Question 1

Which of the following might create cost-push inflation

Accepted Answer

A) A decrease government spending 
B) A decrease in oil prices 
C) A decrease in government regulation 
D) The imposition of a 35 hour work week 
A) A decrease government spending 
B) A decrease in oil prices 
C) A decrease in government regulation 
D) The imposition of a 35 hour work week

Question 2

Policies focused on putting people to work by reducing the regulatory requirements associated with hiring them would be considered

Accepted Answer

A) demand side policies. 
B) supply side policies. 
C) monetary policies. 
D) demand side and supply side policies. 
A) demand side policies. 
B) supply side policies. 
C) monetary policies. 
D) demand side and supply side policies.

Question 3

An increase in taxes will immediately shift

Accepted Answer

A) aggregate demand to the right. 
B) aggregate demand to the left. 
C) aggregate supply to the right. 
D) aggregate supply to the left. 
A) aggregate demand to the right. 
B) aggregate demand to the left. 
C) aggregate supply to the right. 
D) aggregate supply to the left.

Question 4

If a supply-side economist were to make a suggestion to stimulate economic activity which of the following policies would she NOT suggest

Accepted Answer

A) An increase in the minimum wage 
B) A repeal of regulations on business 
C) A repeal of employer-mandated benefits 
D) An elimination of the corporate income tax 
A) An increase in the minimum wage 
B) A repeal of regulations on business 
C) A repeal of employer-mandated benefits 
D) An elimination of the corporate income tax

Question 5

A decrease in taxes will immediately shift

Accepted Answer

A) aggregate demand to the right. 
B) aggregate demand to the left. 
C) aggregate supply to the right. 
D) aggregate supply to the left. 
A) aggregate demand to the right. 
B) aggregate demand to the left. 
C) aggregate supply to the right. 
D) aggregate supply to the left.

Question 6

An increase in government spending will immediately shift

Accepted Answer

A) aggregate demand to the right. 
B) aggregate demand to the left. 
C) aggregate supply to the right. 
D) aggregate supply to the left. 
A) aggregate demand to the right. 
B) aggregate demand to the left. 
C) aggregate supply to the right. 
D) aggregate supply to the left.

Question 7

The Federal Reserve has indirect control over short term interest rates and as a result their ability to control economic activity is through

Accepted Answer

A) aggregate supply. 
B) residual demand. 
C) aggregate demand. 
D) the exchange rate. 
A) aggregate supply. 
B) residual demand. 
C) aggregate demand. 
D) the exchange rate.

Question 8

Which of the following will increase macroeconomic equilibrium prices?

Accepted Answer

A) a decrease in government spending. 
B) an increase in productivity. 
C) a decrease in taxes. 
D) a decrease in input prices. 
A) a decrease in government spending. 
B) an increase in productivity. 
C) a decrease in taxes. 
D) a decrease in input prices.

Question 9

Which of the following policies might create demand-pull inflation

Accepted Answer

A) A decrease government spending 
B) An increase in interest rates 
C) A cut in taxes 
D) All of these policies could create demand-pull inflation 
A) A decrease government spending 
B) An increase in interest rates 
C) A cut in taxes 
D) All of these policies could create demand-pull inflation

Question 10

-Referring to the Aggregate Demand - Aggregate Supply diagram in Figure 8.1, which box should be filled with the label AD for the aggregate demand curve?

Accepted Answer

A) Box 1 
B) Box 2 
C) Box 3 
D) Box 4 
A) Box 1 
B) Box 2 
C) Box 3 
D) Box 4

Question 11

An increase in productivity will cause

Accepted Answer

A) AD to increase (move to the right). 
B) AD to decrease (move to the left). 
C) AS to increase (move to down and to the right). 
D) AS to decrease (move to up and to the left). 
A) AD to increase (move to the right). 
B) AD to decrease (move to the left). 
C) AS to increase (move to down and to the right). 
D) AS to decrease (move to up and to the left).

Question 12

Attempts in 2008 to jump-start the economy on the demand side included a large

Accepted Answer

A) increase in short-term interest rates. 
B) increase in income tax rates. 
C) cut in the size of tax rebate checks. 
D) cut in short-term interest rates. 
A) increase in short-term interest rates. 
B) increase in income tax rates. 
C) cut in the size of tax rebate checks. 
D) cut in short-term interest rates.

