Question 1

Where the aggregate demand curve and the short-run aggregate supply curve intersect

Accepted Answer

A) the long-run aggregate supply curve must also intersect at the same point. 
B) inflation must be increasing. 
C) structural and frictional unemployment equal zero. 
D) the economy is in short-run macroeconomic equilibrium. 
A) the long-run aggregate supply curve must also intersect at the same point. 
B) inflation must be increasing. 
C) structural and frictional unemployment equal zero. 
D) the economy is in short-run macroeconomic equilibrium.

Question 2

The invention of the cotton gin ushered in the Industrial Revolution and began a long period of technological innovation.What did this technological change do the short-run supply curve?

Accepted Answer

A) It shifted the short-run aggregate supply curve to the left. 
B) It shifted the short-run aggregate supply curve to the right. 
C) It moved the economy up along a stationary short-run aggregate supply curve. 
D) It moved the economy down along a stationary short-run aggregate supply curve. 
A) It shifted the short-run aggregate supply curve to the left. 
B) It shifted the short-run aggregate supply curve to the right. 
C) It moved the economy up along a stationary short-run aggregate supply curve. 
D) It moved the economy down along a stationary short-run aggregate supply curve.

Question 3

________ of unemployment during ________ make it easier for workers to ________ wages.

Accepted Answer

A) High levels; a recession; accept lower 
B) Low levels; an expansion; accept lower 
C) Low levels; a recession; negotiate higher 
D) High levels; an expansion; negotiate higher 
A) High levels; a recession; accept lower 
B) Low levels; an expansion; accept lower 
C) Low levels; a recession; negotiate higher 
D) High levels; an expansion; negotiate higher

Question 4

An increase in the value of which of the following would not increase household wealth?

Accepted Answer

A) the equity in one's home. 
B) 500 shares of Google stock. 
C) the balance in your savings account. 
D) a credit card balance. 
A) the equity in one's home. 
B) 500 shares of Google stock. 
C) the balance in your savings account. 
D) a credit card balance.

Question 5

Figure 13-1  
-Refer to Figure 13-1.Ceteris paribus,a decrease in the price level 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 13-4  
-Refer to Figure 13-4.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 7

The ________ curve has a positive slope because as prices of final goods and services rise,prices of inputs rise more slowly.

Accepted Answer

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

Question 8

If,due to a recession,foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended,this will

Accepted Answer

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

Question 9

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.

Question 10

The basic aggregate demand and aggregate supply curve model helps explain ________ fluctuations in real GDP and the price level.

Accepted Answer

A) short-term 
B) long-term 
C) both short-term and long-term 
D) unrelated 
A) short-term 
B) long-term 
C) both short-term and long-term 
D) unrelated

Question 11

Figure 13-2  
-Refer to Figure 13-2.Ceteris paribus,an increase 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 12

Monetarism is a school of thought put forth by ________,who argued that the economy would ordinarily be at potential GDP.

Accepted Answer

A) Karl Marx 
B) Milton Friedman 
C) Finn Kydland and Edward Prescott 
D) Robert Lucas and Thomas Sargent 
A) Karl Marx 
B) Milton Friedman 
C) Finn Kydland and Edward Prescott 
D) Robert Lucas and Thomas Sargent

Question 13

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 14

The real business cycle model focuses on how

Accepted Answer

A) wage and price stickiness explains fluctuations in real GDP. 
B) the labor theory of value is the best measure of value of a good or service. 
C) the Federal Reserve should adopt a monetary growth rule. 
D) productivity shocks explain fluctuations in real GDP. 
A) wage and price stickiness explains fluctuations in real GDP. 
B) the labor theory of value is the best measure of value of a good or service. 
C) the Federal Reserve should adopt a monetary growth rule. 
D) productivity shocks explain fluctuations in real GDP.

Question 15

If firms and workers could predict the future price level exactly,the short-run aggregate supply curve would be

Accepted Answer

A) upward sloping. 
B) downward sloping. 
C) horizontal. 
D) vertical. 
A) upward sloping. 
B) downward sloping. 
C) horizontal. 
D) vertical.

Question 16

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 17

At the beginning of the recession of 2007-2009,real GDP in the United States was ________ potential GDP,and in June 2009,real GDP was ________ potential GDP.

