Question 1

Which of the following causes an increase in short-run aggregate supply?

Accepted Answer

A)  The price level increases. 
B)  The price level decreases. 
C)  Firms and workers expect the price level to fall. 
D)  Firms and workers expect the price level to rise. 
E)  There are fewer workers in the labor force. 
A)  The price level increases. 
B)  The price level decreases. 
C)  Firms and workers expect the price level to fall. 
D)  Firms and workers expect the price level to rise. 
E)  There are fewer workers in the labor force.

Question 2

The Great Recession was similar to most other recessions since World War II in that the economy:

Accepted Answer

A)  rapidly bounced back and resumed normal growth quickly. 
B)  never really declined much at all. 
C)  did not return to normal for at least one year. 
D)  increased rapidly following the beginning of the recession. 
E)  essentially collapsed and never recovered. 
A)  rapidly bounced back and resumed normal growth quickly. 
B)  never really declined much at all. 
C)  did not return to normal for at least one year. 
D)  increased rapidly following the beginning of the recession. 
E)  essentially collapsed and never recovered.

Question 3

The economy is in long-run equilibrium when:

Accepted Answer

A)  aggregate demand intersects short-run aggregate supply. 
B)  short-run aggregate supply intersects long-run aggregate supply. 
C)  aggregate demand intersects long-run aggregate supply. 
D)  aggregate demand intersects both long-run and short-run aggregate supply. 
E)  the economy is at full employment output. 
A)  aggregate demand intersects short-run aggregate supply. 
B)  short-run aggregate supply intersects long-run aggregate supply. 
C)  aggregate demand intersects long-run aggregate supply. 
D)  aggregate demand intersects both long-run and short-run aggregate supply. 
E)  the economy is at full employment output.

Question 4

Which of the following would cause an increase in long-run aggregate supply?

Accepted Answer

A)  The price level increases. 
B)  The price level decreases. 
C)  Firms and workers expect the price level to fall. 
D)  Firms and workers expect the price level to rise. 
E)  The stock of capital increases. 
A)  The price level increases. 
B)  The price level decreases. 
C)  Firms and workers expect the price level to fall. 
D)  Firms and workers expect the price level to rise. 
E)  The stock of capital increases.

Question 5

The long-run aggregate supply curve is:

Accepted Answer

A)  vertical at the level of full employment output. 
B)  horizontal at the going-price level. 
C)  illustrating a positive relationship between price and output. 
D)  illustrating a negative relationship between price and output. 
E)  the same as the short-run aggregate supply curve. 
A)  vertical at the level of full employment output. 
B)  horizontal at the going-price level. 
C)  illustrating a positive relationship between price and output. 
D)  illustrating a negative relationship between price and output. 
E)  the same as the short-run aggregate supply curve.

Question 6

It takes time for the complete effects of monetary and fiscal policy to materialize.This is because there is a(n)________ lag between setting fiscal policy and seeing its effects.

Accepted Answer

A)  recognition 
B)  implementation 
C)  impact 
D)  countercyclical 
E)  automatic 
A)  recognition 
B)  implementation 
C)  impact 
D)  countercyclical 
E)  automatic

Question 7

Dispersion of a business cycle refers to:

Accepted Answer

A)  the length of time from one business cycle peak to the next. 
B)  how low a trough or how high a peak of a business cycle is. 
C)  which segments of the economy are affected by a recession in a business cycle. 
D)  whether the bottom of the cycle is a depression. 
E)  how large a cross section of businesses exit their industry. 
A)  the length of time from one business cycle peak to the next. 
B)  how low a trough or how high a peak of a business cycle is. 
C)  which segments of the economy are affected by a recession in a business cycle. 
D)  whether the bottom of the cycle is a depression. 
E)  how large a cross section of businesses exit their industry.

Question 8

Shifts in the long-run aggregate supply curve are caused by:

Accepted Answer

A)  changes in labor productivity. 
B)  the wealth effect. 
C)  supply shocks. 
D)  changes in spending. 
E)  the interest rate effect. 
A)  changes in labor productivity. 
B)  the wealth effect. 
C)  supply shocks. 
D)  changes in spending. 
E)  the interest rate effect.

Question 9

Input prices affect the firm's ________,and output prices affect the firm's ________.

Accepted Answer

A)  revenue; costs 
B)  costs; costs 
C)  costs; revenue 
D)  revenue; revenue 
E)  decisions in the short run but not in the long run; decisions in the long run but not in the short run 
A)  revenue; costs 
B)  costs; costs 
C)  costs; revenue 
D)  revenue; revenue 
E)  decisions in the short run but not in the long run; decisions in the long run but not in the short run

Question 10

The Great Depression is characterized by a decrease in aggregate demand.Of the following factors,which would have caused aggregate demand to decrease?

