Question 1

Which of the following would shift aggregate demand to the left?

Accepted Answer

A)  A study predicts that the recent drought will increase food prices this winter. 
B)  There is a rise in the median price of houses. 
C)  A rise in the price level reduces saving and increases interest rates. 
D)  The value of the dollar increases. 
E)  The European Union emerges from recession. 
A)  A study predicts that the recent drought will increase food prices this winter. 
B)  There is a rise in the median price of houses. 
C)  A rise in the price level reduces saving and increases interest rates. 
D)  The value of the dollar increases. 
E)  The European Union emerges from recession.

Question 2

Referring to how low a trough or how high a peak of a business cycle is,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 3

Refer to the following figure to answer the questions that follow.
  
-Based on the figure,which of the following would cause the aggregate demand curve to shift from AD₂ to AD₁?

Accepted Answer

A)  The economy has been producing more than its full employment output level and wages and input prices begin to rise. 
B)  There is an increase in the price of oil. 
C)  There is an increase in the general price level that reduces real wealth. 
D)  There is a reduction in consumer confidence about future growth in the economy. 
E)  There is a reduction in income tax rates. 
A)  The economy has been producing more than its full employment output level and wages and input prices begin to rise. 
B)  There is an increase in the price of oil. 
C)  There is an increase in the general price level that reduces real wealth. 
D)  There is a reduction in consumer confidence about future growth in the economy. 
E)  There is a reduction in income tax rates.

Question 4

Refer to the following figure to answer the questions that follow.
  
-Based on the figure,which of the following would cause the long-run equilibrium point to change from point B to point D?

Accepted Answer

A)  The population has aged and there are fewer people in the labor force. 
B)  Firms and workers expected the price level to rise. 
C)  The economy experienced an increase in government spending. 
D)  The economy was in an expansion and has adjusted. 
E)  The country's overall productivity increased. 
A)  The population has aged and there are fewer people in the labor force. 
B)  Firms and workers expected the price level to rise. 
C)  The economy experienced an increase in government spending. 
D)  The economy was in an expansion and has adjusted. 
E)  The country's overall productivity increased.

Question 5

The Great Recession began in:

Accepted Answer

A)  December 2009. 
B)  June 2009. 
C)  August 1929. 
D)  December 2007. 
E)  January 1930. 
A)  December 2009. 
B)  June 2009. 
C)  August 1929. 
D)  December 2007. 
E)  January 1930.

Question 6

The long run is best defined as a period of time such that:

Accepted Answer

A)  more than one year has passed. 
B)  more than five years have passed. 
C)  some prices have adjusted. 
D)  all prices have adjusted. 
E)  all firms are maximizing profit. 
A)  more than one year has passed. 
B)  more than five years have passed. 
C)  some prices have adjusted. 
D)  all prices have adjusted. 
E)  all firms are maximizing profit.

Question 7

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

Accepted Answer

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

Question 8

Which of the following conditions might cause the unemployment rate to be less than the natural rate of unemployment?

Accepted Answer

A)  Demand for products starts to decrease, so firms keep their factories open for additional hours of production to make up the difference. 
B)  Demand for products is so high that firms keep their factories open for additional hours of production and pay their workers overtime. 
C)  Demand for products is so high that firms raise their prices to take advantage of extra profits. 
D)  The economy enters a recession, so firms start to produce more to help boost the economy. 
E)  The government decreases unemployment benefits. 
A)  Demand for products starts to decrease, so firms keep their factories open for additional hours of production to make up the difference. 
B)  Demand for products is so high that firms keep their factories open for additional hours of production and pay their workers overtime. 
C)  Demand for products is so high that firms raise their prices to take advantage of extra profits. 
D)  The economy enters a recession, so firms start to produce more to help boost the economy. 
E)  The government decreases unemployment benefits.

Question 9

Consider the following figure to answer the questions that follow.
  
-During which year was average income climbing the most rapidly?

