Question 1

Figure 15-2
  
-Refer to Figure 15-2.Ceteris paribus,an increase in the expected future 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 2

The short-run aggregate supply curve has a

Accepted Answer

A)  negative slope. 
B)  positive slope. 
C)  slope equal to infinity. 
D)  slope equal to zero. 
A)  negative slope. 
B)  positive slope. 
C)  slope equal to infinity. 
D)  slope equal to zero.

Question 3

The ________ curve has a positive slope because as prices of final goods and services rise,prices of inputs rise more slowly.

Accepted Answer

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

Question 4

Why does the short-run aggregate supply curve slope upward?

Accepted Answer

The short-run aggregate supply curve slo

Question 5

The long-run aggregate supply curve will shift to the right if

Accepted Answer

A)  the economy experiences technological change. 
B)  there is a decrease in population. 
C)  the economy experiences high levels of inflation. 
D)  net exports decrease. 
A)  the economy experiences technological change. 
B)  there is a decrease in population. 
C)  the economy experiences high levels of inflation. 
D)  net exports decrease.

Question 6

Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

Accepted Answer

A)  falling oil prices 
B)  an increase in net exports 
C)  the end of the housing bubble 
D)  a decline in government spending 
A)  falling oil prices 
B)  an increase in net exports 
C)  the end of the housing bubble 
D)  a decline in government spending

Question 7

Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

Accepted Answer

A)  Output will increase. 
B)  Prices will decline. 
C)  Unemployment will decline. 
D)  Short-run aggregate supply will shift to the left. 
A)  Output will increase. 
B)  Prices will decline. 
C)  Unemployment will decline. 
D)  Short-run aggregate supply will shift to the left.

Question 8

What are sticky prices,and how can contracts make them "sticky"?

Accepted Answer

Prices or wages are said to be "sticky"

Question 9

Which of the following is one explanation as to why the aggregate demand curve slopes downward?

Accepted Answer

A)  Increases in the price level lower the interest rate and decrease consumption spending. 
B)  Increases in the price level lower the interest rate and decrease investment spending. 
C)  Increases in the U.S. price level relative to the price level in other countries lowers net exports. 
D)  Increases in the price level raise real wealth and lowers consumption spending. 
A)  Increases in the price level lower the interest rate and decrease consumption spending. 
B)  Increases in the price level lower the interest rate and decrease investment spending. 
C)  Increases in the U.S. price level relative to the price level in other countries lowers net exports. 
D)  Increases in the price level raise real wealth and lowers consumption spending.

Question 10

Last week,13 Mexican pesos could purchase one U.S.dollar.This week,it takes 11 Mexican pesos to purchase one U.S.dollar.This change in the value of the dollar will ________ exports from the United States to Mexico and ________ U.S.aggregate demand.

Accepted Answer

A)  increase; increase 
B)  decrease; decrease 
C)  increase; decrease 
D)  decrease; increase 
A)  increase; increase 
B)  decrease; decrease 
C)  increase; decrease 
D)  decrease; increase

Question 11

Stagflation occurs when

Accepted Answer

A)  inflation rises and GDP rises. 
B)  inflation falls and GDP rises. 
C)  inflation rises and GDP falls. 
D)  inflation falls and GDP falls. 
A)  inflation rises and GDP rises. 
B)  inflation falls and GDP rises. 
C)  inflation rises and GDP falls. 
D)  inflation falls and GDP falls.

Question 12

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 13

If stricter immigration laws are imposed and many foreign workers in the United States are forced to go back to their home countries

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 14

Which of the following models has as its central idea that workers and firms have rational expectations?

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 15

Why are the long-run effects of an increase in aggregate demand on price and output different from the short-run effects?

Accepted Answer

The long-run effects differ from the sho

Question 16

There has been a decrease in investment.As a result,real GDP will ________ in the short run,and ________ in the long run.

