Question 1

According to the research of Christina Romer and David Romer,tax increases implemented to reduce an inherited budget deficit:

Accepted Answer

A)  reduce real output by the same amount as any other tax increase. 
B)  reduce real output by more than other tax increases. 
C)  reduce real output by less than other tax increases. 
D)  increase real output,contrary to what occurs with other tax increases. 
A)  reduce real output by the same amount as any other tax increase. 
B)  reduce real output by more than other tax increases. 
C)  reduce real output by less than other tax increases. 
D)  increase real output,contrary to what occurs with other tax increases. C

Question 2

Which of the following is a true statement?

Accepted Answer

A)  There is a long-run trade-off between inflation and unemployment. 
B)  There is no trade-off between inflation and unemployment in the short-run. 
C)  The short-run Phillips Curve is horizontal. 
D)  The long-run Phillips Curve is vertical. 
A)  There is a long-run trade-off between inflation and unemployment. 
B)  There is no trade-off between inflation and unemployment in the short-run. 
C)  The short-run Phillips Curve is horizontal. 
D)  The long-run Phillips Curve is vertical. D

Question 3

Critics of supply-side economics:

Accepted Answer

A)  argue that a tax cut will increase aggregate supply by more than it increases aggregate demand. 
B)  contend that the relationship between tax rates and economic incentives is small and of uncertain direction. 
C)  believe that a decline in tax rates will increase tax revenues. 
D)  point out that tax cuts enable households to substitute work for leisure. 
A)  argue that a tax cut will increase aggregate supply by more than it increases aggregate demand. 
B)  contend that the relationship between tax rates and economic incentives is small and of uncertain direction. 
C)  believe that a decline in tax rates will increase tax revenues. 
D)  point out that tax cuts enable households to substitute work for leisure. B

Question 4

Stagflation refers to:

Accepted Answer

A)  an increase in inflation accompanied by decreases in real output and employment. 
B)  a decline in the price level accompanied by increases in real output and employment. 
C)  a simultaneous increase in real output and the price level. 
D)  a simultaneous reduction in real output and the price level. 
A)  an increase in inflation accompanied by decreases in real output and employment. 
B)  a decline in the price level accompanied by increases in real output and employment. 
C)  a simultaneous increase in real output and the price level. 
D)  a simultaneous reduction in real output and the price level.

Question 5

In the absence of unexpected shocks,the economy will tend to experience:

Accepted Answer

A)  positive,noninflationary growth. 
B)  no changes in output or prices. 
C)  positive growth with mild amounts of deflation. 
D)  positive growth with mild amounts of inflation. 
A)  positive,noninflationary growth. 
B)  no changes in output or prices. 
C)  positive growth with mild amounts of deflation. 
D)  positive growth with mild amounts of inflation.

Question 6

Suppose that the Consumer Price Index for a particular economy rose from 110 to 120 in year 1,120 to 130 in year 2,and 130 to 140 in year 3.We could conclude that this economy is experiencing:

Accepted Answer

A)  accelerating inflation. 
B)  deflation. 
C)  disinflation. 
D)  a constant rate of inflation. 
A)  accelerating inflation. 
B)  deflation. 
C)  disinflation. 
D)  a constant rate of inflation.

Question 7

In the extended AD-AS model,the long-run aggregate supply curve is vertical.

Accepted Answer

A) True 
 B)False

Question 8

Inflation accompanied by falling real output and employment is known as:

Accepted Answer

A)  Laffer's law. 
B)  Okun's law. 
C)  stagflation. 
D)  the Phillips Curve. 
A)  Laffer's law. 
B)  Okun's law. 
C)  stagflation. 
D)  the Phillips Curve.

Question 9

Other things equal,a decrease in the price level will:

Accepted Answer

A)  shift the aggregate supply curve to the left. 
B)  shift the aggregate demand curve to the left. 
C)  cause a movement up a short-run aggregate supply curve. 
D)  cause a movement down an aggregate supply curve. 
A)  shift the aggregate supply curve to the left. 
B)  shift the aggregate demand curve to the left. 
C)  cause a movement up a short-run aggregate supply curve. 
D)  cause a movement down an aggregate supply curve.

