Question 1

The long-run aggregate supply curve shows the relationship between the ________ and ________.

Accepted Answer

A) inflation rate; quantity of real GDP demanded 
B) real interest rate; quantity of real GDP supplied 
C) nominal interest rate; quantity of real GDP supplied 
D) price level; quantity of real GDP supplied 
A) inflation rate; quantity of real GDP demanded 
B) real interest rate; quantity of real GDP supplied 
C) nominal interest rate; quantity of real GDP supplied 
D) price level; quantity of real GDP supplied

Question 2

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

Accepted Answer

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

Question 3

Which of the following is one explanation as to why the aggregate demand curve slopes downward?

Accepted Answer

A) Increases in the price level lower the interest rate and decrease consumption spending. 
B) Increases in the price level lower the interest rate and decrease investment spending. 
C) Increases in the U.S.price level relative to the price level in other countries lowers net exports. 
D) Increases in the price level raise real wealth and lowers consumption spending. 
A) Increases in the price level lower the interest rate and decrease consumption spending. 
B) Increases in the price level lower the interest rate and decrease investment spending. 
C) Increases in the U.S.price level relative to the price level in other countries lowers net exports. 
D) Increases in the price level raise real wealth and lowers consumption spending.

Question 4

The short-run aggregate supply curve has a(n)________ slope because as prices of ________ rise,prices of ________ rise more slowly.

Accepted Answer

A) positive; final goods and services; inputs 
B) infinite; final goods and services; inputs 
C) positive; inputs; final goods and services 
D) infinite; inputs; final goods and services 
A) positive; final goods and services; inputs 
B) infinite; final goods and services; inputs 
C) positive; inputs; final goods and services 
D) infinite; inputs; final goods and services

Question 5

Changes in the price level

Accepted Answer

A) increase the level of aggregate supply in the long run. 
B) decrease the level of aggregate supply in the long run. 
C) do not affect the level of aggregate supply in the long run. 
D) increase the level of aggregate supply in the long run only at very high levels of output. 
A) increase the level of aggregate supply in the long run. 
B) decrease the level of aggregate supply in the long run. 
C) do not affect the level of aggregate supply in the long run. 
D) increase the level of aggregate supply in the long run only at very high levels of output.

Question 6

The main result 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.

Question 7

Just before,during,and after the recession of 2007-2009,net exports in the United States

Accepted Answer

A) fell and remained negative. 
B) fell,but remained positive. 
C) rose and became positive. 
D) rose,but remained negative. 
A) fell and remained negative. 
B) fell,but remained positive. 
C) rose and became positive. 
D) rose,but remained negative.

Question 8

Interest rates in the economy have risen.How will this affect aggregate demand and equilibrium in the short run?

Accepted Answer

A) Aggregate demand will fall,the equilibrium price level will fall,and the equilibrium level of GDP will fall. 
B) Aggregate demand will fall,the equilibrium price level will rise,and the equilibrium level of GDP will fall. 
C) Aggregate demand will rise,the equilibrium price level will rise,and the equilibrium level of GDP will rise. 
D) Aggregate demand will rise,the equilibrium price level will fall,and the equilibrium level of GDP will rise. 
A) Aggregate demand will fall,the equilibrium price level will fall,and the equilibrium level of GDP will fall. 
B) Aggregate demand will fall,the equilibrium price level will rise,and the equilibrium level of GDP will fall. 
C) Aggregate demand will rise,the equilibrium price level will rise,and the equilibrium level of GDP will rise. 
D) Aggregate demand will rise,the equilibrium price level will fall,and the equilibrium level of GDP will rise.

Question 9

A decrease in the price level will

Accepted Answer

A) shift the short-run aggregate supply curve to the left. 
B) shift the short-run aggregate supply curve to the right. 
C) move the economy up along a stationary short-run aggregate supply curve. 
D) move the economy down along a stationary short-run aggregate supply curve. 
A) shift the short-run aggregate supply curve to the left. 
B) shift the short-run aggregate supply curve to the right. 
C) move the economy up along a stationary short-run aggregate supply curve. 
D) move the economy down along a stationary short-run aggregate supply curve.

Question 10

Suppose the U.S.GDP growth rate is faster relative to other countries' GDP growth rates.This will

Accepted Answer

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

Question 11

When potential GDP increases,long-run aggregate supply also increases.

Accepted Answer

A) True 
 B)False

Question 12

Monetarism is a school of thought put forth by ________,who argued that the economy would most likely be at potential GDP.

Accepted Answer

A) Karl Marx 
B) Milton Friedman 
C) Finn Kydland and Edward Prescott 
D) Robert Lucas and Thomas Sargent 
A) Karl Marx 
B) Milton Friedman 
C) Finn Kydland and Edward Prescott 
D) Robert Lucas and Thomas Sargent

Question 13

Briefly describe monetarism and the monetary growth rule.

