Question 1

The new Keynesians emphasize the importance of

Accepted Answer

A)  rational expectations. 
B)  the monetary growth rule. 
C)  real causes of the business cycle. 
D)  sticky wages and prices. 
A)  rational expectations. 
B)  the monetary growth rule. 
C)  real causes of the business cycle. 
D)  sticky wages and prices.

Question 2

Figure 15-1
  
-Refer to Figure 15-1.Ceteris paribus,a decrease in the value of the domestic currency relative to foreign currencies 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 3

When the price of oil rises unexpectedly,the equilibrium price level ________ and the unemployment rate ________ in the short run.

Accepted Answer

A)  rises; falls 
B)  rises; rises 
C)  falls; falls 
D)  falls; rises 
A)  rises; falls 
B)  rises; rises 
C)  falls; falls 
D)  falls; rises

Question 4

Figure 15-2
  
-Refer to Figure 15-2.Ceteris paribus,an increase in the capital stock 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 5

Figure 15-1
  
-Refer to Figure 15-1.Ceteris paribus,a decrease in households' expectations of their future income 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 6

Figure 15-3
  
-Refer to Figure 15-3.Which of the points in the above graph are possible short-run equilibria?

Accepted Answer

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

Question 7

President Trump has proposed lowering income taxes for individuals.Explain how lower income taxes affect the aggregate demand curve.

Accepted Answer

Lowering the income tax increases the am

Question 8

Because of the slope of the aggregate demand curve,we can say that

Accepted Answer

A)  a decrease in the price level leads to a lower level of real GDP demanded. 
B)  an increase in the price level leads to no change in the level of real GDP demanded. 
C)  a decrease in the price level leads to a higher level of real GDP demanded. 
D)  an increase in the price level leads to a higher level of real GDP demanded. 
A)  a decrease in the price level leads to a lower level of real GDP demanded. 
B)  an increase in the price level leads to no change in the level of real GDP demanded. 
C)  a decrease in the price level leads to a higher level of real GDP demanded. 
D)  an increase in the price level leads to a higher level of real GDP demanded.

Question 9

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)  increases in housing prices 
C)  the financial crisis 
D)  a decline in government spending 
A)  falling oil prices 
B)  increases in housing prices 
C)  the financial crisis 
D)  a decline in government spending

Question 10

Figure 15-4
  
-Refer to Figure 15-4.Given the economy is at point A in year 1,what is the difference between the actual growth rate in GDP in year 2 and the potential growth rate in GDP in year 2?

Accepted Answer

A)  0.3% 
B)  1.1% 
C)  2.7% 
D)  3.7% 
A)  0.3% 
B)  1.1% 
C)  2.7% 
D)  3.7%

Question 11

Figure 15-2
  
-Refer to Figure 15-2.Ceteris paribus,a decrease in the expected price of an important natural resource 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 12

Which of the following would cause the short-run aggregate supply curve to shift to the right?

Accepted Answer

A)  an increase in the price level 
B)  a decrease in inflation expectations 
C)  a technological advance 
D)  an increase in interest rates 
A)  an increase in the price level 
B)  a decrease in inflation expectations 
C)  a technological advance 
D)  an increase in interest rates

Question 13

Which of the following is an assumption made by the dynamic model of aggregate demand and aggregate supply?

Accepted Answer

A)  Aggregate demand and potential real GDP decrease continuously. 
B)  The aggregate demand curve shifts to the right except during periods when workers and firms expect higher wages. 
C)  Potential real GDP increases continuously during economic expansions and decreases continuously during economic recessions. 
D)  The short-run aggregate supply curve shifts to the right except during periods when workers and firms expect higher wages. 
A)  Aggregate demand and potential real GDP decrease continuously. 
B)  The aggregate demand curve shifts to the right except during periods when workers and firms expect higher wages. 
C)  Potential real GDP increases continuously during economic expansions and decreases continuously during economic recessions. 
D)  The short-run aggregate supply curve shifts to the right except during periods when workers and firms expect higher wages.

Question 14

Which of the following correctly describes the automatic mechanism through which the economy adjusts to long-run equilibrium?

Accepted Answer

A)  the leftward shift of the short-run aggregate supply curve that occurs after a recession 
B)  the rightward shift of the short-run aggregate supply curve that occurs after a recession 
C)  the leftward shift of the aggregate demand curve that occurs after a recession 
D)  the rightward shift of the aggregate demand curve that occurs during a recession 
A)  the leftward shift of the short-run aggregate supply curve that occurs after a recession 
B)  the rightward shift of the short-run aggregate supply curve that occurs after a recession 
C)  the leftward shift of the aggregate demand curve that occurs after a recession 
D)  the rightward shift of the aggregate demand curve that occurs during a recession

Question 15

Which of the following models relies on emphasizing the importance of sticky wages and prices?

