Question 1

What does the phrase "Keynesian revolution" refer to?

Accepted Answer

The Keynesian revolution is th

Question 2

Using aggregate demand and aggregate supply,explain what happens in the short run if the Federal Reserve raises interest rates in the economy.Be sure to detail what happens to aggregate demand,the price level,the level of GDP,and unemployment.Assume that the economy is at full employment before the interest rate increase.

Accepted Answer

An increase in the interest rate will ca

Question 3

Which aggregate supply curve has a positive slope?

Accepted Answer

A)  long run only 
B)  short run only 
C)  both long run and short run 
D)  neither long run nor short run 
A)  long run only 
B)  short run only 
C)  both long run and short run 
D)  neither long run nor short run

Question 4

Explain how each of the following events would affect the short-run aggregate supply curve.
a.A decrease in the price level
b.A decrease in what the price level is expected to be in the future
c.A price level that is currently lower than expected
d.An unexpected decrease in the price of an important raw material
e.A decrease in the labor force

Accepted Answer

a∙A lower price level would cause a move

Question 5

Figure 15-2
  
-Refer to Figure 15-2.Ceteris paribus,a decrease in the 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 6

Figure 15-3
  
-Refer to Figure 15-3.Suppose the economy is at point A.If government 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 7

The level of real GDP in the long run is called

Accepted Answer

A)  potential GDP. 
B)  short-run GDP. 
C)  frictional GDP. 
D)  low-capacity GDP. 
A)  potential GDP. 
B)  short-run GDP. 
C)  frictional GDP. 
D)  low-capacity GDP.

Question 8

Monetarism is a school of thought put forth by Milton Friedman.He argued that the economy would ordinarily

Accepted Answer

A)  be below potential GDP. 
B)  be at potential GDP. 
C)  be unstable. 
D)  be above potential GDP. 
A)  be below potential GDP. 
B)  be at potential GDP. 
C)  be unstable. 
D)  be above potential GDP.

Question 9

In 2005,Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico.This subsequently drove up natural gas,gasoline,and heating oil prices.As a result,this should

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 10

If workers leave a country to seek out better opportunities in another country,then this will

Accepted Answer

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

Question 11

Stagflation occurs when aggregate supply and aggregate demand both increase.

Accepted Answer

A) True 
 B)False

Question 12

Interest rates in the economy have risen.How will this affect aggregate demand and equilibrium in the short run?

Accepted Answer

A)  Aggregate demand will fall, the equilibrium price level will fall, and the equilibrium level of GDP will fall. 
B)  Aggregate demand will fall, the equilibrium price level will rise, and the equilibrium level of GDP will fall. 
C)  Aggregate demand will rise, the equilibrium price level will rise, and the equilibrium level of GDP will rise. 
D)  Aggregate demand will rise, the equilibrium price level will fall, and the equilibrium level of GDP will rise. 
A)  Aggregate demand will fall, the equilibrium price level will fall, and the equilibrium level of GDP will fall. 
B)  Aggregate demand will fall, the equilibrium price level will rise, and the equilibrium level of GDP will fall. 
C)  Aggregate demand will rise, the equilibrium price level will rise, and the equilibrium level of GDP will rise. 
D)  Aggregate demand will rise, the equilibrium price level will fall, and the equilibrium level of GDP will rise.

Question 13

Using an aggregate demand graph,illustrate the impact of an increase in the growth rate of U.S.GDP relative to the growth rate of foreign GDP.

Accepted Answer

@#IMG-DLM& The increase in the growth rate of U.S.

Question 14

During 2008,oil price increases

Accepted Answer

A)  shifted the short-run aggregate supply curve farther to the left than similar increases had 30 years earlier. 
B)  shifted the aggregate demand curve farther to the right than similar increases had 30 years earlier. 
C)  did not shift the short-run aggregate supply curve as far to the left as similar increases had 30 years earlier. 
D)  shifted the aggregate demand curve farther to the left than similar increases had 30 years earlier. 
A)  shifted the short-run aggregate supply curve farther to the left than similar increases had 30 years earlier. 
B)  shifted the aggregate demand curve farther to the right than similar increases had 30 years earlier. 
C)  did not shift the short-run aggregate supply curve as far to the left as similar increases had 30 years earlier. 
D)  shifted the aggregate demand curve farther to the left than similar increases had 30 years earlier.

