Question 1

Figure 15-4
  
-Refer to Figure 15-4.Given the economy is at point A in year 1,what will happen to the price level in year 2?

Accepted Answer

A)  It will rise. 
B)  It will fall. 
C)  It will remain constant. 
D)  not enough information to answer the question 
A)  It will rise. 
B)  It will fall. 
C)  It will remain constant. 
D)  not enough information to answer the question

Question 2

Figure 15-2
  
-Refer to Figure 15-2.Ceteris paribus,a decrease in productivity 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 3

A decrease 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 4

Figure 15-2
  
-Refer to Figure 15-2.Ceteris paribus,an increase in the number of workers and firms adjusting to having previously overestimated 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 5

Spending on the war in Afghanistan is essentially categorized as government purchases.How do increases in spending on the war in Afghanistan affect the aggregate demand curve?

Accepted Answer

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

Question 6

Workers expect inflation to fall from 4% to 1% next year.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 7

An increase in the price level results in a(n)________ in the quantity of real GDP demanded because ________.

Accepted Answer

A)  decrease; a higher price level reduces consumption, investment, and net exports. 
B)  increase; a higher price level reduces consumption, investment, and net exports. 
C)  decrease; a higher price level increases consumption, investment, and net exports. 
D)  increase; a higher price level increases consumption, investment, and net exports. 
A)  decrease; a higher price level reduces consumption, investment, and net exports. 
B)  increase; a higher price level reduces consumption, investment, and net exports. 
C)  decrease; a higher price level increases consumption, investment, and net exports. 
D)  increase; a higher price level increases consumption, investment, and net exports.

Question 8

For the recession of 2007-2009,it took ________ for real GDP to return to its cyclical peak.

Accepted Answer

A)  about 18 months 
B)  about 2 year 
C)  about 3.5 years 
D)  almost 5 years 
A)  about 18 months 
B)  about 2 year 
C)  about 3.5 years 
D)  almost 5 years

Question 9

Figure 15-1
  
-Refer to Figure 15-1.Ceteris paribus,an increase in interest rates 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 10

The monetary growth rule is a plan for increasing the quantity of money

Accepted Answer

A)  at a fixed rate that does not respond to changes in the economic condition. 
B)  at a rate which increases as the economy grows. 
C)  at a rate which decreases as the economy declines. 
D)  at a rate which increases during recessions and decreases during expansions. 
A)  at a fixed rate that does not respond to changes in the economic condition. 
B)  at a rate which increases as the economy grows. 
C)  at a rate which decreases as the economy declines. 
D)  at a rate which increases during recessions and decreases during expansions.

Question 11

Which of the following is not an assumption made by the dynamic model of aggregate demand and aggregate supply?

Accepted Answer

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

Question 12

Potential GDP is also referred to as

Accepted Answer

A)  realized GDP. 
B)  full-employment GDP. 
C)  politico-economic GDP. 
D)  balanced-budget GDP. 
A)  realized GDP. 
B)  full-employment GDP. 
C)  politico-economic GDP. 
D)  balanced-budget GDP.

Question 13

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

The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off

Accepted Answer

A)  government spending. 
B)  government spending and unplanned investment. 
C)  investment and consumption spending. 
D)  net exports. 
A)  government spending. 
B)  government spending and unplanned investment. 
C)  investment and consumption spending. 
D)  net exports.

Question 15

For the recession of 2007-2009,it took ________ for employment to return to its cyclical peak.

Accepted Answer

A)  about 18 months 
B)  about 2.5 years 
C)  about 3.5 years 
D)  more than 6 years 
A)  about 18 months 
B)  about 2.5 years 
C)  about 3.5 years 
D)  more than 6 years

Question 16

Most recessions in the United States since World War II have begun with

Accepted Answer

A)  a decline in residential construction. 
B)  a rapid increase in the price level. 
C)  a substantial number of bank failures. 
D)  a stock market crash. 
A)  a decline in residential construction. 
B)  a rapid increase in the price level. 
C)  a substantial number of bank failures. 
D)  a stock market crash.

Question 17

Figure 15-4
  
-Refer to Figure 15-4.In the figure above,LRAS₁ and SRAS₁ denote LRAS and SRAS in year 1,while LRAS₂ and SRAS₂ denote LRAS and SRAS in year 2.Given the economy is at point A in year 1,what is the growth rate in potential GDP in year 2?

