C)  likely; output prices always fall during recession 
D)  likely; aggregate demand is vertical in the long run

Question 9

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 10

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 11

Figure 24-3
  
-Refer to Figure 24-3.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 12

Figure 24-1
  
-Refer to Figure 24-1.Ceteris paribus,a decrease 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 13

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 14

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

Accepted Answer

A) True 
 B)False

Question 15

Figure 24-1
  
-Refer to Figure 24-1.Ceteris paribus,an increase in the price level 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 16

An increase in imports increases aggregate demand.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not an assumption made by the dynamic model of aggregate demand and aggregate supply?

Accepted Answer

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

Question 18

Figure 24-1
  
-Refer to Figure 24-1.Ceteris paribus,an increase in interest rates 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 19

A decrease in investment causes the price level to ________ in the short run and ________ in the long run.

Accepted Answer

A)  increase; increase further 
B)  increase; decrease 
C)  decrease; decrease further 
D)  decrease; increase 
A)  increase; increase further 
B)  increase; decrease 
C)  decrease; decrease further 
D)  decrease; increase

Question 20

Suppose there has been an increase 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

A supply shock causes the long-run aggregate supply curve to shift left,decreasing the price level.

A negative supply shock in the short run causes

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

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

Figure 24-1 -Refer to Figure 24-1.Ceteris paribus,an increase in the value of the domestic currency relative to foreign currencies would be represented by a movement from

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

Monetarists believe that the quantity of money should be increased at an increasing rate.

When the economy enters into a recession,your employer is to reduce your wages because .

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?

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

Figure 24-3 -Refer to Figure 24-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y₁ represents potential GDP.

Figure 24-1 -Refer to Figure 24-1.Ceteris paribus,a decrease in government spending would be represented by a movement from

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

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

Figure 24-1 -Refer to Figure 24-1.Ceteris paribus,an increase in the price level would be represented by a movement from

An increase in imports increases aggregate demand.

Which of the following is not an assumption made by the dynamic model of aggregate demand and aggregate supply?

Figure 24-1 -Refer to Figure 24-1.Ceteris paribus,an increase in interest rates would be represented by a movement from

A decrease in investment causes the price level to in the short run and in the long run.

Suppose there has been an increase in investment.As a result,real GDP will in the short run,and in the long run.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 13: Aggregate Demand and Aggregate Supply Analysis

A supply shock causes the long-run aggregate supply curve to shift left,decreasing the price level.

A negative supply shock in the short run causes

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

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

Figure 24-1 -Refer to Figure 24-1.Ceteris paribus,an increase in the value of the domestic currency relative to foreign currencies would be represented by a movement from

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

Monetarists believe that the quantity of money should be increased at an increasing rate.

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

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?

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

Figure 24-3 -Refer to Figure 24-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y1 represents potential GDP.

Figure 24-1 -Refer to Figure 24-1.Ceteris paribus,a decrease in government spending would be represented by a movement from

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

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

Figure 24-1 -Refer to Figure 24-1.Ceteris paribus,an increase in the price level would be represented by a movement from

An increase in imports increases aggregate demand.

Which of the following is not an assumption made by the dynamic model of aggregate demand and aggregate supply?

Figure 24-1 -Refer to Figure 24-1.Ceteris paribus,an increase in interest rates would be represented by a movement from

A decrease in investment causes the price level to ________ in the short run and ________ in the long run.

Suppose there has been an increase in investment.As a result,real GDP will ________ in the short run,and ________ in the long run.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

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

When the economy enters into a recession,your employer is to reduce your wages because .

Figure 24-3 -Refer to Figure 24-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y₁ represents potential GDP.

A decrease in investment causes the price level to in the short run and in the long run.

Suppose there has been an increase in investment.As a result,real GDP will in the short run,and in the long run.