Question 1

Refer to the following figure to answer the next five questions.
  
-Based on the figure,which points represent long-run equilibrium?

Accepted Answer

A)  A and B 
B)  A and C 
C)  A and D 
D)  B and D 
E)  A, B, C, and D 
A)  A and B 
B)  A and C 
C)  A and D 
D)  B and D 
E)  A, B, C, and D

Question 2

Consider the wealth effect,interest rate effect,and international trade effect.Of these,the __________ effect is the most significant and the __________ effect is the least significant.

Accepted Answer

A)  wealth; international trade 
B)  wealth; interest rate 
C)  interest rate; wealth 
D)  interest rate; international trade 
E)  international trade; wealth 
A)  wealth; international trade 
B)  wealth; interest rate 
C)  interest rate; wealth 
D)  interest rate; international trade 
E)  international trade; wealth

Question 3

The term ___________ is a popular way to describe the recession-expansion pattern followed by the economy.

Accepted Answer

A)  business cycle 
B)  output cycle 
C)  inflation cycle 
D)  unemployment cycle 
E)  long-run cycle 
A)  business cycle 
B)  output cycle 
C)  inflation cycle 
D)  unemployment cycle 
E)  long-run cycle

Question 4

In the long run,the output of an economy:

Accepted Answer

A)  does not grow. 
B)  grows at a positive rate. 
C)  depends on aggregate demand. 
D)  is equal to full employment output. 
E)  depends on the price level. 
A)  does not grow. 
B)  grows at a positive rate. 
C)  depends on aggregate demand. 
D)  is equal to full employment output. 
E)  depends on the price level.

Question 5

In the long run,a technological advance that improves communication can be expected to _________ labor productivity and _________ unemployment.

Accepted Answer

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

Question 6

Suppose new drilling techniques increase the world oil supply.In the long run,output will _________ and the price level will _________.

Accepted Answer

A)  remain unchanged; decrease 
B)  remain unchanged; remain unchanged 
C)  increase; decrease 
D)  increase; remain unchanged 
E)  increase; increase 
A)  remain unchanged; decrease 
B)  remain unchanged; remain unchanged 
C)  increase; decrease 
D)  increase; remain unchanged 
E)  increase; increase

Question 7

How does the international trade effect explain the slope of the aggregate demand curve?

Accepted Answer

A rise in the price level makes a countr

Question 8

Starting from long-run equilibrium,draw an aggregate demand-aggregate supply graph to illustrate the difference between a long-run and a short-run equilibrium due to an increase in aggregate demand.Once the economy is in the short-run equilibrium,explain-but it's not necessary to illustrate-how long-run equilibrium will be restored.

Accepted Answer

In long-run equilibrium,the economy is p

Question 9

Refer to the following figure to answer the next five questions.
  
-Based on the figure,if the economy is at point F,then in the long run,we can expect:

Accepted Answer

A)  the price level to increase and output to increase. 
B)  the price level to decrease and output to increase. 
C)  the long-run aggregate supply curve to shift to the left. 
D)  aggregate demand to increase. 
E)  aggregate demand to decrease. 
A)  the price level to increase and output to increase. 
B)  the price level to decrease and output to increase. 
C)  the long-run aggregate supply curve to shift to the left. 
D)  aggregate demand to increase. 
E)  aggregate demand to decrease.

Question 10

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 11

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 12

Aggregate supply describes a relationship between:

Accepted Answer

A)  spending and income. 
B)  output and prices. 
C)  costs and revenue. 
D)  spending and output. 
E)  spending and prices. 
A)  spending and income. 
B)  output and prices. 
C)  costs and revenue. 
D)  spending and output. 
E)  spending and prices.

Question 13

If prices fall,then real wealth __________ and the quantity of aggregate demand __________.

Accepted Answer

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

Question 14

When an economy experiences economic growth:

Accepted Answer

A)  the long-run aggregate supply curve is unaffected. 
B)  the long-run aggregate supply curve shifts to the right. 
C)  the long-run aggregate supply curve shifts to the left. 
D)  the aggregate demand curve shifts to the left. 
E)  the short-run aggregate supply curve shifts to the left. 
A)  the long-run aggregate supply curve is unaffected. 
B)  the long-run aggregate supply curve shifts to the right. 
C)  the long-run aggregate supply curve shifts to the left. 
D)  the aggregate demand curve shifts to the left. 
E)  the short-run aggregate supply curve shifts to the left.

Question 15

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 16

Refer to the following figure to answer the next five questions.
  
-Based on the figure,if the economy is currently at point B,then in the long run,we can expect the economy to be at point __________.

