Question 1

An increase in disposable income will shift the aggregate demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 2

Suppose a recession occurs as a result of a negative supply shock,and instead of the economy naturally working its way back to equilibrium,the government uses policy to shift the aggregate demand curve to fight the recession.Using policy this way would

Accepted Answer

A) bring real GDP back to potential GDP more quickly but would result in a permanently higher price level. 
B) bring real GDP back to potential GDP more slowly but would bring the price level back to the original price level more quickly. 
C) quickly result in a new,higher level of real GDP and a permanently lower price level. 
D) bring the price level back to its original level more quickly but would result in a permanently lower level of potential GDP. 
A) bring real GDP back to potential GDP more quickly but would result in a permanently higher price level. 
B) bring real GDP back to potential GDP more slowly but would bring the price level back to the original price level more quickly. 
C) quickly result in a new,higher level of real GDP and a permanently lower price level. 
D) bring the price level back to its original level more quickly but would result in a permanently lower level of potential GDP.

Question 3

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 4

Figure 13-1  
-Refer to Figure 13-1.Ceteris paribus,a decrease in personal income taxes 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.

An increase in disposable income will shift the aggregate demand curve to the right.

Suppose a recession occurs as a result of a negative supply shock,and instead of the economy naturally working its way back to equilibrium,the government uses policy to shift the aggregate demand curve to fight the recession.Using policy this way would

The level of real GDP in the long run is called

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,a decrease in personal income taxes would be represented by a movement from

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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Exam 13: Aggregate Demand and Aggregate Supply Analysis

An increase in disposable income will shift the aggregate demand curve to the right.

Suppose a recession occurs as a result of a negative supply shock,and instead of the economy naturally working its way back to equilibrium,the government uses policy to shift the aggregate demand curve to fight the recession.Using policy this way would

The level of real GDP in the long run is called

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,a decrease in personal income taxes would be represented by a movement from

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters