Question 1

Suppose the Federal Reserve wanted to fight inflation by increasing interest rates. Doing so would

Accepted Answer

A) increase aggregate demand. 
B) increase aggregate supply. 
C) decrease aggregate demand. 
D) decrease aggregate supply. 
A) increase aggregate demand. 
B) increase aggregate supply. 
C) decrease aggregate demand. 
D) decrease aggregate supply.

Question 2

Which of the following will increase macroeconomic equilibrium prices?

Accepted Answer

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

Question 3

Which of the following will increase macroeconomic equilibrium prices?

Accepted Answer

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

Question 4

If, in response to a weak employment picture, a law was passed to increase the number of lanes on all interstate highways by at least one lane this would likely

Accepted Answer

A) increase aggregate demand. 
B) increase aggregate supply. 
C) decrease aggregate demand. 
D) decrease aggregate supply. 
A) increase aggregate demand. 
B) increase aggregate supply. 
C) decrease aggregate demand. 
D) decrease aggregate supply.

Question 5

In reaction to the terrorist attacks of September 11, 2001 the Federal Reserve moved to lower interest rates. This was intended to

Accepted Answer

A) increase aggregate demand. 
B) increase aggregate supply. 
C) decrease aggregate demand. 
D) decrease aggregate supply. 
A) increase aggregate demand. 
B) increase aggregate supply. 
C) decrease aggregate demand. 
D) decrease aggregate supply.

Question 6

Elimination of government regulations undertaken explicitly to influence the aggregate supply curve would be an example of

Accepted Answer

A) Keynesian economics. 
B) classical economics. 
C) demand-side economics. 
D) supply-side economics. 
A) Keynesian economics. 
B) classical economics. 
C) demand-side economics. 
D) supply-side economics.

Question 7

Early in 2008, as the worldwide recession intensified in Europe, it seemed possible that the U.S. might be able to avoid the recession because

Accepted Answer

A) U)S. interest rates remained the highest in the world. 
B) the U.S. dollar was very weak relative to the euro. 
C) U)S. exports were falling at a rapid pace. 
D) the U.S. federal government balanced its budget. 
A) U)S. interest rates remained the highest in the world. 
B) the U.S. dollar was very weak relative to the euro. 
C) U)S. exports were falling at a rapid pace. 
D) the U.S. federal government balanced its budget.

Question 8

An increase in interest rates 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 9

Which of the following might create cost-push inflation

Accepted Answer

A) A decrease government spending 
B) An increase in oil prices 
C) A decrease in government regulation 
D) An increase in taxes 
A) A decrease government spending 
B) An increase in oil prices 
C) A decrease in government regulation 
D) An increase in taxes

Question 10

-In the Aggregate Demand - Aggregate Supply diagram in Figure 8.1, Box 6 should be filled with

Accepted Answer

A) PI for Price Index. 
B) RGDP for Real Gross Domestic Product. 
C) AS for Aggregate Supply. 
D) AD for Aggregate Demand. 
A) PI for Price Index. 
B) RGDP for Real Gross Domestic Product. 
C) AS for Aggregate Supply. 
D) AD for Aggregate Demand.

Exam 8: Aggregate Demand and Aggregate Supply

Suppose the Federal Reserve wanted to fight inflation by increasing interest rates. Doing so would

Which of the following will increase macroeconomic equilibrium prices?

Which of the following will increase macroeconomic equilibrium prices?

If, in response to a weak employment picture, a law was passed to increase the number of lanes on all interstate highways by at least one lane this would likely

In reaction to the terrorist attacks of September 11, 2001 the Federal Reserve moved to lower interest rates. This was intended to

Elimination of government regulations undertaken explicitly to influence the aggregate supply curve would be an example of

Early in 2008, as the worldwide recession intensified in Europe, it seemed possible that the U.S. might be able to avoid the recession because

An increase in interest rates will cause

Which of the following might create cost-push inflation

-In the Aggregate Demand - Aggregate Supply diagram in Figure 8.1, Box 6 should be filled with

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