Question 1

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

Question 2

A decrease in aggregate demand causes a decrease in ________ only in the short run,but causes a decrease 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 D

Question 3

President Bush lowered income taxes for individuals in 2001. Explain how lower income taxes affect the aggregate demand curve.

Accepted Answer

Lowering the income tax increases the amount of disposable income available to households.Higher disposable income increases consumption at every price level.The result is a shift in the aggregate demand curve to the right.

Question 4

If the U.S.dollar increases 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 5

Monetarism is a school of thought put forth by Milton Friedman. He argued that the economy would most likely

Accepted Answer

A)  be below potential GDP. 
B)  be at potential GDP. 
C)  be unstable. 
D)  be above potential GDP. 
A)  be below potential GDP. 
B)  be at potential GDP. 
C)  be unstable. 
D)  be above potential GDP.

Question 6

An increase in disposable income will shift the aggregate demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 7

The long-run aggregate supply curve shows the relationship between

Accepted Answer

A)  short-run aggregate supply and short-run aggregate demand. 
B)  the price level and quantity of real GDP supplied. 
C)  the real interest rate and the nominal interest rate. 
D)  the quantity of real GDP supplied and the quantity of nominal GDP supplied. 
A)  short-run aggregate supply and short-run aggregate demand. 
B)  the price level and quantity of real GDP supplied. 
C)  the real interest rate and the nominal interest rate. 
D)  the quantity of real GDP supplied and the quantity of nominal GDP supplied.

Question 8

If technological change occurs in the economy,

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 9

Suppose a developing country experiences a reduction in machinery and capital equipment as foreign entrepreneurs decrease the amount of investment in the economy. As a result,

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

Question 10

Stagflation occurs when inflation ________ and GDP ________.

Accepted Answer

A)  rises; rises 
B)  rises; falls 
C)  falls; rises 
D)  falls; falls 
A)  rises; rises 
B)  rises; falls 
C)  falls; rises 
D)  falls; falls

Question 11

Because of the slope(s)of the ________,we can say that a decrease in the price level leads to a higher level of real GDP demanded.

Accepted Answer

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

Question 12

The invention of the integrated circuit by Jack Kilby of Texas Instruments gave rise to the information age.What did this technological change do the short-run supply curve?

Accepted Answer

A)  It shifted the short-run aggregate supply curve to the left. 
B)  It shifted the short-run aggregate supply curve to the right. 
C)  It moved the economy up along a stationary short-run aggregate supply curve. 
D)  It moved the economy down along a stationary short-run aggregate supply curve. 
A)  It shifted the short-run aggregate supply curve to the left. 
B)  It shifted the short-run aggregate supply curve to the right. 
C)  It moved the economy up along a stationary short-run aggregate supply curve. 
D)  It moved the economy down along a stationary short-run aggregate supply curve.

Question 13

The new Keynesians emphasize the importance of

Accepted Answer

A)  rational expectations. 
B)  the monetary growth rule. 
C)  real causes of the business cycle. 
D)  sticky wages and prices. 
A)  rational expectations. 
B)  the monetary growth rule. 
C)  real causes of the business cycle. 
D)  sticky wages and prices.

Question 14

Figure 24-1
  
-Refer to Figure 24-1.Ceteris paribus,a decrease 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 15

Figure 24-2
  
-Refer to Figure 24-2.Ceteris paribus,a decrease in the price level 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 16

During 2008,oil price increases

Accepted Answer

A)  shifted the short-run aggregate supply curve farther to the left than similar increases had 30 years earlier. 
B)  shifted the aggregate demand curve farther to the right than similar increases had 30 years earlier. 
C)  did not shift the short-run aggregate supply curve as far to the left as similar increases had 30 years earlier. 
D)  shifted the aggregate demand curve farther to the left than similar increases had 30 years earlier. 
A)  shifted the short-run aggregate supply curve farther to the left than similar increases had 30 years earlier. 
B)  shifted the aggregate demand curve farther to the right than similar increases had 30 years earlier. 
C)  did not shift the short-run aggregate supply curve as far to the left as similar increases had 30 years earlier. 
D)  shifted the aggregate demand curve farther to the left than similar increases had 30 years earlier.

Question 17

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 18

A decrease 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 19

Stagflation occurs when short-run aggregate supply decreases.

Accepted Answer

A) True 
 B)False

Question 20

If potential GDP is equal to $600 billion,what does the long-run aggregate supply curve look like?

Accepted Answer

A)  It is a horizontal line at $600 billion of GDP. 
B)  It is a vertical line at a level of GDP below $600 billion. 
C)  It is a vertical line at $600 billion of GDP. 
D)  It is a vertical line at a level of GDP above $600 billion. 
A)  It is a horizontal line at $600 billion of GDP. 
B)  It is a vertical line at a level of GDP below $600 billion. 
C)  It is a vertical line at $600 billion of GDP. 
D)  It is a vertical line at a level of GDP above $600 billion.

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

A decrease in aggregate demand causes a decrease in only in the short run,but causes a decrease in in both the short run and the long run.

President Bush lowered income taxes for individuals in 2001. Explain how lower income taxes affect the aggregate demand curve.

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

Monetarism is a school of thought put forth by Milton Friedman. He argued that the economy would most likely

An increase in disposable income will shift the aggregate demand curve to the right.

The long-run aggregate supply curve shows the relationship between

If technological change occurs in the economy,

Suppose a developing country experiences a reduction in machinery and capital equipment as foreign entrepreneurs decrease the amount of investment in the economy. As a result,

Stagflation occurs when inflation and GDP .

Because of the slope(s)of the ________,we can say that a decrease in the price level leads to a higher level of real GDP demanded.

The invention of the integrated circuit by Jack Kilby of Texas Instruments gave rise to the information age.What did this technological change do the short-run supply curve?

The new Keynesians emphasize the importance of

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

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

During 2008,oil price increases

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

A decrease in aggregate demand results in a(n) in the .

Stagflation occurs when short-run aggregate supply decreases.

If potential GDP is equal to $600 billion,what does the long-run aggregate supply curve look like?

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

A decrease in aggregate demand causes a decrease in ________ only in the short run,but causes a decrease in ________ in both the short run and the long run.

President Bush lowered income taxes for individuals in 2001. Explain how lower income taxes affect the aggregate demand curve.

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

Monetarism is a school of thought put forth by Milton Friedman. He argued that the economy would most likely

An increase in disposable income will shift the aggregate demand curve to the right.

The long-run aggregate supply curve shows the relationship between

If technological change occurs in the economy,

Suppose a developing country experiences a reduction in machinery and capital equipment as foreign entrepreneurs decrease the amount of investment in the economy. As a result,

Stagflation occurs when inflation ________ and GDP ________.

Because of the slope(s)of the ________,we can say that a decrease in the price level leads to a higher level of real GDP demanded.

The invention of the integrated circuit by Jack Kilby of Texas Instruments gave rise to the information age.What did this technological change do the short-run supply curve?

The new Keynesians emphasize the importance of

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

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

During 2008,oil price increases

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

A decrease in aggregate demand results in a(n)________ in the ________.

Stagflation occurs when short-run aggregate supply decreases.

If potential GDP is equal to $600 billion,what does the long-run aggregate supply curve look like?

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

A decrease in aggregate demand causes a decrease in only in the short run,but causes a decrease in in both the short run and the long run.

Stagflation occurs when inflation and GDP .

A decrease in aggregate demand results in a(n) in the .