Accepted Answer

A)  2000 
B)  2001 
C)  2004 
D)  2005 
E)  2008 
A)  2000 
B)  2001 
C)  2004 
D)  2005 
E)  2008

Question 10

When actual unemployment is less than its natural rate,the:

Accepted Answer

A)  economy is expanding beyond its long-run capabilities. 
B)  economy is producing within its long-run capabilities. 
C)  numbers must be wrong because the actual unemployment rate can never be less than the natural rate. 
D)  economy is in a recession. 
E)  economy must be experiencing high inflation. 
A)  economy is expanding beyond its long-run capabilities. 
B)  economy is producing within its long-run capabilities. 
C)  numbers must be wrong because the actual unemployment rate can never be less than the natural rate. 
D)  economy is in a recession. 
E)  economy must be experiencing high inflation.

Question 11

A supply shock is defined as a(n):

Accepted Answer

A)  decrease in full employment output. 
B)  surprise event that changes the firm's production costs. 
C)  reduction in aggregate demand that has a negative impact on the firm's revenue. 
D)  sudden upward movement along the short-run aggregate supply curve. 
E)  attempt by employees to negotiate a wage increase. 
A)  decrease in full employment output. 
B)  surprise event that changes the firm's production costs. 
C)  reduction in aggregate demand that has a negative impact on the firm's revenue. 
D)  sudden upward movement along the short-run aggregate supply curve. 
E)  attempt by employees to negotiate a wage increase.

Question 12

For the questions that follow, suppose a country has the following quarterly growth data for the last three years:
  
-The country's long-run average growth rate is 3%.In how many of these quarters did GDP contract?

Accepted Answer

A)  two 
B)  six 
C)  five 
D)  four 
E)  three 
A)  two 
B)  six 
C)  five 
D)  four 
E)  three

Question 13

Refer to the following figure to answer the questions that follow.
  
-Based on the figure,starting at point A,if there is an increase in the price of oil,then in the short run we move to point ________ and in the long run to point ________.

Accepted Answer

A)  F; E 
B)  F; A 
C)  D; C 
D)  D; A 
E)  B; E 
A)  F; E 
B)  F; A 
C)  D; C 
D)  D; A 
E)  B; E

Question 14

An increase in the value of the dollar will ________ exports and ________ imports.

Accepted Answer

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

Question 15

Suppose that you have the following information about the economy,where all figures are in millions of dollars:
Full employment output = $2,000
Consumption = $1,200
Investment = $400
Government spending = $500
Net exports = -$200
Because short-run output is ________ full employment output,in the long run we would expect the price level to ________.

Accepted Answer

A)  less than; rise 
B)  less than; fall 
C)  greater than; rise 
D)  greater than; fall 
E)  equal to; remain unchanged 
A)  less than; rise 
B)  less than; fall 
C)  greater than; rise 
D)  greater than; fall 
E)  equal to; remain unchanged

Question 16

Suppose the majority of students who are graduating in May from a large university have found jobs and signed employment contracts by February.Starting in February,these students are likely to ________ spending and shift the aggregate demand curve________.

Accepted Answer

A)  increase; to the left 
B)  decrease; to the right 
C)  decrease; to the left 
D)  increase; to the right 
E)  not change their rate of; to the right 
A)  increase; to the left 
B)  decrease; to the right 
C)  decrease; to the left 
D)  increase; to the right 
E)  not change their rate of; to the right

Question 17

When the U.S.aggregate demand curve shifted to the left during the Great Depression:

Accepted Answer

A)  tax rates decreased. 
B)  real gross domestic product (GDP) increased. 
C)  the price level increased. 
D)  the money supply increased. 
E)  real GDP decreased. 
A)  tax rates decreased. 
B)  real gross domestic product (GDP) increased. 
C)  the price level increased. 
D)  the money supply increased. 
E)  real GDP decreased.

Question 18

An increase in the value of the dollar will:

Accepted Answer

A)  have no effect on aggregate demand or supply. 
B)  decrease aggregate supply. 
C)  increase aggregate supply. 
D)  increase aggregate demand. 
E)  decrease aggregate demand. 
A)  have no effect on aggregate demand or supply. 
B)  decrease aggregate supply. 
C)  increase aggregate supply. 
D)  increase aggregate demand. 
E)  decrease aggregate demand.

Question 19

The Great Recession began in ________ and lasted for ________ months.

