Question 1

The new classical model has as its central idea that

Accepted Answer

A)  wage and price stickiness explains fluctuations in real GDP. 
B)  workers and firms have rational expectations. 
C)  the Federal Reserve should adopt a monetary growth rule. 
D)  shifts in aggregate demand have no impact on real GDP. 
A)  wage and price stickiness explains fluctuations in real GDP. 
B)  workers and firms have rational expectations. 
C)  the Federal Reserve should adopt a monetary growth rule. 
D)  shifts in aggregate demand have no impact on real GDP.

Question 2

One factor which brought on the recession of 2007-2009 was the end of the housing bubble.

Accepted Answer

A) True 
 B)False

Question 3

A decrease in disposable income will shift the aggregate demand curve to the left.

Accepted Answer

A) True 
 B)False

Question 4

Beginning with long-run equilibrium,use the aggregate demand and aggregate supply model to illustrate what happens in the short run when the economy suffers a negative supply shock.

Accepted Answer

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

Question 5

Using an aggregate demand graph,illustrate the impact of an increase in the price level on aggregate demand.

Accepted Answer

@#IMG-DLM& This illustrates an increase in the pri

Question 6

Suppose the economy is at full employment and firms become more optimistic about the future profitability of new investment.Which of the following will happen in the short run?

Accepted Answer

A)  Output will decline. 
B)  Prices will decline. 
C)  Unemployment will decline. 
D)  The aggregate demand curve will shift to the left. 
A)  Output will decline. 
B)  Prices will decline. 
C)  Unemployment will decline. 
D)  The aggregate demand curve will shift to the left.

Question 7

Explain how "menu costs" affect the slope of the short-run aggregate supply curve.

Accepted Answer

Menu costs make some prices sticky.As th

Question 8

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 9

According to Marx,which of the following factors of production did not contribute anything of value to production?

Accepted Answer

A)  labor 
B)  capital 
C)  natural resources 
D)  entrepreneurship 
A)  labor 
B)  capital 
C)  natural resources 
D)  entrepreneurship

Question 10

Stagflation occurs when aggregate supply and aggregate demand both increase.

Accepted Answer

A) True 
 B)False

Question 11

An increase in the price level results in a(n)________ in the quantity of real GDP demanded because ________.

Accepted Answer

A)  decrease; a higher price level reduces consumption, investment, and net exports. 
B)  increase; a higher price level reduces consumption, investment, and net exports. 
C)  decrease; a higher price level increases consumption, investment, and net exports. 
D)  increase; a higher price level increases consumption, investment, and net exports. 
A)  decrease; a higher price level reduces consumption, investment, and net exports. 
B)  increase; a higher price level reduces consumption, investment, and net exports. 
C)  decrease; a higher price level increases consumption, investment, and net exports. 
D)  increase; a higher price level increases consumption, investment, and net exports.

Question 12

Figure 24-1
  
-Refer to Figure 24-1.Ceteris paribus,a decrease in firms' expectations of the future profitability of investment 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

Explain why the long-run aggregate supply curve is vertical.

Accepted Answer

The long-run aggregate supply curve is v

Question 14

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

Accepted Answer

Aggregate demand inc

Question 15

Explain how the static aggregate demand and aggregate supply model gives us misleading results about the price level,particularly with respect to decreases in aggregate demand.Describe how the aggregate demand curve is different in the dynamic model as compared to the static model.Describe how potential GDP is different in the dynamic model as compared to the static model.

Accepted Answer

The static model incorrectly predicts th

Question 16

If the U.S.dollar decreases 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 17

Last week,six Swedish kronor could purchase one U.S.dollar.This week,it takes eight Swedish kronor to purchase one U.S.dollar.This change in the value of the dollar will ________ exports from the United States to Sweden and ________ U.S.aggregate demand.