Accepted Answer

A)  an increase in the labor supply 
B)  an increase in the money supply 
C)  an advance in technology 
D)  a decrease in expected future income 
E)  an increase in government spending 
A)  an increase in the labor supply 
B)  an increase in the money supply 
C)  an advance in technology 
D)  a decrease in expected future income 
E)  an increase in government spending

Question 11

All else being equal,an increase in ________ would shift the long-run aggregate supply curve to the left.

Accepted Answer

A)  the unemployment rate 
B)  the inflation rate 
C)  economic growth 
D)  government spending 
E)  the rate at which capital deteriorates (depreciation) 
A)  the unemployment rate 
B)  the inflation rate 
C)  economic growth 
D)  government spending 
E)  the rate at which capital deteriorates (depreciation)

Question 12

The long-run average growth rate of real GDP in the U.S.economy is about:

Accepted Answer

A)  2%. 
B)  3%. 
C)  5%. 
D)  10%. 
E)  1%. 
A)  2%. 
B)  3%. 
C)  5%. 
D)  10%. 
E)  1%.

Question 13

Consider the following data that identifies real GDP in comparison to the long-run trend of real GDP to answer the questions that follow.
  
-Between quarter 10 and quarter 11,real GDP grew by what percentage?

Accepted Answer

A)  6% 
B)  3% 
C)  4% 
D)  5% 
E)  -5% 
A)  6% 
B)  3% 
C)  4% 
D)  5% 
E)  -5%

Question 14

When median home prices of currently owned homes rise,the value of real wealth for these owners ________ and their aggregate demand ________.

Accepted Answer

A)  increases; is unaffected 
B)  increases; increases 
C)  increases; decreases 
D)  decreases; decreases 
E)  is unaffected; is unaffected 
A)  increases; is unaffected 
B)  increases; increases 
C)  increases; decreases 
D)  decreases; decreases 
E)  is unaffected; is unaffected

Question 15

Referring to which segments of the economy are affected by a recession in a business cycle,the term used to describe this phenomenon is:

Accepted Answer

A)  altitude. 
B)  dispersion. 
C)  duration. 
D)  depth. 
E)  amplitude. 
A)  altitude. 
B)  dispersion. 
C)  duration. 
D)  depth. 
E)  amplitude.

Question 16

The phase of the business cycle where the economy is growing faster than usual is called:

Accepted Answer

A)  an economic trough. 
B)  the long-run trend of GDP. 
C)  an economic expansion. 
D)  an economic contraction. 
E)  an economic peak. 
A)  an economic trough. 
B)  the long-run trend of GDP. 
C)  an economic expansion. 
D)  an economic contraction. 
E)  an economic peak.

Question 17

Perfect summer weather increases farm output by 30%.In the short run,this can be expected to ________ the price level and ________ real wealth.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
E)  have no effect on; have no effect on 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
E)  have no effect on; have no effect on

Question 18

A(n)________ would cause a rightward shift of the aggregate demand curve.

Accepted Answer

A)  decrease in the expected price level 
B)  decrease in foreign income 
C)  increase in expected income 
D)  decrease in real wealth 
E)  increase in the value of the dollar 
A)  decrease in the expected price level 
B)  decrease in foreign income 
C)  increase in expected income 
D)  decrease in real wealth 
E)  increase in the value of the dollar

Question 19

A severe drought hits a country and reduces farm output by 50%.In the short run,this will ________ output and ________ employment.

Accepted Answer

A)  decrease; decrease 
B)  decrease; increase 
C)  decrease; have no effect on 
D)  have no effect on; have no effect on 
E)  increase; increase 
A)  decrease; decrease 
B)  decrease; increase 
C)  decrease; have no effect on 
D)  have no effect on; have no effect on 
E)  increase; increase

Question 20

Increases in productivity will:

Accepted Answer

A)  cause the price level to rise. 
B)  impact short-run aggregate supply but not long-run aggregate supply. 
C)  impact aggregate demand but not aggregate supply. 
D)  increase long-run aggregate supply. 
E)  increase the price level and aggregate supply. 
A)  cause the price level to rise. 
B)  impact short-run aggregate supply but not long-run aggregate supply. 
C)  impact aggregate demand but not aggregate supply. 
D)  increase long-run aggregate supply. 
E)  increase the price level and aggregate supply.

Which of the following causes an increase in short-run aggregate supply?