Accepted Answer

Monetarism refers to the macroeconomic t

Question 14

Forecasts made by White House economists and economists at the Congressional Budget Office in 2011 projected that real GDP

Accepted Answer

A) would return to potential GDP by the end of 2011. 
B) would not return to potential GDP until the first quarter of 2013. 
C) would not return to potential GDP until 2016. 
D) would never return to potential GDP. 
A) would return to potential GDP by the end of 2011. 
B) would not return to potential GDP until the first quarter of 2013. 
C) would not return to potential GDP until 2016. 
D) would never return to potential GDP.

Question 15

Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

Accepted Answer

A) falling oil prices 
B) increases in housing prices 
C) the financial crisis 
D) a decline in government spending 
A) falling oil prices 
B) increases in housing prices 
C) the financial crisis 
D) a decline in government spending

Question 16

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

Accepted Answer

A) unlikely; output and input prices generally fall during recession 
B) unlikely; lower wages reduce productivity and morale 
C) likely; output prices always fall during recession 
D) likely; aggregate demand is vertical in the long run 
A) unlikely; output and input prices generally fall during recession 
B) unlikely; lower wages reduce productivity and morale 
C) likely; output prices always fall during recession 
D) likely; aggregate demand is vertical in the long run

Question 17

Figure 13-1  
-Refer to Figure 13-1.Ceteris paribus,an increase in households' expectations of their future income 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 18

President Obama has discussed raising income taxes for individuals earning over $250,000 in income.Explain how these higher income taxes will affect the aggregate demand curve.

Accepted Answer

Raising the income tax decreases the amo

Question 19

An adverse supply shock causes the short-run aggregate supply curve to shift left,increasing the price level.

Accepted Answer

A) True 
 B)False

Question 20

The basic aggregate demand and aggregate supply curve model helps explain

Accepted Answer

A) short-term fluctuations in real GDP and the price level. 
B) long-term growth. 
C) price fluctuations in an individual market. 
D) output fluctuations in an individual market. 
A) short-term fluctuations in real GDP and the price level. 
B) long-term growth. 
C) price fluctuations in an individual market. 
D) output fluctuations in an individual market.

The long-run aggregate supply curve shows the relationship between the and .

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

Which of the following is one explanation as to why the aggregate demand curve slopes downward?

The short-run aggregate supply curve has a(n) slope because as prices of rise,prices of rise more slowly.

Changes in the price level

The main result of the monetarist model is that

Just before,during,and after the recession of 2007-2009,net exports in the United States

Interest rates in the economy have risen.How will this affect aggregate demand and equilibrium in the short run?

A decrease in the price level will

Suppose the U.S.GDP growth rate is faster relative to other countries' GDP growth rates.This will

When potential GDP increases,long-run aggregate supply also increases.

Monetarism is a school of thought put forth by ________,who argued that the economy would most likely be at potential GDP.

Briefly describe monetarism and the monetary growth rule.

Forecasts made by White House economists and economists at the Congressional Budget Office in 2011 projected that real GDP

Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

When the economy enters into a recession,your employer is to reduce your wages because .

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,an increase in households' expectations of their future income would be represented by a movement from

President Obama has discussed raising income taxes for individuals earning over $250,000 in income.Explain how these higher income taxes will affect the aggregate demand curve.

An adverse supply shock causes the short-run aggregate supply curve to shift left,increasing the price level.

The basic aggregate demand and aggregate supply curve model helps explain

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

The long-run aggregate supply curve shows the relationship between the ________ and ________.

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

Which of the following is one explanation as to why the aggregate demand curve slopes downward?

The short-run aggregate supply curve has a(n)________ slope because as prices of ________ rise,prices of ________ rise more slowly.

Changes in the price level

The main result of the monetarist model is that

Just before,during,and after the recession of 2007-2009,net exports in the United States

Interest rates in the economy have risen.How will this affect aggregate demand and equilibrium in the short run?

A decrease in the price level will

Suppose the U.S.GDP growth rate is faster relative to other countries' GDP growth rates.This will

When potential GDP increases,long-run aggregate supply also increases.

Monetarism is a school of thought put forth by ________,who argued that the economy would most likely be at potential GDP.

Briefly describe monetarism and the monetary growth rule.

Forecasts made by White House economists and economists at the Congressional Budget Office in 2011 projected that real GDP

Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

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

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,an increase in households' expectations of their future income would be represented by a movement from

President Obama has discussed raising income taxes for individuals earning over $250,000 in income.Explain how these higher income taxes will affect the aggregate demand curve.

An adverse supply shock causes the short-run aggregate supply curve to shift left,increasing the price level.

The basic aggregate demand and aggregate supply curve model helps explain

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

The long-run aggregate supply curve shows the relationship between the and .

The short-run aggregate supply curve has a(n) slope because as prices of rise,prices of rise more slowly.

When the economy enters into a recession,your employer is to reduce your wages because .