Question 1

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

Accepted Answer

The long-run aggregate supply curve is v

Question 2

The international trade effect states that

Accepted Answer

A) an increase in the price level will raise net exports. 
B) an increase in the price level will lower net exports. 
C) an increase in the price level will raise exports. 
D) an increase in the price level will lower imports. 
A) an increase in the price level will raise net exports. 
B) an increase in the price level will lower net exports. 
C) an increase in the price level will raise exports. 
D) an increase in the price level will lower imports.

Question 3

Figure 13-1  
-Refer to Figure 13-1.Ceteris paribus,a decrease in government spending 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 4

If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run,the economy would experience

Accepted Answer

A) stagflation. 
B) long-run economic decline. 
C) hyperinflation. 
D) an increase in the natural rate of unemployment. 
A) stagflation. 
B) long-run economic decline. 
C) hyperinflation. 
D) an increase in the natural rate of unemployment.

Question 5

Figure 13-3  
-Refer to Figure 13-3.Suppose the economy is at point C.If investment 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 6

Inflation is generally the result of total spending growing faster than total production.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following would cause the short-run aggregate supply curve to shift to the left?

Accepted Answer

A) an increase in the price level 
B) an increase in inflation expectations 
C) a technological advance 
D) a decrease in interest rates 
A) an increase in the price level 
B) an increase in inflation expectations 
C) a technological advance 
D) a decrease in interest rates

Question 8

A decrease in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?

Accepted Answer

A) The price level will fall,and the level of GDP will be unaffected. 
B) The price level will fall,and the level of GDP will fall. 
C) The price level will rise,and the level of GDP will fall. 
D) The price level will rise,and the level of GDP will be unaffected. 
A) The price level will fall,and the level of GDP will be unaffected. 
B) The price level will fall,and the level of GDP will fall. 
C) The price level will rise,and the level of GDP will fall. 
D) The price level will rise,and the level of GDP will be unaffected.

Question 9

The short-run aggregate supply curve has a

Accepted Answer

A) negative slope. 
B) positive slope. 
C) slope equal to infinity. 
D) slope equal to zero. 
A) negative slope. 
B) positive slope. 
C) slope equal to infinity. 
D) slope equal to zero.

Question 10

The recession of 2007-2009 made many consumers pessimistic about their future incomes.How does this increased pessimism affect the aggregate demand curve?

Accepted Answer

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

Question 11

At a long-run macroeconomic equilibrium,real GDP is always equal to potential GDP.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Figure 13-2  
-Refer to Figure 13-2.Ceteris paribus,an increase in the labor force 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 14

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 15

What is a supply shock,and why might a supply shock lead to stagflation?

Accepted Answer

A supply shock is an unexpected event th

Question 16

When people became ________ concerned with the underlying value of their houses and became ________ concerned with the expectations of the prices of their houses increasing,a housing bubble occurred.

Accepted Answer

A) less; less 
B) less; more 
C) more; less 
D) more; more 
A) less; less 
B) less; more 
C) more; less 
D) more; more

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 an increase in wealth.

Accepted Answer

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

Question 18

What is the relationship among the AD,SRAS and LRAS curves when the economy is in macroeconomic equilibrium?

Accepted Answer

When the economy is in long-ru

Question 19

An increase in imports increases aggregate demand.

Accepted Answer

A) True 
 B)False

Question 20

Using an aggregate demand graph,illustrate the impact of an increase in the growth rate of U.S.GDP relative to the growth rate of foreign GDP.

Accepted Answer

@#IMG-DLM& The increase in the growth rate of U.S.

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

The international trade effect states that

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,a decrease in government spending would be represented by a movement from

If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run,the economy would experience

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

Inflation is generally the result of total spending growing faster than total production.

Which of the following would cause the short-run aggregate supply curve to shift to the left?

A decrease in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?

The short-run aggregate supply curve has a

The recession of 2007-2009 made many consumers pessimistic about their future incomes.How does this increased pessimism affect the aggregate demand curve?

At a long-run macroeconomic equilibrium,real GDP is always equal to potential GDP.

The level of real GDP in the long run is

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

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

What is a supply shock,and why might a supply shock lead to stagflation?

When people became concerned with the underlying value of their houses and became concerned with the expectations of the prices of their houses increasing,a housing bubble occurred.

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.

What is the relationship among the AD,SRAS and LRAS curves when the economy is in macroeconomic equilibrium?

An increase in imports increases aggregate demand.

Using an aggregate demand graph,illustrate the impact of an increase in the growth rate of U.S.GDP relative to the growth rate of foreign GDP.

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

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

The international trade effect states that

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,a decrease in government spending would be represented by a movement from

If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run,the economy would experience

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

Inflation is generally the result of total spending growing faster than total production.

Which of the following would cause the short-run aggregate supply curve to shift to the left?

A decrease in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?

The short-run aggregate supply curve has a

The recession of 2007-2009 made many consumers pessimistic about their future incomes.How does this increased pessimism affect the aggregate demand curve?

At a long-run macroeconomic equilibrium,real GDP is always equal to potential GDP.

The level of real GDP in the long run is

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

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

What is a supply shock,and why might a supply shock lead to stagflation?

When people became ________ concerned with the underlying value of their houses and became ________ concerned with the expectations of the prices of their houses increasing,a housing bubble occurred.

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.

What is the relationship among the AD,SRAS and LRAS curves when the economy is in macroeconomic equilibrium?

An increase in imports increases aggregate demand.

Using an aggregate demand graph,illustrate the impact of an increase in the growth rate of U.S.GDP relative to the growth rate of foreign GDP.

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

When people became concerned with the underlying value of their houses and became concerned with the expectations of the prices of their houses increasing,a housing bubble occurred.