Accepted Answer

A) below; above 
B) below; below 
C) above; below 
D) above; above 
A) below; above 
B) below; below 
C) above; below 
D) above; above

Question 18

An increase in the price level causes a movement down the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 19

Japanese electronics exports were hurt in 2008 as a result of the recession.How would this decrease in exports have affected Japan's aggregate demand curve?

Accepted Answer

A) The aggregate demand curve would have shifted to the right. 
B) The aggregate demand curve would not have shifted,but there would have been a movement up the aggregate demand curve. 
C) The aggregate demand curve would not have shifted,but there would have been a movement down the aggregate demand curve. 
D) The aggregate demand curve would have shifted to the left. 
A) The aggregate demand curve would have shifted to the right. 
B) The aggregate demand curve would not have shifted,but there would have been a movement up the aggregate demand curve. 
C) The aggregate demand curve would not have shifted,but there would have been a movement down the aggregate demand curve. 
D) The aggregate demand curve would have shifted to the left.

Question 20

The long-run aggregate supply curve is vertical.

Accepted Answer

A) True 
 B)False

Where the aggregate demand curve and the short-run aggregate supply curve intersect

The invention of the cotton gin ushered in the Industrial Revolution and began a long period of technological innovation.What did this technological change do the short-run supply curve?

of unemployment during make it easier for workers to wages.

An increase in the value of which of the following would not increase household wealth?

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,a decrease in the price level would be represented by a movement from

Figure 13-4 -Refer to Figure 13-4.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?

The ________ curve has a positive slope because as prices of final goods and services rise,prices of inputs rise more slowly.

If,due to a recession,foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended,this will

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

The basic aggregate demand and aggregate supply curve model helps explain ________ fluctuations in real GDP and the price level.

Figure 13-2 -Refer to Figure 13-2.Ceteris paribus,an increase in the price level would be represented by a movement from

Monetarism is a school of thought put forth by ________,who argued that the economy would ordinarily be at potential GDP.

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?

The real business cycle model focuses on how

If firms and workers could predict the future price level exactly,the short-run aggregate supply curve would be

During 2008,oil price increases

At the beginning of the recession of 2007-2009,real GDP in the United States was potential GDP,and in June 2009,real GDP was potential GDP.

An increase in the price level causes a movement down the aggregate demand curve.

Japanese electronics exports were hurt in 2008 as a result of the recession.How would this decrease in exports have affected Japan's aggregate demand curve?

The long-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

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

Exam 13: Aggregate Demand and Aggregate Supply Analysis

Where the aggregate demand curve and the short-run aggregate supply curve intersect

The invention of the cotton gin ushered in the Industrial Revolution and began a long period of technological innovation.What did this technological change do the short-run supply curve?

________ of unemployment during ________ make it easier for workers to ________ wages.

An increase in the value of which of the following would not increase household wealth?

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,a decrease in the price level would be represented by a movement from

Figure 13-4 -Refer to Figure 13-4.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?

The ________ curve has a positive slope because as prices of final goods and services rise,prices of inputs rise more slowly.

If,due to a recession,foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended,this will

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

The basic aggregate demand and aggregate supply curve model helps explain ________ fluctuations in real GDP and the price level.

Figure 13-2 -Refer to Figure 13-2.Ceteris paribus,an increase in the price level would be represented by a movement from

Monetarism is a school of thought put forth by ________,who argued that the economy would ordinarily be at potential GDP.

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?

The real business cycle model focuses on how

If firms and workers could predict the future price level exactly,the short-run aggregate supply curve would be

During 2008,oil price increases

At the beginning of the recession of 2007-2009,real GDP in the United States was ________ potential GDP,and in June 2009,real GDP was ________ potential GDP.

An increase in the price level causes a movement down the aggregate demand curve.

Japanese electronics exports were hurt in 2008 as a result of the recession.How would this decrease in exports have affected Japan's aggregate demand curve?

The long-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

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

of unemployment during make it easier for workers to wages.

Figure 13-4 -Refer to Figure 13-4.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?

At the beginning of the recession of 2007-2009,real GDP in the United States was potential GDP,and in June 2009,real GDP was potential GDP.