Accepted Answer

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

Question 18

The long-run adjustment to a negative supply shock results in

Accepted Answer

A)  the short-run aggregate supply curve shifting to the right. 
B)  the price level rising. 
C)  unemployment rising. 
D)  workers being willing to accept higher wages. 
A)  the short-run aggregate supply curve shifting to the right. 
B)  the price level rising. 
C)  unemployment rising. 
D)  workers being willing to accept higher wages.

Question 19

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 20

Figure 24-4
  
-Refer to Figure 24-4.Given the economy is at point A in year 1,what is the inflation rate between year 1 and year 2?

Accepted Answer

A)  0.9% 
B)  1.8% 
C)  2.7% 
D)  3.0% 
A)  0.9% 
B)  1.8% 
C)  2.7% 
D)  3.0%

The new classical model has as its central idea that

One factor which brought on the recession of 2007-2009 was the end of the housing bubble.

A decrease in disposable income will shift the aggregate demand curve to the left.

Beginning with long-run equilibrium,use the aggregate demand and aggregate supply model to illustrate what happens in the short run when the economy suffers a negative supply shock.

Using an aggregate demand graph,illustrate the impact of an increase in the price level on aggregate demand.

Suppose the economy is at full employment and firms become more optimistic about the future profitability of new investment.Which of the following will happen in the short run?

Explain how "menu costs" affect the slope of the short-run aggregate supply curve.

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

According to Marx,which of the following factors of production did not contribute anything of value to production?

Stagflation occurs when aggregate supply and aggregate demand both increase.

An increase in the price level results in a(n) in the quantity of real GDP demanded because .

Figure 24-1 -Refer to Figure 24-1.Ceteris paribus,a decrease in firms' expectations of the future profitability of investment spending would be represented by a movement from

Explain why the long-run aggregate supply curve is vertical.

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

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

Last week,six Swedish kronor could purchase one U.S.dollar.This week,it takes eight Swedish kronor to purchase one U.S.dollar.This change in the value of the dollar will exports from the United States to Sweden and U.S.aggregate demand.

The long-run adjustment to a negative supply shock results in

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

Figure 24-4 -Refer to Figure 24-4.Given the economy is at point A in year 1,what is the inflation rate between year 1 and year 2?

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

The new classical model has as its central idea that

One factor which brought on the recession of 2007-2009 was the end of the housing bubble.

A decrease in disposable income will shift the aggregate demand curve to the left.

Beginning with long-run equilibrium,use the aggregate demand and aggregate supply model to illustrate what happens in the short run when the economy suffers a negative supply shock.

Using an aggregate demand graph,illustrate the impact of an increase in the price level on aggregate demand.

Suppose the economy is at full employment and firms become more optimistic about the future profitability of new investment.Which of the following will happen in the short run?

Explain how "menu costs" affect the slope of the short-run aggregate supply curve.

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

According to Marx,which of the following factors of production did not contribute anything of value to production?

Stagflation occurs when aggregate supply and aggregate demand both increase.

An increase in the price level results in a(n)________ in the quantity of real GDP demanded because ________.

Figure 24-1 -Refer to Figure 24-1.Ceteris paribus,a decrease in firms' expectations of the future profitability of investment spending would be represented by a movement from

Explain why the long-run aggregate supply curve is vertical.

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

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

Last week,six Swedish kronor could purchase one U.S.dollar.This week,it takes eight Swedish kronor to purchase one U.S.dollar.This change in the value of the dollar will ________ exports from the United States to Sweden and ________ U.S.aggregate demand.

The long-run adjustment to a negative supply shock results in

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

Figure 24-4 -Refer to Figure 24-4.Given the economy is at point A in year 1,what is the inflation rate between year 1 and year 2?

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

An increase in the price level results in a(n) in the quantity of real GDP demanded because .

Last week,six Swedish kronor could purchase one U.S.dollar.This week,it takes eight Swedish kronor to purchase one U.S.dollar.This change in the value of the dollar will exports from the United States to Sweden and U.S.aggregate demand.