Question 15

Changes in ________ do not affect the level of aggregate supply in the long run.

Accepted Answer

A)  technology 
B)  the number of workers in the economy 
C)  the price level 
D)  the amount of accumulated capital equipment 
A)  technology 
B)  the number of workers in the economy 
C)  the price level 
D)  the amount of accumulated capital equipment

Question 16

A supply shock causes the long-run aggregate supply curve to shift left,decreasing the price level.

Accepted Answer

A) True 
 B)False

Question 17

How do lower taxes affect aggregate demand?

Accepted Answer

A)  They increase disposable income, consumption, and aggregate demand. 
B)  They reduce disposable income, consumption, and aggregate demand. 
C)  they increase corporate investment and aggregate demand. 
D)  They increase aggregate supply and thus increase aggregate demand as well. 
A)  They increase disposable income, consumption, and aggregate demand. 
B)  They reduce disposable income, consumption, and aggregate demand. 
C)  they increase corporate investment and aggregate demand. 
D)  They increase aggregate supply and thus increase aggregate demand as well.

Question 18

Why does the short-run aggregate supply curve shift to the right in the long run,following a decrease in aggregate demand?

Accepted Answer

A)  Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices. 
B)  Workers and firms adjust their expectations of wages and prices downward and they push for higher wages and prices. 
C)  Workers and firms adjust their expectations of wages and prices upward and they push for higher wages and prices. 
D)  Workers and firms adjust their expectations of wages and prices upward and they accept lower wages and prices. 
A)  Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices. 
B)  Workers and firms adjust their expectations of wages and prices downward and they push for higher wages and prices. 
C)  Workers and firms adjust their expectations of wages and prices upward and they push for higher wages and prices. 
D)  Workers and firms adjust their expectations of wages and prices upward and they accept lower wages and prices.

Question 19

A decrease in disposable income will shift the aggregate demand curve to the left.

Accepted Answer

A) True 
 B)False

Question 20

At a long-run macroeconomic equilibrium,real GDP is always equal to potential GDP.

Accepted Answer

A) True 
 B)False

What does the phrase "Keynesian revolution" refer to?

Which aggregate supply curve has a positive slope?

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

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

The level of real GDP in the long run is called

Monetarism is a school of thought put forth by Milton Friedman.He argued that the economy would ordinarily

In 2005,Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico.This subsequently drove up natural gas,gasoline,and heating oil prices.As a result,this should

If workers leave a country to seek out better opportunities in another country,then this will

Stagflation occurs when aggregate supply and aggregate demand both increase.

Interest rates in the economy have risen.How will this affect aggregate demand and equilibrium in the short run?

Using an aggregate demand graph,illustrate the impact of an increase in the growth rate of U.S.GDP relative to the growth rate of foreign GDP.

During 2008,oil price increases

Changes in ________ do not affect the level of aggregate supply in the long run.

A supply shock causes the long-run aggregate supply curve to shift left,decreasing the price level.

How do lower taxes affect aggregate demand?

Why does the short-run aggregate supply curve shift to the right in the long run,following a decrease in aggregate demand?

A decrease in disposable income will shift the aggregate demand curve to the left.

At a long-run macroeconomic equilibrium,real GDP is always equal to potential GDP.

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

What does the phrase "Keynesian revolution" refer to?

Which aggregate supply curve has a positive slope?

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

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

The level of real GDP in the long run is called

Monetarism is a school of thought put forth by Milton Friedman.He argued that the economy would ordinarily

In 2005,Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico.This subsequently drove up natural gas,gasoline,and heating oil prices.As a result,this should

If workers leave a country to seek out better opportunities in another country,then this will

Stagflation occurs when aggregate supply and aggregate demand both increase.

Interest rates in the economy have risen.How will this affect aggregate demand and equilibrium in the short run?

Using an aggregate demand graph,illustrate the impact of an increase in the growth rate of U.S.GDP relative to the growth rate of foreign GDP.

During 2008,oil price increases

Changes in ________ do not affect the level of aggregate supply in the long run.

A supply shock causes the long-run aggregate supply curve to shift left,decreasing the price level.

How do lower taxes affect aggregate demand?

Why does the short-run aggregate supply curve shift to the right in the long run,following a decrease in aggregate demand?

A decrease in disposable income will shift the aggregate demand curve to the left.

At a long-run macroeconomic equilibrium,real GDP is always equal to potential GDP.

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