Question 1

If firms and workers could predict the future price level exactly,the short-run aggregate supply curve would be

Accepted Answer

A)  upward sloping. 
B)  downward sloping. 
C)  horizontal. 
D)  vertical. 
A)  upward sloping. 
B)  downward sloping. 
C)  horizontal. 
D)  vertical.

Question 2

Where the aggregate demand curve and the short-run aggregate supply curve intersect

Accepted Answer

A)  the long-run aggregate supply curve must also intersect at the same point. 
B)  inflation must be increasing. 
C)  structural and frictional unemployment equal zero. 
D)  the economy is in short-run macroeconomic equilibrium. 
A)  the long-run aggregate supply curve must also intersect at the same point. 
B)  inflation must be increasing. 
C)  structural and frictional unemployment equal zero. 
D)  the economy is in short-run macroeconomic equilibrium.

Question 3

Beginning with long-run equilibrium,use the aggregate demand and aggregate supply model to illustrate what happens in the short run when the economy suffers a negative supply shock.

Accepted Answer

@#IMG-DLM& The economy is at point A with the pric

Question 4

Use the dynamic model of aggregate demand and supply to illustrate a situation where aggregate demand and short-run aggregate supply are both increasing from year 1 to year 2,resulting in a higher price level and higher level of real GDP at macroeconomic equilibrium in year 2.

Accepted Answer

@#IMG-DLM& AD₁,SRAS₁ and LRAS₁ all represent year

Question 5

Following the bursting of the housing bubble in 2005,KB Homes sold ________ new homes and its stock price ________ dramatically.The result was total losses of $2.4 billion between 2007 and 2010.

Accepted Answer

A)  fewer; rose 
B)  fewer; fell 
C)  more; rose 
D)  more; fell 
A)  fewer; rose 
B)  fewer; fell 
C)  more; rose 
D)  more; fell

Question 6

New classical macroeconomic theory emphasizes the role of "sticky" prices in the economy.

Accepted Answer

A) True 
 B)False

Question 7

When the price level in the United States falls relative to the price level of other countries,________ will fall,________ will rise,and ________ will rise.

Accepted Answer

A)  imports; exports; net exports 
B)  exports; imports; net exports 
C)  net exports; exports; imports 
D)  net exports; imports; exports 
A)  imports; exports; net exports 
B)  exports; imports; net exports 
C)  net exports; exports; imports 
D)  net exports; imports; exports

Question 8

A rapid increase in the price of oil will tend to

Accepted Answer

A)  shift short-run aggregate supply to the left. 
B)  shift long-run aggregate supply to the left. 
C)  shift long-run aggregate supply to the right. 
D)  shift aggregate demand to the right. 
A)  shift short-run aggregate supply to the left. 
B)  shift long-run aggregate supply to the left. 
C)  shift long-run aggregate supply to the right. 
D)  shift aggregate demand to the right.

Question 9

If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run,the economy would experience

Accepted Answer

A)  stagflation. 
B)  long-run economic decline. 
C)  hyperinflation. 
D)  an increase in the natural rate of unemployment. 
A)  stagflation. 
B)  long-run economic decline. 
C)  hyperinflation. 
D)  an increase in the natural rate of unemployment.

Question 10

In the dynamic aggregate demand and aggregate supply model,what is the result of aggregate demand increasing faster than potential real GDP?

Accepted Answer

Aggregate demand inc

Question 11

Figure 15-1
  
-Refer to Figure 15-1.Ceteris paribus,a decrease in government 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 12

The long-run aggregate supply curve

Accepted Answer

A)  has a negative slope. 
B)  has a steep but positive slope. 
C)  is horizontal. 
D)  is vertical. 
A)  has a negative slope. 
B)  has a steep but positive slope. 
C)  is horizontal. 
D)  is vertical.

Question 13

For reasons including overproduction in the United States, a decrease in global demand, and limited production cuts by OPEC, the price of oil continued to fall during 2017. The falling prices have led OPEC to institute further cuts in oil production, but this effort has been thwarted by OPEC member Libya, whose production increased to 855,000 barrels a day, roughly triple its daily output from the previous year. Libya has Africa's largest oil reserves, but political unrest and militia blockades have severely restricted output in recent years. Due to political instability, OPEC had excluded Libya, Nigeria, and Iran from its agreement to cut production in 2016, but now all three countries have increased production. According to Michael Lynch, president of Strategic Energy and Economic Research, "A lot of experts figured things were so unstable in Libya and politics were so opaque that they did not want to factor in more supply from there. OPEC has been wounded. It gets back to the problem that OPEC has a lot of members in bad shape, making it difficult for them to call on everybody to make sacrifices equally. So they excluded those three and now it's come back to bite them." In late May, OPEC announced an extension to its cutback agreement, but in the month that followed, oil prices fell 16 percent. The same month, Libya announced plans to increase oil production to 1.5 million barrels a day by the end of 2018, and to 2.2 million barrels a day by 2023.
Source: Clifford Krauss, "Libya's Increased Oil Production Thwarts OPEC's Reduction Plans," New York Times, June 20, 2017.
-Refer to the Article Summary.The unexpected increase in the supply of oil mentioned in the article summary resulted in a decrease in the price of oil.After an unexpected decrease in the price of oil,the long-run adjustment ________ the price level and ________ the unemployment rate as they return to their original levels.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Question 14

Figure 15-3
  
-Refer to Figure 15-3.Suppose the economy is at point A.If investment spending increases in the economy,where will the eventual long-run equilibrium be?

