Question 1

Figure 13-2  
-Refer to Figure 13-2.Ceteris paribus,a decrease 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 2

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 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

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

Accepted Answer

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

Question 5

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 6

Suppose the economy is at full employment and firms become more pessimistic about the future profitability of new investment.Which of the following will happen in the short run?

Accepted Answer

A) Output will rise. 
B) Prices will rise. 
C) Unemployment will rise. 
D) The aggregate demand curve will shift to the right. 
A) Output will rise. 
B) Prices will rise. 
C) Unemployment will rise. 
D) The aggregate demand curve will shift to the right.

Question 7

Figure 13-3  
-Refer to Figure 13-3.Suppose the economy is at point C.If government spending decreases in the economy,where will the eventual long-run equilibrium be?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 8

If the short-run aggregate supply increases by less than the long-run aggregate supply,then,at the short-run equilibrium

Accepted Answer

A) GDP will be below potential GDP. 
B) aggregate demand will increase. 
C) GDP will be above potential GDP. 
D) GDP will be equal to potential GDP. 
A) GDP will be below potential GDP. 
B) aggregate demand will increase. 
C) GDP will be above potential GDP. 
D) GDP will be equal to potential GDP.

Question 9

Figure 13-1  
-Refer to Figure 13-1.Ceteris paribus,an increase 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.

Question 10

Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

Accepted Answer

A) Output will decrease. 
B) Prices will increase. 
C) Unemployment will rise. 
D) Short-run aggregate supply will shift to the right. 
A) Output will decrease. 
B) Prices will increase. 
C) Unemployment will rise. 
D) Short-run aggregate supply will shift to the right.

Question 11

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 12

Figure 13-3  
-Refer to Figure 13-3.Suppose the economy is at point A.If the economy experiences a negative supply shock,where will the eventual short-run equilibrium be?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 13

Which of the following models focuses on how productivity shocks explain fluctuations in real GDP?

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 14

Monetarism is a school of thought put forth by Milton Friedman.He argued that the economy would ordinarily

Accepted Answer

A) be below potential GDP. 
B) be at potential GDP. 
C) be unstable. 
D) be above potential GDP. 
A) be below potential GDP. 
B) be at potential GDP. 
C) be unstable. 
D) be above potential GDP.

Question 15

Stagflation usually results from

Accepted Answer

A) a supply shock. 
B) a decrease in aggregate demand. 
C) an increase in aggregate supply. 
D) an increase in aggregate demand. 
A) a supply shock. 
B) a decrease in aggregate demand. 
C) an increase in aggregate supply. 
D) an increase in aggregate demand.

Question 16

Figure 13-1  
-Refer to Figure 13-1.Ceteris paribus,an increase in the growth rate of domestic GDP relative to the growth rate of foreign GDP 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 17

If technological change occurs in the economy

Accepted Answer

A) the long-run aggregate supply curve will shift to the right. 
B) the long-run aggregate supply curve will shift to the left. 
C) we will move up along the long-run aggregate supply curve. 
D) we will move down along the long-run aggregate supply curve. 
A) the long-run aggregate supply curve will shift to the right. 
B) the long-run aggregate supply curve will shift to the left. 
C) we will move up along the long-run aggregate supply curve. 
D) we will move down along the long-run aggregate supply curve.

Question 18

Stagflation occurs when

Accepted Answer

A) inflation rises and GDP rises. 
B) inflation falls and GDP rises. 
C) inflation rises and GDP falls. 
D) inflation falls and GDP falls. 
A) inflation rises and GDP rises. 
B) inflation falls and GDP rises. 
C) inflation rises and GDP falls. 
D) inflation falls and GDP falls.

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

The main belief of the monetarist model is that

Accepted Answer

A) workers and firms have rational expectations. 
B) the quantity of money should be increased at a constant rate. 
C) productivity shocks explain fluctuations in real GDP. 
D) the economy is slow to adjust to sticky wages and prices. 
A) workers and firms have rational expectations. 
B) the quantity of money should be increased at a constant rate. 
C) productivity shocks explain fluctuations in real GDP. 
D) the economy is slow to adjust to sticky wages and prices.

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

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

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

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

Which of the following is considered a negative supply shock?

Suppose the economy is at full employment and firms become more pessimistic about the future profitability of new investment.Which of the following will happen in the short run?

Figure 13-3 -Refer to Figure 13-3.Suppose the economy is at point C.If government spending decreases in the economy,where will the eventual long-run equilibrium be?

If the short-run aggregate supply increases by less than the long-run aggregate supply,then,at the short-run equilibrium

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

Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

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

Figure 13-3 -Refer to Figure 13-3.Suppose the economy is at point A.If the economy experiences a negative supply shock,where will the eventual short-run equilibrium be?

Which of the following models focuses on how productivity shocks explain fluctuations in real GDP?

Monetarism is a school of thought put forth by Milton Friedman.He argued that the economy would ordinarily

Stagflation usually results from

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,an increase in the growth rate of domestic GDP relative to the growth rate of foreign GDP would be represented by a movement from

If technological change occurs in the economy

Stagflation occurs when

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

The main belief of the monetarist model is that

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

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

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

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

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

Which of the following is considered a negative supply shock?

Suppose the economy is at full employment and firms become more pessimistic about the future profitability of new investment.Which of the following will happen in the short run?

Figure 13-3 -Refer to Figure 13-3.Suppose the economy is at point C.If government spending decreases in the economy,where will the eventual long-run equilibrium be?

If the short-run aggregate supply increases by less than the long-run aggregate supply,then,at the short-run equilibrium

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

Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

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

Figure 13-3 -Refer to Figure 13-3.Suppose the economy is at point A.If the economy experiences a negative supply shock,where will the eventual short-run equilibrium be?

Which of the following models focuses on how productivity shocks explain fluctuations in real GDP?

Monetarism is a school of thought put forth by Milton Friedman.He argued that the economy would ordinarily

Stagflation usually results from

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,an increase in the growth rate of domestic GDP relative to the growth rate of foreign GDP would be represented by a movement from

If technological change occurs in the economy

Stagflation occurs when

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

The main belief of the monetarist model is that

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