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 16

The short-run aggregate supply curve has a(n)________ slope because as prices of ________ rise,prices of ________ rise more slowly.

Accepted Answer

A)  positive; final goods and services; inputs 
B)  infinite; final goods and services; inputs 
C)  positive; inputs; final goods and services 
D)  infinite; inputs; final goods and services 
A)  positive; final goods and services; inputs 
B)  infinite; final goods and services; inputs 
C)  positive; inputs; final goods and services 
D)  infinite; inputs; final goods and services

Question 17

Using an aggregate demand graph,illustrate the impact of an increase in the interest rate.

Accepted Answer

@#IMG-DLM& The increase in the interest rate will

Question 18

If aggregate demand just increased,which of the following may have caused the increase?

Accepted Answer

A)  an increase in government purchases 
B)  an increase in the interest rate 
C)  an increase in the price level 
D)  an increase in imports 
A)  an increase in government purchases 
B)  an increase in the interest rate 
C)  an increase in the price level 
D)  an increase in imports

Question 19

Which of the following is considered a negative supply shock?

Accepted Answer

A)  increasing investment in the economy causes the capital stock to rise 
B)  an unexpected increase in the price of natural gas 
C)  a decline in wages 
D)  an improvement in technology 
A)  increasing investment in the economy causes the capital stock to rise 
B)  an unexpected increase in the price of natural gas 
C)  a decline in wages 
D)  an improvement in technology

Question 20

The short-run aggregate supply curve is vertical.

Accepted Answer

A) True 
 B)False

The new Keynesians emphasize the importance of

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in the value of the domestic currency relative to foreign currencies would be represented by a movement from

When the price of oil rises unexpectedly,the equilibrium price level and the unemployment rate in the short run.

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,an increase in the capital stock would be represented by a movement from

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in households' expectations of their future income would be represented by a movement from

Figure 15-3 -Refer to Figure 15-3.Which of the points in the above graph are possible short-run equilibria?

President Trump has proposed lowering income taxes for individuals.Explain how lower income taxes affect the aggregate demand curve.

Because of the slope of the aggregate demand curve,we can say that

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

Figure 15-4 -Refer to Figure 15-4.Given the economy is at point A in year 1,what is the difference between the actual growth rate in GDP in year 2 and the potential growth rate in GDP in year 2?

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,a decrease in the expected price of an important natural resource would be represented by a movement from

Which of the following would cause the short-run aggregate supply curve to shift to the right?

Which of the following is an assumption made by the dynamic model of aggregate demand and aggregate supply?

Which of the following correctly describes the automatic mechanism through which the economy adjusts to long-run equilibrium?

Which of the following models relies on emphasizing the importance of sticky wages and prices?

The short-run aggregate supply curve has a(n) slope because as prices of rise,prices of rise more slowly.

Using an aggregate demand graph,illustrate the impact of an increase in the interest rate.

If aggregate demand just increased,which of the following may have caused the increase?

Which of the following is considered a negative supply shock?

The short-run aggregate supply curve is vertical.

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

The new Keynesians emphasize the importance of

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in the value of the domestic currency relative to foreign currencies would be represented by a movement from

When the price of oil rises unexpectedly,the equilibrium price level ________ and the unemployment rate ________ in the short run.

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,an increase in the capital stock would be represented by a movement from

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in households' expectations of their future income would be represented by a movement from

Figure 15-3 -Refer to Figure 15-3.Which of the points in the above graph are possible short-run equilibria?

President Trump has proposed lowering income taxes for individuals.Explain how lower income taxes affect the aggregate demand curve.

Because of the slope of the aggregate demand curve,we can say that

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

Figure 15-4 -Refer to Figure 15-4.Given the economy is at point A in year 1,what is the difference between the actual growth rate in GDP in year 2 and the potential growth rate in GDP in year 2?

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,a decrease in the expected price of an important natural resource would be represented by a movement from

Which of the following would cause the short-run aggregate supply curve to shift to the right?

Which of the following is an assumption made by the dynamic model of aggregate demand and aggregate supply?

Which of the following correctly describes the automatic mechanism through which the economy adjusts to long-run equilibrium?

Which of the following models relies on emphasizing the importance of sticky wages and prices?

The short-run aggregate supply curve has a(n)________ slope because as prices of ________ rise,prices of ________ rise more slowly.

Using an aggregate demand graph,illustrate the impact of an increase in the interest rate.

If aggregate demand just increased,which of the following may have caused the increase?

Which of the following is considered a negative supply shock?

The short-run aggregate supply curve is vertical.

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

When the price of oil rises unexpectedly,the equilibrium price level and the unemployment rate in the short run.

The short-run aggregate supply curve has a(n) slope because as prices of rise,prices of rise more slowly.