Question 10

A shift in the Phillips Curve to the left will improve the short-run inflation-unemployment choices available to society.

Accepted Answer

A) True 
 B)False

Question 11

Rightward and upward shifts of the Phillips Curve in the 1970s and early 1980s were caused by:

Accepted Answer

A)  adverse shocks to aggregate supply. 
B)  adverse shocks to aggregate demand. 
C)  an increase in the misery index. 
D)  the Vietnam War. 
A)  adverse shocks to aggregate supply. 
B)  adverse shocks to aggregate demand. 
C)  an increase in the misery index. 
D)  the Vietnam War.

Question 12

In terms of aggregate supply,the short run is a period in which:

Accepted Answer

A)  the price level is constant. 
B)  employment is constant. 
C)  real output is constant. 
D)  nominal wages and other resource prices are unresponsive to price-level changes. 
A)  the price level is constant. 
B)  employment is constant. 
C)  real output is constant. 
D)  nominal wages and other resource prices are unresponsive to price-level changes.

Question 13

Which of the following allegedly contributed to the stagflation in the mid-1970s?

Accepted Answer

A)  Appreciation of the dollar. 
B)  A sharp drop in the prices of farm products. 
C)  A dramatic increase in oil prices. 
D)  Rising productivity in manufacturing. 
A)  Appreciation of the dollar. 
B)  A sharp drop in the prices of farm products. 
C)  A dramatic increase in oil prices. 
D)  Rising productivity in manufacturing.

Question 14

Suppose the full employment level of real output (Q)for a hypothetical economy is $500,the price level (P)initially is 100,and prices and wages are flexible both upward and downward.Use the following short-run aggregate supply schedules to answer the question.   Refer to the information given.In the long run,an increase in the price level from 100 to 125 will:

Accepted Answer

A)  increase real output from $500 to $560. 
B)  decrease real output from $500 to $440. 
C)  change the aggregate supply schedule from (a)to (c)and result in an equilibrium level of real output of $560. 
D)  change the aggregate supply schedule from (a)to (b)and result in an equilibrium level of real output of $500. 
A)  increase real output from $500 to $560. 
B)  decrease real output from $500 to $440. 
C)  change the aggregate supply schedule from (a)to (c)and result in an equilibrium level of real output of $560. 
D)  change the aggregate supply schedule from (a)to (b)and result in an equilibrium level of real output of $500.

Question 15

A rightward and upward shift of the Phillips Curve is consistent with the occurrence of stagflation.

Accepted Answer

A) True 
 B)False

Question 16

In the extended analysis of aggregate supply,the short-run aggregate supply curve is:

Accepted Answer

A)  vertical and the long-run aggregate supply curve is horizontal. 
B)  horizontal and the long-run aggregate supply curve is vertical. 
C)  upsloping and the long-run aggregate supply curve is vertical. 
D)  horizontal and the long-run aggregate supply curve is upsloping. 
A)  vertical and the long-run aggregate supply curve is horizontal. 
B)  horizontal and the long-run aggregate supply curve is vertical. 
C)  upsloping and the long-run aggregate supply curve is vertical. 
D)  horizontal and the long-run aggregate supply curve is upsloping.

Question 17

Suppose the full employment level of real output (Q)for a hypothetical economy is $500,the price level (P)initially is 100,and prices and wages are flexible both upward and downward.Use the following short-run aggregate supply schedules to answer the question.   Refer to the information given.If the price level unexpectedly increases from 100 to 125,the level of real output in the short run will:

Accepted Answer

A)  rise from $500 to $560. 
B)  fall from $500 to $440. 
C)  fall from $560 to $500. 
D)  rise from $440 to $500. 
A)  rise from $500 to $560. 
B)  fall from $500 to $440. 
C)  fall from $560 to $500. 
D)  rise from $440 to $500.

