Question 1

All of the following would be considered a positive addition to household wealth except

Accepted Answer

A)  the equity in one's home 
B)  500 shares of Google stock 
C)  the balance in your savings account 
D)  a credit card balance 
A)  the equity in one's home 
B)  500 shares of Google stock 
C)  the balance in your savings account 
D)  a credit card balance

Question 2

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

Accepted Answer

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

Question 3

If,due to a recession,foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended,this will

Accepted Answer

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

Question 4

In the dynamic aggregated demand and aggregate supply model,if AD shifts faster than AS

Accepted Answer

A)  inflation occurs. 
B)  deflation occurs. 
C)  stagflation occurs. 
D)  disinflation occurs. 
A)  inflation occurs. 
B)  deflation occurs. 
C)  stagflation occurs. 
D)  disinflation occurs.

Question 5

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.

Question 6

In the United States,because shipping plays such an important role in the economy,declines in cargo volumes reflect

Accepted Answer

A)  increases in short-run aggregate supply. 
B)  increases in inflation. 
C)  declines in aggregate demand. 
D)  decreases in long-run aggregate supply. 
A)  increases in short-run aggregate supply. 
B)  increases in inflation. 
C)  declines in aggregate demand. 
D)  decreases in long-run aggregate supply.

Question 7

Most recessions in the United States since World War II have begun with

Accepted Answer

A)  a decline in residential construction. 
B)  a rapid increase in the price level. 
C)  a substantial number of bank failures. 
D)  a stock market crash. 
A)  a decline in residential construction. 
B)  a rapid increase in the price level. 
C)  a substantial number of bank failures. 
D)  a stock market crash.

Question 8

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

Accepted Answer

The long-run aggregate supply curve is v

Question 9

Beginning with long-run equilibrium,use the aggregate demand and aggregate supply model to illustrate what happens in the short run when the economy suffers a negative supply shock.

Accepted Answer

@#IMG-DLM& The economy is at point A with the pric

Question 10

Stagflation usually results from

Accepted Answer

A)  a supply shock. 
B)  a decrease in aggregate demand. 
C)  an increase in aggregate supply. 
D)  an increase in aggregate demand. 
A)  a supply shock. 
B)  a decrease in aggregate demand. 
C)  an increase in aggregate supply. 
D)  an increase in aggregate demand.

Question 11

Explain how the static aggregate demand and aggregate supply model gives us misleading results about the price level,particularly with respect to decreases in aggregate demand.Describe how the aggregate demand curve is different in the dynamic model as compared to the static model.Describe how potential GDP is different in the dynamic model as compared to the static model.

Accepted Answer

The static model incorrectly predicts th

Question 12

Long-run macroeconomic equilibrium occurs when

Accepted Answer

A)  aggregate demand equals short-run aggregate supply. 
B)  aggregate demand equals short-run aggregate supply and they intersect at a point on the long-run supply curve. 
C)  structural and frictional unemployment equals zero. 
D)  output is above potential GDP. 
A)  aggregate demand equals short-run aggregate supply. 
B)  aggregate demand equals short-run aggregate supply and they intersect at a point on the long-run supply curve. 
C)  structural and frictional unemployment equals zero. 
D)  output is above potential GDP.

Question 13

Last week,six Swedish kronor could purchase one U.S.dollar.This week,it takes eight Swedish kronor to purchase one U.S.dollar.This change in the value of the dollar will ________ exports from the United States to Sweden and ________ U.S.aggregate demand.

Accepted Answer

A)  increase; increase 
B)  decrease; decrease 
C)  increase; decrease 
D)  decrease; increase 
A)  increase; increase 
B)  decrease; decrease 
C)  increase; decrease 
D)  decrease; increase

Question 14

German luxury car exports were hurt in 2009 as a result of the recession.How would this decrease in exports have affected Germany's aggregate demand curve?