Accepted Answer

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

Question 15

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

Question 16

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 17

An increase in the price level will

Accepted Answer

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

Question 18

According to Marx,which of the following factors of production did not contribute anything of value to production?

Accepted Answer

A)  labor 
B)  capital 
C)  natural resources 
D)  entrepreneurship 
A)  labor 
B)  capital 
C)  natural resources 
D)  entrepreneurship

Question 19

The international trade effect states that a(n)________ in the price level will ________ net exports.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; decrease 
D)  decrease; not affect 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; decrease 
D)  decrease; not affect

Question 20

Last week,six Swedish kronor could purchase one U.S.dollar.This week,it takes eight Swedish kronor to purchase one U.S.dollar.This change in the value of the dollar will ________ exports from the United States to Sweden 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

If firms and workers could predict the future price level exactly,the short-run aggregate supply curve would be

Where the aggregate demand curve and the short-run aggregate supply curve intersect

Beginning with long-run equilibrium,use the aggregate demand and aggregate supply model to illustrate what happens in the short run when the economy suffers a negative supply shock.

Use the dynamic model of aggregate demand and supply to illustrate a situation where aggregate demand and short-run aggregate supply are both increasing from year 1 to year 2,resulting in a higher price level and higher level of real GDP at macroeconomic equilibrium in year 2.

Following the bursting of the housing bubble in 2005,KB Homes sold new homes and its stock price dramatically.The result was total losses of $2.4 billion between 2007 and 2010.

New classical macroeconomic theory emphasizes the role of "sticky" prices in the economy.

When the price level in the United States falls relative to the price level of other countries, will fall, will rise,and will rise.

A rapid increase in the price of oil will tend to

If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run,the economy would experience

In the dynamic aggregate demand and aggregate supply model,what is the result of aggregate demand increasing faster than potential real GDP?

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in government spending would be represented by a movement from

The long-run aggregate supply curve

Figure 15-3 -Refer to Figure 15-3.Suppose the economy is at point A.If investment spending increases in the economy,where will the eventual long-run equilibrium be?

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 .

An increase in the price level will

According to Marx,which of the following factors of production did not contribute anything of value to production?

The international trade effect states that a(n) in the price level will net exports.

Last week,six Swedish kronor could purchase one U.S.dollar.This week,it takes eight Swedish kronor to purchase one U.S.dollar.This change in the value of the dollar will exports from the United States to Sweden and U.S.aggregate demand.

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

If firms and workers could predict the future price level exactly,the short-run aggregate supply curve would be

Where the aggregate demand curve and the short-run aggregate supply curve intersect

Beginning with long-run equilibrium,use the aggregate demand and aggregate supply model to illustrate what happens in the short run when the economy suffers a negative supply shock.

Use the dynamic model of aggregate demand and supply to illustrate a situation where aggregate demand and short-run aggregate supply are both increasing from year 1 to year 2,resulting in a higher price level and higher level of real GDP at macroeconomic equilibrium in year 2.

Following the bursting of the housing bubble in 2005,KB Homes sold ________ new homes and its stock price ________ dramatically.The result was total losses of $2.4 billion between 2007 and 2010.

New classical macroeconomic theory emphasizes the role of "sticky" prices in the economy.

When the price level in the United States falls relative to the price level of other countries,________ will fall,________ will rise,and ________ will rise.

A rapid increase in the price of oil will tend to

If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run,the economy would experience

In the dynamic aggregate demand and aggregate supply model,what is the result of aggregate demand increasing faster than potential real GDP?

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in government spending would be represented by a movement from

The long-run aggregate supply curve

Figure 15-3 -Refer to Figure 15-3.Suppose the economy is at point A.If investment spending increases in the economy,where will the eventual long-run equilibrium be?

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 ________.

An increase in the price level will

According to Marx,which of the following factors of production did not contribute anything of value to production?

The international trade effect states that a(n)________ in the price level will ________ net exports.

Last week,six Swedish kronor could purchase one U.S.dollar.This week,it takes eight Swedish kronor to purchase one U.S.dollar.This change in the value of the dollar will ________ exports from the United States to Sweden and ________ U.S.aggregate demand.

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

Following the bursting of the housing bubble in 2005,KB Homes sold new homes and its stock price dramatically.The result was total losses of $2.4 billion between 2007 and 2010.

When the price level in the United States falls relative to the price level of other countries, will fall, will rise,and will rise.

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 .

The international trade effect states that a(n) in the price level will net exports.

Last week,six Swedish kronor could purchase one U.S.dollar.This week,it takes eight Swedish kronor to purchase one U.S.dollar.This change in the value of the dollar will exports from the United States to Sweden and U.S.aggregate demand.