Accepted Answer

A)  June 2011; 12 
B)  August 1929; 44 
C)  December 2007; 18 
D)  May 1937; 14 
E)  March 2001; 8 
A)  June 2011; 12 
B)  August 1929; 44 
C)  December 2007; 18 
D)  May 1937; 14 
E)  March 2001; 8

Question 20

During the Great Depression,aggregate demand in the U.S.economy decreased.As a result,the unemployment rate ________ and the price level ________.

Accepted Answer

A)  decreased; increased 
B)  remained unchanged; increased 
C)  increased; remained unchanged 
D)  remained unchanged; remained unchanged 
E)  increased; decreased 
A)  decreased; increased 
B)  remained unchanged; increased 
C)  increased; remained unchanged 
D)  remained unchanged; remained unchanged 
E)  increased; decreased

Which of the following would shift aggregate demand to the left?

Referring to how low a trough or how high a peak of a business cycle is,the term used to describe this phenomenon is:

Refer to the following figure to answer the questions that follow. -Based on the figure,which of the following would cause the aggregate demand curve to shift from AD₂ to AD₁?

Refer to the following figure to answer the questions that follow. -Based on the figure,which of the following would cause the long-run equilibrium point to change from point B to point D?

The Great Recession began in:

The long run is best defined as a period of time such that:

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

Which of the following conditions might cause the unemployment rate to be less than the natural rate of unemployment?

Consider the following figure to answer the questions that follow. -During which year was average income climbing the most rapidly?

When actual unemployment is less than its natural rate,the:

A supply shock is defined as a(n):

For the questions that follow, suppose a country has the following quarterly growth data for the last three years: -The country's long-run average growth rate is 3%.In how many of these quarters did GDP contract?

Refer to the following figure to answer the questions that follow. -Based on the figure,starting at point A,if there is an increase in the price of oil,then in the short run we move to point and in the long run to point .

An increase in the value of the dollar will exports and imports.

Suppose the majority of students who are graduating in May from a large university have found jobs and signed employment contracts by February.Starting in February,these students are likely to spending and shift the aggregate demand curve.

When the U.S.aggregate demand curve shifted to the left during the Great Depression:

An increase in the value of the dollar will:

The Great Recession began in and lasted for months.

During the Great Depression,aggregate demand in the U.S.economy decreased.As a result,the unemployment rate and the price level .

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 would shift aggregate demand to the left?

Referring to how low a trough or how high a peak of a business cycle is,the term used to describe this phenomenon is:

Refer to the following figure to answer the questions that follow. -Based on the figure,which of the following would cause the aggregate demand curve to shift from AD₂ to AD₁?

Refer to the following figure to answer the questions that follow. -Based on the figure,which of the following would cause the long-run equilibrium point to change from point B to point D?

The Great Recession began in:

The long run is best defined as a period of time such that:

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

Which of the following conditions might cause the unemployment rate to be less than the natural rate of unemployment?

Consider the following figure to answer the questions that follow. -During which year was average income climbing the most rapidly?

When actual unemployment is less than its natural rate,the:

A supply shock is defined as a(n):

For the questions that follow, suppose a country has the following quarterly growth data for the last three years: -The country's long-run average growth rate is 3%.In how many of these quarters did GDP contract?

Refer to the following figure to answer the questions that follow. -Based on the figure,starting at point A,if there is an increase in the price of oil,then in the short run we move to point ________ and in the long run to point ________.

An increase in the value of the dollar will ________ exports and ________ imports.

Suppose the majority of students who are graduating in May from a large university have found jobs and signed employment contracts by February.Starting in February,these students are likely to ________ spending and shift the aggregate demand curve________.

When the U.S.aggregate demand curve shifted to the left during the Great Depression:

An increase in the value of the dollar will:

The Great Recession began in ________ and lasted for ________ months.

During the Great Depression,aggregate demand in the U.S.economy decreased.As a result,the unemployment rate ________ and the price level ________.

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

Refer to the following figure to answer the questions that follow. -Based on the figure,starting at point A,if there is an increase in the price of oil,then in the short run we move to point and in the long run to point .

An increase in the value of the dollar will exports and imports.

Suppose the majority of students who are graduating in May from a large university have found jobs and signed employment contracts by February.Starting in February,these students are likely to spending and shift the aggregate demand curve.

The Great Recession began in and lasted for months.

During the Great Depression,aggregate demand in the U.S.economy decreased.As a result,the unemployment rate and the price level .