Question 18

Which of the following statements is true?

Accepted Answer

A)  The short-run aggregate supply curve is downsloping. 
B)  The short-run aggregate supply curve is vertical. 
C)  The long-run aggregate supply curve is vertical. 
D)  The long-run aggregate supply curve is upsloping. 
A)  The short-run aggregate supply curve is downsloping. 
B)  The short-run aggregate supply curve is vertical. 
C)  The long-run aggregate supply curve is vertical. 
D)  The long-run aggregate supply curve is upsloping.

Question 19

As distinct from reductions in the price level,reductions in the rate of inflation are referred to as:

Accepted Answer

A)  dollar depreciation. 
B)  stagflation. 
C)  deflation. 
D)  disinflation. 
A)  dollar depreciation. 
B)  stagflation. 
C)  deflation. 
D)  disinflation.

Question 20

The Laffer Curve underlies the contention that lower tax rates need not reduce tax revenues.

Accepted Answer

A) True 
 B)False

According to the research of Christina Romer and David Romer,tax increases implemented to reduce an inherited budget deficit:

Which of the following is a true statement?

Critics of supply-side economics:

Stagflation refers to:

In the absence of unexpected shocks,the economy will tend to experience:

Suppose that the Consumer Price Index for a particular economy rose from 110 to 120 in year 1,120 to 130 in year 2,and 130 to 140 in year 3.We could conclude that this economy is experiencing:

In the extended AD-AS model,the long-run aggregate supply curve is vertical.

Inflation accompanied by falling real output and employment is known as:

Other things equal,a decrease in the price level will:

A shift in the Phillips Curve to the left will improve the short-run inflation-unemployment choices available to society.

Rightward and upward shifts of the Phillips Curve in the 1970s and early 1980s were caused by:

In terms of aggregate supply,the short run is a period in which:

Which of the following allegedly contributed to the stagflation in the mid-1970s?

A rightward and upward shift of the Phillips Curve is consistent with the occurrence of stagflation.

In the extended analysis of aggregate supply,the short-run aggregate supply curve is:

Which of the following statements is true?

As distinct from reductions in the price level,reductions in the rate of inflation are referred to as:

The Laffer Curve underlies the contention that lower tax rates need not reduce tax revenues.

Income Inequality Poverty and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

The Balance of Payments, Exchange Rates, and Trade Deficits

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

The United States and the Global Economy

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Exam 37: Extending the Analysis of Aggregate Supply

According to the research of Christina Romer and David Romer,tax increases implemented to reduce an inherited budget deficit:

Which of the following is a true statement?

Critics of supply-side economics:

Stagflation refers to:

In the absence of unexpected shocks,the economy will tend to experience:

Suppose that the Consumer Price Index for a particular economy rose from 110 to 120 in year 1,120 to 130 in year 2,and 130 to 140 in year 3.We could conclude that this economy is experiencing:

In the extended AD-AS model,the long-run aggregate supply curve is vertical.

Inflation accompanied by falling real output and employment is known as:

Other things equal,a decrease in the price level will:

A shift in the Phillips Curve to the left will improve the short-run inflation-unemployment choices available to society.

Rightward and upward shifts of the Phillips Curve in the 1970s and early 1980s were caused by:

In terms of aggregate supply,the short run is a period in which:

Which of the following allegedly contributed to the stagflation in the mid-1970s?

A rightward and upward shift of the Phillips Curve is consistent with the occurrence of stagflation.

In the extended analysis of aggregate supply,the short-run aggregate supply curve is:

Which of the following statements is true?

As distinct from reductions in the price level,reductions in the rate of inflation are referred to as:

The Laffer Curve underlies the contention that lower tax rates need not reduce tax revenues.

Income Inequality Poverty and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

The Balance of Payments, Exchange Rates, and Trade Deficits

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

The United States and the Global Economy

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