Accepted Answer

A)  increase; increase further 
B)  increase; decrease to its initial value 
C)  decrease; decrease further 
D)  decrease; increase to its initial level 
A)  increase; increase further 
B)  increase; decrease to its initial value 
C)  decrease; decrease further 
D)  decrease; increase to its initial level

Question 17

When people became less concerned with the underlying value of their houses and instead focused on the expectations of the prices of their houses increasing,________ occurred.

Accepted Answer

A)  stagflation 
B)  an automatic destabilizer 
C)  a housing bubble 
D)  a supply shock 
A)  stagflation 
B)  an automatic destabilizer 
C)  a housing bubble 
D)  a supply shock

Question 18

Explain the three reasons the aggregate demand curve slopes downward.

Accepted Answer

The three reasons are the wealth effect,

Question 19

Figure 15-1
  
-Refer to Figure 15-1.Ceteris paribus,a decrease in firms' expectations of the future profitability of investment spending 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 20

An increase in government spending will result in an increase in the price level and an increase in real GDP in the long run.

Accepted Answer

A) True 
 B)False

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,an increase in the expected future price level would be represented by a movement from

The short-run aggregate supply curve has a

The ________ curve has a positive slope because as prices of final goods and services rise,prices of inputs rise more slowly.

Why does the short-run aggregate supply curve slope upward?

The long-run aggregate supply curve will shift to the right if

Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

What are sticky prices,and how can contracts make them "sticky"?

Which of the following is one explanation as to why the aggregate demand curve slopes downward?

Last week,13 Mexican pesos could purchase one U.S.dollar.This week,it takes 11 Mexican pesos to purchase one U.S.dollar.This change in the value of the dollar will exports from the United States to Mexico and U.S.aggregate demand.

Stagflation occurs when

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

If stricter immigration laws are imposed and many foreign workers in the United States are forced to go back to their home countries

Which of the following models has as its central idea that workers and firms have rational expectations?

Why are the long-run effects of an increase in aggregate demand on price and output different from the short-run effects?

There has been a decrease in investment.As a result,real GDP will in the short run,and in the long run.

When people became less concerned with the underlying value of their houses and instead focused on the expectations of the prices of their houses increasing,________ occurred.

Explain the three reasons the aggregate demand curve slopes downward.

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in firms' expectations of the future profitability of investment spending would be represented by a movement from

An increase in government spending will result in an increase in the price level and an increase in real GDP in the long run.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters

Exam 15: Aggregate Demand and Aggregate Supply Analysis

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,an increase in the expected future price level would be represented by a movement from

The short-run aggregate supply curve has a

The ________ curve has a positive slope because as prices of final goods and services rise,prices of inputs rise more slowly.

Why does the short-run aggregate supply curve slope upward?

The long-run aggregate supply curve will shift to the right if

Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

What are sticky prices,and how can contracts make them "sticky"?

Which of the following is one explanation as to why the aggregate demand curve slopes downward?

Last week,13 Mexican pesos could purchase one U.S.dollar.This week,it takes 11 Mexican pesos to purchase one U.S.dollar.This change in the value of the dollar will ________ exports from the United States to Mexico and ________ U.S.aggregate demand.

Stagflation occurs when

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

If stricter immigration laws are imposed and many foreign workers in the United States are forced to go back to their home countries

Which of the following models has as its central idea that workers and firms have rational expectations?

Why are the long-run effects of an increase in aggregate demand on price and output different from the short-run effects?

There has been a decrease in investment.As a result,real GDP will ________ in the short run,and ________ in the long run.

When people became less concerned with the underlying value of their houses and instead focused on the expectations of the prices of their houses increasing,________ occurred.

Explain the three reasons the aggregate demand curve slopes downward.

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in firms' expectations of the future profitability of investment spending would be represented by a movement from

An increase in government spending will result in an increase in the price level and an increase in real GDP in the long run.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters

Last week,13 Mexican pesos could purchase one U.S.dollar.This week,it takes 11 Mexican pesos to purchase one U.S.dollar.This change in the value of the dollar will exports from the United States to Mexico and U.S.aggregate demand.

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

There has been a decrease in investment.As a result,real GDP will in the short run,and in the long run.