Accepted Answer

A)  8% 
B)  9.1% 
C)  10% 
D)  12% 
A)  8% 
B)  9.1% 
C)  10% 
D)  12%

Question 18

On the long-run aggregate supply curve

Accepted Answer

A)  an increase in the price level increases the aggregate quantity of GDP supplied. 
B)  an increase in the price level reduces the aggregate quantity of GDP supplied. 
C)  an increase in the price level has no effect on the aggregate quantity of GDP supplied. 
D)  an increase in the price level increases the level of potential GDP. 
A)  an increase in the price level increases the aggregate quantity of GDP supplied. 
B)  an increase in the price level reduces the aggregate quantity of GDP supplied. 
C)  an increase in the price level has no effect on the aggregate quantity of GDP supplied. 
D)  an increase in the price level increases the level of potential GDP.

Question 19

Using an aggregate demand graph,illustrate the impact of an increase in the price level on aggregate demand.

Accepted Answer

@#IMG-DLM& This illustrates an increase in the pri

Question 20

While in office,President Obama discussed raising income taxes for individuals earning over $250,000 in income.Explain how these higher income taxes would affect the aggregate demand curve.

Accepted Answer

Raising the income tax decreases the amo

Figure 15-4 -Refer to Figure 15-4.Given the economy is at point A in year 1,what will happen to the price level in year 2?

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

A decrease in aggregate demand results in a(n) in the .

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,an increase in the number of workers and firms adjusting to having previously overestimated the price level would be represented by a movement from

Spending on the war in Afghanistan is essentially categorized as government purchases.How do increases in spending on the war in Afghanistan affect the aggregate demand curve?

Workers expect inflation to fall from 4% to 1% next year.As a result,this should

An increase in the price level results in a(n) in the quantity of real GDP demanded because .

For the recession of 2007-2009,it took ________ for real GDP to return to its cyclical peak.

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,an increase in interest rates would be represented by a movement from

The monetary growth rule is a plan for increasing the quantity of money

Which of the following is not an assumption made by the dynamic model of aggregate demand and aggregate supply?

Potential GDP is also referred to as

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

The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off

For the recession of 2007-2009,it took ________ for employment to return to its cyclical peak.

Most recessions in the United States since World War II have begun with

Figure 15-4 -Refer to Figure 15-4.In the figure above,LRAS₁ and SRAS₁ denote LRAS and SRAS in year 1,while LRAS₂ and SRAS₂ denote LRAS and SRAS in year 2.Given the economy is at point A in year 1,what is the growth rate in potential GDP in year 2?

On the long-run aggregate supply curve

Using an aggregate demand graph,illustrate the impact of an increase in the price level on aggregate demand.

While in office,President Obama discussed raising income taxes for individuals earning over $250,000 in income.Explain how these higher income taxes would affect the aggregate demand curve.

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 15-4 -Refer to Figure 15-4.Given the economy is at point A in year 1,what will happen to the price level in year 2?

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

A decrease in aggregate demand results in a(n)________ in the ________.

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,an increase in the number of workers and firms adjusting to having previously overestimated the price level would be represented by a movement from

Spending on the war in Afghanistan is essentially categorized as government purchases.How do increases in spending on the war in Afghanistan affect the aggregate demand curve?

Workers expect inflation to fall from 4% to 1% next year.As a result,this should

An increase in the price level results in a(n)________ in the quantity of real GDP demanded because ________.

For the recession of 2007-2009,it took ________ for real GDP to return to its cyclical peak.

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,an increase in interest rates would be represented by a movement from

The monetary growth rule is a plan for increasing the quantity of money

Which of the following is not an assumption made by the dynamic model of aggregate demand and aggregate supply?

Potential GDP is also referred to as

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

The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off

For the recession of 2007-2009,it took ________ for employment to return to its cyclical peak.

Most recessions in the United States since World War II have begun with

Figure 15-4 -Refer to Figure 15-4.In the figure above,LRAS₁ and SRAS₁ denote LRAS and SRAS in year 1,while LRAS₂ and SRAS₂ denote LRAS and SRAS in year 2.Given the economy is at point A in year 1,what is the growth rate in potential GDP in year 2?

On the long-run aggregate supply curve

Using an aggregate demand graph,illustrate the impact of an increase in the price level on aggregate demand.

While in office,President Obama discussed raising income taxes for individuals earning over $250,000 in income.Explain how these higher income taxes would affect the aggregate demand curve.

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

A decrease in aggregate demand results in a(n) in the .

An increase in the price level results in a(n) in the quantity of real GDP demanded because .