Question 13

Which of the following will increase macroeconomic equilibrium real gross domestic product?

Accepted Answer

A) an increase in government spending. 
B) a decrease in productivity. 
C) an increase in taxes. 
D) an increase in input prices. 
A) an increase in government spending. 
B) a decrease in productivity. 
C) an increase in taxes. 
D) an increase in input prices.

Question 14

Which of the following will increase macroeconomic equilibrium prices?

Accepted Answer

A) a decrease in government spending. 
B) an increase in productivity. 
C) an increase in taxes. 
D) an increase in input prices. 
A) a decrease in government spending. 
B) an increase in productivity. 
C) an increase in taxes. 
D) an increase in input prices.

Question 15

-Referring to the Aggregate Demand - Aggregate Supply diagram in Figure 8.1, which box should be filled with the label PI* for the macroeconomic equilibrium level of the price index?

Accepted Answer

A) Box 1 
B) Box 2 
C) Box 5 
D) Box 6 
A) Box 1 
B) Box 2 
C) Box 5 
D) Box 6

Question 16

Policies focused on lowering interest rates to allow people to buy homes would be considered

Accepted Answer

A) demand side policies. 
B) supply side policies. 
C) fiscal policies. 
D) demand side and supply side policies. 
A) demand side policies. 
B) supply side policies. 
C) fiscal policies. 
D) demand side and supply side policies.

Question 17

When domestic prices rise

Accepted Answer

A) people buy fewer imported goods. 
B) people buy more imported goods. 
C) exports rise. 
D) interest sensitive consumption rises. 
A) people buy fewer imported goods. 
B) people buy more imported goods. 
C) exports rise. 
D) interest sensitive consumption rises.

Question 18

Which of the following policies might create demand-pull inflation

Accepted Answer

A) A decrease government spending 
B) A decrease in interest rates 
C) An increase in taxes 
D) All of these policies could create demand-pull inflation 
A) A decrease government spending 
B) A decrease in interest rates 
C) An increase in taxes 
D) All of these policies could create demand-pull inflation

Question 19

Which of the following will increase macroeconomic equilibrium real gross domestic product?

Accepted Answer

A) a decrease in government spending. 
B) an increase in productivity. 
C) an increase in taxes. 
D) an increase in input prices. 
A) a decrease in government spending. 
B) an increase in productivity. 
C) an increase in taxes. 
D) an increase in input prices.

Question 20

A decrease in interest rates will immediately shift

Accepted Answer

A) aggregate demand to the right. 
B) aggregate demand to the left. 
C) aggregate supply to the right. 
D) aggregate supply to the left. 
A) aggregate demand to the right. 
B) aggregate demand to the left. 
C) aggregate supply to the right. 
D) aggregate supply to the left.

Exam 8: Aggregate Demand and Aggregate Supply

Which of the following might create cost-push inflation

Policies focused on putting people to work by reducing the regulatory requirements associated with hiring them would be considered

An increase in taxes will immediately shift

If a supply-side economist were to make a suggestion to stimulate economic activity which of the following policies would she NOT suggest

A decrease in taxes will immediately shift

An increase in government spending will immediately shift

The Federal Reserve has indirect control over short term interest rates and as a result their ability to control economic activity is through

Which of the following will increase macroeconomic equilibrium prices?

Which of the following policies might create demand-pull inflation

-Referring to the Aggregate Demand - Aggregate Supply diagram in Figure 8.1, which box should be filled with the label AD for the aggregate demand curve?

An increase in productivity will cause

Attempts in 2008 to jump-start the economy on the demand side included a large

Which of the following will increase macroeconomic equilibrium real gross domestic product?

Which of the following will increase macroeconomic equilibrium prices?

-Referring to the Aggregate Demand - Aggregate Supply diagram in Figure 8.1, which box should be filled with the label PI* for the macroeconomic equilibrium level of the price index?

Policies focused on lowering interest rates to allow people to buy homes would be considered

When domestic prices rise

Which of the following policies might create demand-pull inflation

Which of the following will increase macroeconomic equilibrium real gross domestic product?

A decrease in interest rates will immediately shift

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