Question 1

Figure 24-2
  
-Refer to Figure 24-2.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

A decrease in government spending will result in a decrease in the price level and a decrease in real GDP in the long run.

Accepted Answer

A) True 
 B)False

Question 3

When the aggregate demand curve and the short-run aggregate supply curve intersect,

Accepted Answer

A)  the long-run aggregate supply curve must also intersect at the same point. 
B)  inflation must be increasing. 
C)  structural and frictional unemployment equal zero. 
D)  the economy is in short-run macroeconomic equilibrium. 
A)  the long-run aggregate supply curve must also intersect at the same point. 
B)  inflation must be increasing. 
C)  structural and frictional unemployment equal zero. 
D)  the economy is in short-run macroeconomic equilibrium.

Question 4

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 5

Stagflation occurs when

Accepted Answer

A)  inflation rises and GDP rises. 
B)  inflation falls and GDP rises. 
C)  inflation rises and GDP falls. 
D)  inflation falls and GDP falls. 
A)  inflation rises and GDP rises. 
B)  inflation falls and GDP rises. 
C)  inflation rises and GDP falls. 
D)  inflation falls and GDP falls.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

When potential GDP increases,long-run aggregate supply also increases.

Accepted Answer

A) True 
 B)False

Question 8

Forecasts made by White House economists and economists at the Congressional Budget Office in 2011 project that real GDP

Accepted Answer

A)  would return to potential GDP by the end of 2011. 
B)  would not return to potential GDP until the first quarter of 2013.. 
C)  would not return to potential GDP until 2016. 
D)  would never return to potential GDP. 
A)  would return to potential GDP by the end of 2011. 
B)  would not return to potential GDP until the first quarter of 2013.. 
C)  would not return to potential GDP until 2016. 
D)  would never return to potential GDP.

Question 9

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

Question 10

If workers and firms have rational expectations,they form their expectations using

Accepted Answer

A)  all the information available to them. 
B)  only information from the past. 
C)  only information provided to them by the government. 
D)  only information gathered from random sources. 
A)  all the information available to them. 
B)  only information from the past. 
C)  only information provided to them by the government. 
D)  only information gathered from random sources.

Question 11

During the recession of 2007-2009 in the United States,________ relative to potential GDP.

Accepted Answer

A)  business fixed investment spending rose and net export spending declined 
B)  consumption spending rose and residential construction spending declined 
C)  federal government purchases rose and changes in business inventories declined 
D)  net export spending rose and consumption spending declined 
A)  business fixed investment spending rose and net export spending declined 
B)  consumption spending rose and residential construction spending declined 
C)  federal government purchases rose and changes in business inventories declined 
D)  net export spending rose and consumption spending declined

Question 12

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 13

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 14

Figure 24-4
  
-Refer to Figure 24-4.In the figure above,LRAS1 and SRAS1 denote LRAS and SRAS in year 1,while LRAS2 and SRAS2 denote LRAS and SRAS in year 2.Given the economy is at point A in year 1,what is the growth rate in potential GDP in year 2?

Accepted Answer

A)  8% 
B)  9.1% 
C)  10% 
D)  12% 
A)  8% 
B)  9.1% 
C)  10% 
D)  12%

Question 15

Figure 24-3
  
-Refer to Figure 24-3.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 16

Figure 24-1
  
-Refer to Figure 24-1.Ceteris paribus,an increase in personal income taxes 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 17

As the recession persisted into 2009,the unemployment rate in the United States rose to ________,the highest rate since the recession of 2001-2002 and the second highest since the Great Depression.

Accepted Answer

A)  5.5 percent 
B)  9.3 percent 
C)  17.6 percent 
D)  25.1 percent 
A)  5.5 percent 
B)  9.3 percent 
C)  17.6 percent 
D)  25.1 percent

Question 18

President Obama has discussed raising income taxes for individuals earning over $250,000 in income.Explain how these higher income taxes will affect the aggregate demand curve.

Accepted Answer

Raising the income tax decreases the amo

Question 19

The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off

Accepted Answer

A)  government spending. 
B)  government spending and unplanned investment. 
C)  investment and consumption spending. 
D)  net exports. 
A)  government spending. 
B)  government spending and unplanned investment. 
C)  investment and consumption spending. 
D)  net exports.

Question 20

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.

Figure 24-2 -Refer to Figure 24-2.Ceteris paribus,an increase in productivity would be represented by a movement from

A decrease in government spending will result in a decrease in the price level and a decrease in real GDP in the long run.

When the aggregate demand curve and the short-run aggregate supply curve intersect,

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

Stagflation occurs when

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

When potential GDP increases,long-run aggregate supply also increases.

Forecasts made by White House economists and economists at the Congressional Budget Office in 2011 project that real GDP

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?

If workers and firms have rational expectations,they form their expectations using

During the recession of 2007-2009 in the United States,________ relative to potential GDP.

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.

Full-employment GDP is also known as

Figure 24-4 -Refer to Figure 24-4.In the figure above,LRAS₁ and SRAS₁ denote LRAS and SRAS in year 1,while LRAS₂ and SRAS₂ denote LRAS and SRAS in year 2.Given the economy is at point A in year 1,what is the growth rate in potential GDP in year 2?

Figure 24-3 -Refer to Figure 24-3.Suppose the economy is at point C.If government spending decreases in the economy,where will the eventual long-run equilibrium be?

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

As the recession persisted into 2009,the unemployment rate in the United States rose to ________,the highest rate since the recession of 2001-2002 and the second highest since the Great Depression.

President Obama has discussed raising income taxes for individuals earning over $250,000 in income.Explain how these higher income taxes will affect the aggregate demand curve.

The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off

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

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

Figure 24-2 -Refer to Figure 24-2.Ceteris paribus,an increase in productivity would be represented by a movement from

A decrease in government spending will result in a decrease in the price level and a decrease in real GDP in the long run.

When the aggregate demand curve and the short-run aggregate supply curve intersect,

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

Stagflation occurs when

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

When potential GDP increases,long-run aggregate supply also increases.

Forecasts made by White House economists and economists at the Congressional Budget Office in 2011 project that real GDP

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?

If workers and firms have rational expectations,they form their expectations using

During the recession of 2007-2009 in the United States,________ relative to potential GDP.

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.

Full-employment GDP is also known as

Figure 24-4 -Refer to Figure 24-4.In the figure above,LRAS1 and SRAS1 denote LRAS and SRAS in year 1,while LRAS2 and SRAS2 denote LRAS and SRAS in year 2.Given the economy is at point A in year 1,what is the growth rate in potential GDP in year 2?

Figure 24-3 -Refer to Figure 24-3.Suppose the economy is at point C.If government spending decreases in the economy,where will the eventual long-run equilibrium be?

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

As the recession persisted into 2009,the unemployment rate in the United States rose to ________,the highest rate since the recession of 2001-2002 and the second highest since the Great Depression.

President Obama has discussed raising income taxes for individuals earning over $250,000 in income.Explain how these higher income taxes will affect the aggregate demand curve.

The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off

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

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

Figure 24-4 -Refer to Figure 24-4.In the figure above,LRAS₁ and SRAS₁ denote LRAS and SRAS in year 1,while LRAS₂ and SRAS₂ denote LRAS and SRAS in year 2.Given the economy is at point A in year 1,what is the growth rate in potential GDP in year 2?