Question 1

According to the real business cycle model,________ in aggregate demand ________ GDP.

Accepted Answer

A)  increases; decrease 
B)  increases; increase 
C)  increases; do not affect 
D)  decreases; increase 
A)  increases; decrease 
B)  increases; increase 
C)  increases; do not affect 
D)  decreases; increase

Question 2

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 3

Figure 24-2
  
-Refer to Figure 24-2.Ceteris paribus,a decrease in the capital stock 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 4

An increase in the price level will

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 5

An increase in aggregate demand results in a(n)________ in the ________.

Accepted Answer

A)  recession; long run 
B)  expansion; long run 
C)  expansion; short run 
D)  recession; short run 
A)  recession; long run 
B)  expansion; long run 
C)  expansion; short run 
D)  recession; short run

Question 6

Briefly describe monetarism and the monetary growth rule.

Accepted Answer

Monetarism refers to the macroeconomic t

Question 7

Figure 24-3
  
-Refer to Figure 24-3.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 24-2
  
-Refer to Figure 24-2.Ceteris paribus,an increase in the labor force 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 9

Workers expect inflation to rise from 3% to 5% next year.As a result,this 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 10

On the long-run aggregate supply curve,

Accepted Answer

A)  a decrease in the price level decreases the level of potential GDP. 
B)  a decrease in the price level increases the aggregate quantity of GDP supplied. 
C)  a decrease in the price level decreases the aggregate quantity of GDP supplied. 
D)  a decrease in the price level has no effect on the aggregate quantity of GDP supplied. 
A)  a decrease in the price level decreases the level of potential GDP. 
B)  a decrease in the price level increases the aggregate quantity of GDP supplied. 
C)  a decrease in the price level decreases the aggregate quantity of GDP supplied. 
D)  a decrease in the price level has no effect on the aggregate quantity of GDP supplied.

Question 11

An increase in aggregate demand causes an increase in ________ only in the short run,but causes an increase in ________ in both the short run and the long run.

Accepted Answer

A)  the price level; real GDP 
B)  real GDP; real GDP 
C)  the price level; the price level 
D)  real GDP; the price level 
A)  the price level; real GDP 
B)  real GDP; real GDP 
C)  the price level; the price level 
D)  real GDP; the price level

Question 12

Using the aggregate supply and demand model,illustrate what happens in the long run when the economy suffers a supply shock.Begin your analysis by assuming the economy has suffered the supply shock in the short run,but has not yet adjusted to it in the long run.

Accepted Answer

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

Question 13

Deflation will

Accepted Answer

A)  increase aggregate demand. 
B)  increase the quantity of real GDP demanded. 
C)  decrease aggregate demand. 
D)  decrease the quantity of real GDP demanded. 
A)  increase aggregate demand. 
B)  increase the quantity of real GDP demanded. 
C)  decrease aggregate demand. 
D)  decrease the quantity of real GDP demanded.

Question 14

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 15

Figure 24-3
  
-Refer to Figure 24-3.Suppose the economy is at point A.If investment 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 aggregate demand just increased,which of the following may have caused the increase?

Accepted Answer

A)  an increase in government purchases 
B)  an increase in the interest rate 
C)  an increase in the price level 
D)  an increase in imports 
A)  an increase in government purchases 
B)  an increase in the interest rate 
C)  an increase in the price level 
D)  an increase in imports

Question 17

The ________ shows the relationship between the price level and quantity of real GDP demanded.

Accepted Answer

A)  consumer price index 
B)  aggregate expenditure line 
C)  45-degree line 
D)  aggregate demand curve 
A)  consumer price index 
B)  aggregate expenditure line 
C)  45-degree line 
D)  aggregate demand curve

Question 18

Interest rates in the economy have fallen.How will this affect aggregate demand and equilibrium in the short run?

Accepted Answer

A)  Aggregate demand will rise, the equilibrium price level will rise, and the equilibrium level of GDP will rise. 
B)  Aggregate demand will rise, the equilibrium price level will fall, and the equilibrium level of GDP will rise. 
C)  Aggregate demand will fall, the equilibrium price level will fall, and the equilibrium level of GDP will fall. 
D)  Aggregate demand will fall, the equilibrium price level will rise, and the equilibrium level of GDP will fall. 
A)  Aggregate demand will rise, the equilibrium price level will rise, and the equilibrium level of GDP will rise. 
B)  Aggregate demand will rise, the equilibrium price level will fall, and the equilibrium level of GDP will rise. 
C)  Aggregate demand will fall, the equilibrium price level will fall, and the equilibrium level of GDP will fall. 
D)  Aggregate demand will fall, the equilibrium price level will rise, and the equilibrium level of GDP will fall.

Question 19

Using an aggregate demand graph,illustrate the impact of an increase in the interest rate.

Accepted Answer

@#IMG-DLM& The increase in the interest rate will

Question 20

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

Accepted Answer

We can make the aggregate demand and agg

According to the real business cycle model, in aggregate demand GDP.

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

Figure 24-2 -Refer to Figure 24-2.Ceteris paribus,a decrease in the capital stock would be represented by a movement from

An increase in the price level will

An increase in aggregate demand results in a(n) in the .

Briefly describe monetarism and the monetary growth rule.

Figure 24-3 -Refer to Figure 24-3.Suppose the economy is at point A.If the economy experiences a supply shock,where will the eventual short-run equilibrium be?

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

Workers expect inflation to rise from 3% to 5% next year.As a result,this should

On the long-run aggregate supply curve,

An increase in aggregate demand causes an increase in only in the short run,but causes an increase in in both the short run and the long run.

Using the aggregate supply and demand model,illustrate what happens in the long run when the economy suffers a supply shock.Begin your analysis by assuming the economy has suffered the supply shock in the short run,but has not yet adjusted to it in the long run.

Deflation will

How do lower taxes affect aggregate demand?

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

If aggregate demand just increased,which of the following may have caused the increase?

The ________ shows the relationship between the price level and quantity of real GDP demanded.

Interest rates in the economy have fallen.How will this affect aggregate demand and equilibrium in the short run?

Using an aggregate demand graph,illustrate the impact of an increase in the interest rate.

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

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

According to the real business cycle model,________ in aggregate demand ________ GDP.

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

Figure 24-2 -Refer to Figure 24-2.Ceteris paribus,a decrease in the capital stock would be represented by a movement from

An increase in the price level will

An increase in aggregate demand results in a(n)________ in the ________.

Briefly describe monetarism and the monetary growth rule.

Figure 24-3 -Refer to Figure 24-3.Suppose the economy is at point A.If the economy experiences a supply shock,where will the eventual short-run equilibrium be?

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

Workers expect inflation to rise from 3% to 5% next year.As a result,this should

On the long-run aggregate supply curve,

An increase in aggregate demand causes an increase in ________ only in the short run,but causes an increase in ________ in both the short run and the long run.

Using the aggregate supply and demand model,illustrate what happens in the long run when the economy suffers a supply shock.Begin your analysis by assuming the economy has suffered the supply shock in the short run,but has not yet adjusted to it in the long run.

Deflation will

How do lower taxes affect aggregate demand?

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

If aggregate demand just increased,which of the following may have caused the increase?

The ________ shows the relationship between the price level and quantity of real GDP demanded.

Interest rates in the economy have fallen.How will this affect aggregate demand and equilibrium in the short run?

Using an aggregate demand graph,illustrate the impact of an increase in the interest rate.

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

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

According to the real business cycle model, in aggregate demand GDP.

An increase in aggregate demand results in a(n) in the .

An increase in aggregate demand causes an increase in only in the short run,but causes an increase in in both the short run and the long run.