Question 1

The recession of 2007-2009 began in ________,with the end of the economic expansion that had begun in ________.

Accepted Answer

A)  January 2007; April 1984 
B)  December 2007; November 2001 
C)  July 2007; August 2006 
D)  March 2007; March 1995 
A)  January 2007; April 1984 
B)  December 2007; November 2001 
C)  July 2007; August 2006 
D)  March 2007; March 1995

Question 2

When the economy enters a recession,your employer is unlikely to reduce your wages because ________ during a recession.

Accepted Answer

A)  output and input prices generally fall 
B)  lower wages increase your incentive to find employment elsewhere. 
C)  output prices always fall 
D)  output prices generally fall and input prices generally rise 
A)  output and input prices generally fall 
B)  lower wages increase your incentive to find employment elsewhere. 
C)  output prices always fall 
D)  output prices generally fall and input prices generally rise

Question 3

Which of the following will shift the aggregate demand curve to the right,ceteris paribus?

Accepted Answer

A)  an increase in interest rates 
B)  a decrease in disposable income 
C)  a decrease in expected profits for firms 
D)  an increase in net exports 
A)  an increase in interest rates 
B)  a decrease in disposable income 
C)  a decrease in expected profits for firms 
D)  an increase in net exports

Question 4

A decrease in the price level will

Accepted Answer

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

Question 5

Explain why the long-run aggregate supply curve is vertical.

Accepted Answer

The long-run aggregate supply curve is v

Question 6

The level of real GDP in the long run is

Accepted Answer

A)  called potential GDP. 
B)  affected by changes in the price level. 
C)  determined solely by aggregate demand. 
D)  the same as the level of nominal GDP in the long run. 
A)  called potential GDP. 
B)  affected by changes in the price level. 
C)  determined solely by aggregate demand. 
D)  the same as the level of nominal GDP in the long run.

Question 7

Starting from long-run equilibrium,use the basic aggregate demand and aggregate supply diagram to show what happens in both the long run and the short run when there is an increase in wealth.

Accepted Answer

@#IMG-DLM& Before the increase in demand,the econo

Question 8

The ________ curve is vertical.

Accepted Answer

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

Question 9

The level of aggregate supply in the long run is not affected by

Accepted Answer

A)  changes in technology. 
B)  changes in the capital stock. 
C)  changes in the price level. 
D)  changes in the number of workers. 
A)  changes in technology. 
B)  changes in the capital stock. 
C)  changes in the price level. 
D)  changes in the number of workers.

Question 10

Because of the slope(s)of the ________,we can say that a decrease in the price level leads to a higher level of real GDP demanded.

Accepted Answer

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

Question 11

Just before and during the recession of 2007-2009,net exports in the United States

Accepted Answer

A)  fell and remained negative. 
B)  fell, but remained positive. 
C)  rose and became positive. 
D)  rose, but remained negative. 
A)  fell and remained negative. 
B)  fell, but remained positive. 
C)  rose and became positive. 
D)  rose, but remained negative.

Question 12

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

Accepted Answer

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

Question 13

Figure 15-1
  
-Refer to Figure 15-1.Ceteris paribus,an increase 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 14

Long-run macroeconomic equilibrium occurs when

Accepted Answer

A)  the aggregate demand curve intersects the short-run aggregate supply curve. 
B)  the aggregate demand and short-run aggregate supply curves intersect at a point on the long-run aggregate supply curve. 
C)  structural and frictional unemployment equal zero. 
D)  output is above potential GDP. 
A)  the aggregate demand curve intersects the short-run aggregate supply curve. 
B)  the aggregate demand and short-run aggregate supply curves intersect at a point on the long-run aggregate supply curve. 
C)  structural and frictional unemployment equal zero. 
D)  output is above potential GDP.

Question 15

In the long run

Accepted Answer

A)  GDP = potential GDP. 
B)  unemployment is below its natural rate. 
C)  LRAS and SRAS lie on the same line. 
D)  unemployment is above its natural rate. 
A)  GDP = potential GDP. 
B)  unemployment is below its natural rate. 
C)  LRAS and SRAS lie on the same line. 
D)  unemployment is above its natural rate.

Question 16

An adverse supply shock causes the short-run aggregate supply curve to shift left,increasing the price level.

Accepted Answer

A) True 
 B)False

Question 17

Starting from long-run equilibrium,use the basic aggregate demand and aggregate supply diagram to show what happens in both the long run and the short run when there is a decline in wealth.

Accepted Answer

@#IMG-DLM& Before the decline in demand,the econom

Question 18

What is potential GDP?

Accepted Answer

A)  It is the level of real GDP in the long run. 
B)  It is the difference between current GDP and maximum GDP. 
C)  It is the level of real GDP in the short run. 
D)  It is the level of GDP at which inflation is constant. 
A)  It is the level of real GDP in the long run. 
B)  It is the difference between current GDP and maximum GDP. 
C)  It is the level of real GDP in the short run. 
D)  It is the level of GDP at which inflation is constant.

Question 19

An increase in the price level will

Accepted Answer

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

Question 20

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

Accepted Answer

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

The recession of 2007-2009 began in ,with the end of the economic expansion that had begun in .

When the economy enters a recession,your employer is unlikely to reduce your wages because ________ during a recession.

Which of the following will shift the aggregate demand curve to the right,ceteris paribus?

A decrease in the price level will

Explain why the long-run aggregate supply curve is vertical.

The level of real GDP in the long run is

Starting from long-run equilibrium,use the basic aggregate demand and aggregate supply diagram to show what happens in both the long run and the short run when there is an increase in wealth.

The ________ curve is vertical.

The level of aggregate supply in the long run is not affected by

Because of the slope(s)of the ________,we can say that a decrease in the price level leads to a higher level of real GDP demanded.

Just before and during the recession of 2007-2009,net exports in the United States

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

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

Long-run macroeconomic equilibrium occurs when

In the long run

An adverse supply shock causes the short-run aggregate supply curve to shift left,increasing the price level.

Starting from long-run equilibrium,use the basic aggregate demand and aggregate supply diagram to show what happens in both the long run and the short run when there is a decline in wealth.

What is potential GDP?

An increase in the price level will

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

The recession of 2007-2009 began in ________,with the end of the economic expansion that had begun in ________.

When the economy enters a recession,your employer is unlikely to reduce your wages because ________ during a recession.

Which of the following will shift the aggregate demand curve to the right,ceteris paribus?

A decrease in the price level will

Explain why the long-run aggregate supply curve is vertical.

The level of real GDP in the long run is

Starting from long-run equilibrium,use the basic aggregate demand and aggregate supply diagram to show what happens in both the long run and the short run when there is an increase in wealth.

The ________ curve is vertical.

The level of aggregate supply in the long run is not affected by

Because of the slope(s)of the ________,we can say that a decrease in the price level leads to a higher level of real GDP demanded.

Just before and during the recession of 2007-2009,net exports in the United States

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

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

Long-run macroeconomic equilibrium occurs when

In the long run

An adverse supply shock causes the short-run aggregate supply curve to shift left,increasing the price level.

Starting from long-run equilibrium,use the basic aggregate demand and aggregate supply diagram to show what happens in both the long run and the short run when there is a decline in wealth.

What is potential GDP?

An increase in the price level will

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

The recession of 2007-2009 began in ,with the end of the economic expansion that had begun in .