Accepted Answer

A)  The aggregate demand curve would have shifted to the right. 
B)  The aggregate demand curve would not have shifted, but there would have been a movement up the aggregate demand curve. 
C)  The aggregate demand curve would not have shifted, but there would have been a movement down the aggregate demand curve. 
D)  The aggregate demand curve would have shifted to the left. 
A)  The aggregate demand curve would have shifted to the right. 
B)  The aggregate demand curve would not have shifted, but there would have been a movement up the aggregate demand curve. 
C)  The aggregate demand curve would not have shifted, but there would have been a movement down the aggregate demand curve. 
D)  The aggregate demand curve would have shifted to the left.

Question 15

Using an aggregate demand graph,illustrate the impact of an increase in the price level on aggregate demand.

Accepted Answer

@#IMG-DLM& This illustrates an increase in the pri

Question 16

If the short-run aggregate supply increases by less than the long-run aggregate supply,then,at the short-run equilibrium,

Accepted Answer

A)  GDP will be below potential GDP. 
B)  aggregate demand will increase. 
C)  GDP will be above potential GDP. 
D)  GDP will be equal to potential GDP. 
A)  GDP will be below potential GDP. 
B)  aggregate demand will increase. 
C)  GDP will be above potential GDP. 
D)  GDP will be equal to potential GDP.

Question 17

Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

Accepted Answer

A)  Output will decrease. 
B)  Prices will increase. 
C)  Unemployment will rise. 
D)  Short-run aggregate supply will shift to the right. 
A)  Output will decrease. 
B)  Prices will increase. 
C)  Unemployment will rise. 
D)  Short-run aggregate supply will shift to the right.

Question 18

Full-employment GDP is also known as

Accepted Answer

A)  realized GDP. 
B)  potential GDP. 
C)  politico-economic GDP. 
D)  balanced-budget GDP. 
A)  realized GDP. 
B)  potential GDP. 
C)  politico-economic GDP. 
D)  balanced-budget GDP.

Question 19

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 20

The level of aggregate supply in the long-run is not affected by

Accepted Answer

A)  changes in technology. 
B)  changes in the capital stock. 
C)  changes in the price level. 
D)  changes in the number of workers. 
A)  changes in technology. 
B)  changes in the capital stock. 
C)  changes in the price level. 
D)  changes in the number of workers.

Exam 24: Aggregate Demand and Aggregate Supply Analysis

All of the following would be considered a positive addition to household wealth except

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

If,due to a recession,foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended,this will

In the dynamic aggregated demand and aggregate supply model,if AD shifts faster than AS

The basic aggregate demand and aggregate supply curve model helps explain

In the United States,because shipping plays such an important role in the economy,declines in cargo volumes reflect

Most recessions in the United States since World War II have begun with

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

Beginning with long-run equilibrium,use the aggregate demand and aggregate supply model to illustrate what happens in the short run when the economy suffers a negative supply shock.

Stagflation usually results from

Long-run macroeconomic equilibrium occurs when

Last week,six Swedish kronor could purchase one U.S.dollar.This week,it takes eight Swedish kronor to purchase one U.S.dollar.This change in the value of the dollar will ________ exports from the United States to Sweden and ________ U.S.aggregate demand.

German luxury car exports were hurt in 2009 as a result of the recession.How would this decrease in exports have affected Germany's aggregate demand curve?

Using an aggregate demand graph,illustrate the impact of an increase in the price level on aggregate demand.

If the short-run aggregate supply increases by less than the long-run aggregate supply,then,at the short-run equilibrium,

Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

Full-employment GDP is also known as

Changes in the price level

The level of aggregate supply in the long-run is not affected by

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

Externalities, environmental Policy, and Public Goods

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: The Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

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

Last week,six Swedish kronor could purchase one U.S.dollar.This week,it takes eight Swedish kronor to purchase one U.S.dollar.This change in the value of the dollar will exports from the United States to Sweden and U.S.aggregate demand.