Accepted Answer

A)  A 
B)  C 
C)  D 
D)  E 
E)  B 
A)  A 
B)  C 
C)  D 
D)  E 
E)  B

Question 17

The wealth effect is best described as resulting from:

Accepted Answer

A)  an increase in the price level reducing the real value of wealth. 
B)  a decrease in the price level reducing the real value of wealth. 
C)  an increase in wealth due to capital gains. 
D)  a decrease in wealth due to capital gains. 
E)  an increase in disposable income due to a reduction in taxes. 
A)  an increase in the price level reducing the real value of wealth. 
B)  a decrease in the price level reducing the real value of wealth. 
C)  an increase in wealth due to capital gains. 
D)  a decrease in wealth due to capital gains. 
E)  an increase in disposable income due to a reduction in taxes.

Question 18

_________ would decrease short-run aggregate supply.

Accepted Answer

A)  A negative supply shock 
B)  Menu costs 
C)  Money illusion 
D)  A technological advance 
E)  A lower than expected price level 
A)  A negative supply shock 
B)  Menu costs 
C)  Money illusion 
D)  A technological advance 
E)  A lower than expected price level

Question 19

Aggregate demand is about _________ and aggregate supply is about _________.

Accepted Answer

A)  income; spending 
B)  spending; production 
C)  production; spending 
D)  production; income 
E)  saving; profit 
A)  income; spending 
B)  spending; production 
C)  production; spending 
D)  production; income 
E)  saving; profit

Question 20

Refer to the following figure to answer the next five questions.
  
-Based on the figure,a decrease in _________ could cause the economy to move from point A to point B.

Accepted Answer

A)  investment 
B)  consumer confidence 
C)  labor productivity 
D)  the price of oil 
E)  taxes 
A)  investment 
B)  consumer confidence 
C)  labor productivity 
D)  the price of oil 
E)  taxes

Refer to the following figure to answer the next five questions. -Based on the figure,which points represent long-run equilibrium?

Consider the wealth effect,interest rate effect,and international trade effect.Of these,the effect is the most significant and the effect is the least significant.

The term ___________ is a popular way to describe the recession-expansion pattern followed by the economy.

In the long run,the output of an economy:

In the long run,a technological advance that improves communication can be expected to _ labor productivity and _ unemployment.

Suppose new drilling techniques increase the world oil supply.In the long run,output will _ and the price level will _.

How does the international trade effect explain the slope of the aggregate demand curve?

Refer to the following figure to answer the next five questions. -Based on the figure,if the economy is at point F,then in the long run,we can expect:

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

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

Aggregate supply describes a relationship between:

If prices fall,then real wealth and the quantity of aggregate demand .

When an economy experiences economic growth:

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

Refer to the following figure to answer the next five questions. -Based on the figure,if the economy is currently at point B,then in the long run,we can expect the economy to be at point __________.

The wealth effect is best described as resulting from:

_________ would decrease short-run aggregate supply.

Aggregate demand is about _ and aggregate supply is about _.

Refer to the following figure to answer the next five questions. -Based on the figure,a decrease in _________ could cause the economy to move from point A to point B.

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

Exam 13: The Aggregate Demandaggregate Supply Model

Refer to the following figure to answer the next five questions. -Based on the figure,which points represent long-run equilibrium?

Consider the wealth effect,interest rate effect,and international trade effect.Of these,the __________ effect is the most significant and the __________ effect is the least significant.

The term ___________ is a popular way to describe the recession-expansion pattern followed by the economy.

In the long run,the output of an economy:

In the long run,a technological advance that improves communication can be expected to _________ labor productivity and _________ unemployment.

Suppose new drilling techniques increase the world oil supply.In the long run,output will _________ and the price level will _________.

How does the international trade effect explain the slope of the aggregate demand curve?

Refer to the following figure to answer the next five questions. -Based on the figure,if the economy is at point F,then in the long run,we can expect:

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

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

Aggregate supply describes a relationship between:

If prices fall,then real wealth __________ and the quantity of aggregate demand __________.

When an economy experiences economic growth:

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

Refer to the following figure to answer the next five questions. -Based on the figure,if the economy is currently at point B,then in the long run,we can expect the economy to be at point __________.

The wealth effect is best described as resulting from:

_________ would decrease short-run aggregate supply.

Aggregate demand is about _________ and aggregate supply is about _________.

Refer to the following figure to answer the next five questions. -Based on the figure,a decrease in _________ could cause the economy to move from point A to point B.

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

Consider the wealth effect,interest rate effect,and international trade effect.Of these,the effect is the most significant and the effect is the least significant.

In the long run,a technological advance that improves communication can be expected to _ labor productivity and _ unemployment.

Suppose new drilling techniques increase the world oil supply.In the long run,output will _ and the price level will _.

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

If prices fall,then real wealth and the quantity of aggregate demand .

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

Aggregate demand is about _ and aggregate supply is about _.