The Great Recession was similar to most other recessions since World War II in that the economy:

The economy is in long-run equilibrium when:

Which of the following would cause an increase in long-run aggregate supply?

The long-run aggregate supply curve is:

It takes time for the complete effects of monetary and fiscal policy to materialize.This is because there is a(n)________ lag between setting fiscal policy and seeing its effects.

Dispersion of a business cycle refers to:

Shifts in the long-run aggregate supply curve are caused by:

Input prices affect the firm's ,and output prices affect the firm's .

The Great Depression is characterized by a decrease in aggregate demand.Of the following factors,which would have caused aggregate demand to decrease?

All else being equal,an increase in ________ would shift the long-run aggregate supply curve to the left.

The long-run average growth rate of real GDP in the U.S.economy is about:

Consider the following data that identifies real GDP in comparison to the long-run trend of real GDP to answer the questions that follow. -Between quarter 10 and quarter 11,real GDP grew by what percentage?

When median home prices of currently owned homes rise,the value of real wealth for these owners and their aggregate demand .

Referring to which segments of the economy are affected by a recession in a business cycle,the term used to describe this phenomenon is:

The phase of the business cycle where the economy is growing faster than usual is called:

Perfect summer weather increases farm output by 30%.In the short run,this can be expected to the price level and real wealth.

A(n)________ would cause a rightward shift of the aggregate demand curve.

A severe drought hits a country and reduces farm output by 50%.In the short run,this will output and employment.

Increases in productivity will:

Thinking Like an Economist

Economic Models and Gains From Trade

The Market at Work: Supply and Demand

Market Efficiency

Costs and Production: How Do Businesses Work?

Market Structures

Behavioral Economics and Game Theory

Labor Markets and Earnings

Government in the Economy

What Is Macroeconomics?

Measuring the Macroeconomy, Inflation, and Unemployment

Economic Growth and the Wealth of Nations

Savings, Investment, and the Market for Loanable Funds

Money and the Federal Reserve

Monetary Policy

Fiscal Policy and Budget Deficits

International Economics

Personal Finance

Filters

Exam 12: Aggregate Demand and Aggregate Supply

Which of the following causes an increase in short-run aggregate supply?

The Great Recession was similar to most other recessions since World War II in that the economy:

The economy is in long-run equilibrium when:

Which of the following would cause an increase in long-run aggregate supply?

The long-run aggregate supply curve is:

It takes time for the complete effects of monetary and fiscal policy to materialize.This is because there is a(n)________ lag between setting fiscal policy and seeing its effects.

Dispersion of a business cycle refers to:

Shifts in the long-run aggregate supply curve are caused by:

Input prices affect the firm's ________,and output prices affect the firm's ________.

The Great Depression is characterized by a decrease in aggregate demand.Of the following factors,which would have caused aggregate demand to decrease?

All else being equal,an increase in ________ would shift the long-run aggregate supply curve to the left.

The long-run average growth rate of real GDP in the U.S.economy is about:

Consider the following data that identifies real GDP in comparison to the long-run trend of real GDP to answer the questions that follow. -Between quarter 10 and quarter 11,real GDP grew by what percentage?

When median home prices of currently owned homes rise,the value of real wealth for these owners ________ and their aggregate demand ________.

Referring to which segments of the economy are affected by a recession in a business cycle,the term used to describe this phenomenon is:

The phase of the business cycle where the economy is growing faster than usual is called:

Perfect summer weather increases farm output by 30%.In the short run,this can be expected to ________ the price level and ________ real wealth.

A(n)________ would cause a rightward shift of the aggregate demand curve.

A severe drought hits a country and reduces farm output by 50%.In the short run,this will ________ output and ________ employment.

Increases in productivity will:

Thinking Like an Economist

Economic Models and Gains From Trade

The Market at Work: Supply and Demand

Market Efficiency

Costs and Production: How Do Businesses Work?

Market Structures

Behavioral Economics and Game Theory

Labor Markets and Earnings

Government in the Economy

What Is Macroeconomics?

Measuring the Macroeconomy, Inflation, and Unemployment

Economic Growth and the Wealth of Nations

Savings, Investment, and the Market for Loanable Funds

Money and the Federal Reserve

Monetary Policy

Fiscal Policy and Budget Deficits

International Economics

Personal Finance

Filters

Input prices affect the firm's ,and output prices affect the firm's .

When median home prices of currently owned homes rise,the value of real wealth for these owners and their aggregate demand .

Perfect summer weather increases farm output by 30%.In the short run,this can be expected to the price level and real wealth.

A severe drought hits a country and reduces farm output by 50%.In the short run,this will output and employment.