Question 1

Suppose a booming stock market encourages consumption spending to rise dramatically.What would be the most likely long-run impact?

Accepted Answer

A)  Prices fall. 
B)  GDP first rises,and then falls back to long-run equilibrium. 
C)  A recession occurs. 
D)  The impact cannot be determined from the information given. 
A)  Prices fall. 
B)  GDP first rises,and then falls back to long-run equilibrium. 
C)  A recession occurs. 
D)  The impact cannot be determined from the information given.

Question 2

One reason the price level did not rise after the 2008-2009 stimulus policy actions is that it may not have shifted aggregate demand to the right.

Accepted Answer

A) True 
 B)False

Question 3

The idea that new spending creates more new spending is known as:

Accepted Answer

A)  the crowding-out effect. 
B)  the multiplier effect. 
C)  the wealth effect. 
D)  the interest rate effect. 
A)  the crowding-out effect. 
B)  the multiplier effect. 
C)  the wealth effect. 
D)  the interest rate effect.

Question 4

The difference between the Keynesian model and the aggregate demand/aggregate supply (AD/AS)model is that the:

Accepted Answer

A)  Keynesian model assumes that prices are constant. 
B)  AD/AS model assumes that prices are constant. 
C)  Keynesian model assumes full employment. 
D)  AD/AS model assumes that equilibrium always occurs at less than full employment. 
A)  Keynesian model assumes that prices are constant. 
B)  AD/AS model assumes that prices are constant. 
C)  Keynesian model assumes full employment. 
D)  AD/AS model assumes that equilibrium always occurs at less than full employment.

Question 5

Aggregate supply increases when:

Accepted Answer

A)  input prices rise. 
B)  subsidies are reduced. 
C)  there is a decrease in firms' market power. 
D)  business expectations tend toward the negative. 
A)  input prices rise. 
B)  subsidies are reduced. 
C)  there is a decrease in firms' market power. 
D)  business expectations tend toward the negative.

Question 6

Analyze the aggregate supply curve and differentiate between the short run and long run.Support your response with a graph.

Accepted Answer

The aggregate supply curve shows the rea

Question 7

Which is a determinant of aggregate supply?

Accepted Answer

A)  interest rates 
B)  productivity 
C)  prices of substitutes 
D)  household expectations 
A)  interest rates 
B)  productivity 
C)  prices of substitutes 
D)  household expectations

Question 8

Assume initially the economy is at full employment.If aggregate demand increases,the aggregate price level and costs will ______,and ultimately,the short run aggregate supply curve shifts to the _______.

Accepted Answer

A)  rise;right 
B)  rise;left 
C)  fall;right 
D)  fall;left 
A)  rise;right 
B)  rise;left 
C)  fall;right 
D)  fall;left

Question 9

If the amount of regulation in an economy increases,the aggregate supply curve shifts _____ and output supplied will be _____.

Accepted Answer

A)  left;increased 
B)  left;reduced 
C)  right;increased 
D)  right;reduced 
A)  left;increased 
B)  left;reduced 
C)  right;increased 
D)  right;reduced

Question 10

(Figure: Determining SRAS Shifts 3)   Which of the following might be a cause of the change in short-run aggregate supply?

Accepted Answer

A)  Unions successfully negotiate higher wages. 
B)  Subsidies to firms increase. 
C)  Consumer incomes drop. 
D)  Workers and firms believe that inflation is going to decrease. 
A)  Unions successfully negotiate higher wages. 
B)  Subsidies to firms increase. 
C)  Consumer incomes drop. 
D)  Workers and firms believe that inflation is going to decrease.

Question 11

Cost-push inflation occurs when aggregate demand expands so much that equilibrium output exceeds full employment output.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following events causes an increase in aggregate demand?

Accepted Answer

A)  decreasing wealth 
B)  falling interest rates 
C)  decrease in government spending 
D)  rising imports 
A)  decreasing wealth 
B)  falling interest rates 
C)  decrease in government spending 
D)  rising imports

Question 13

Which of the following events will NOT cause the aggregate demand curve to shift?

Accepted Answer

A)  Businesses are optimistic about the economy,investing heavily in new equipment. 
B)  Consumers' wealth drops because of a drop in the stock market. 
C)  A rise in the aggregate price level causes a drop in exports. 
D)  Governments increase spending on national security in the wake of terrorist attacks. 
A)  Businesses are optimistic about the economy,investing heavily in new equipment. 
B)  Consumers' wealth drops because of a drop in the stock market. 
C)  A rise in the aggregate price level causes a drop in exports. 
D)  Governments increase spending on national security in the wake of terrorist attacks.

Question 14

If the prices of U.S.goods decrease overall,those goods become less competitive in the foreign market.

Accepted Answer

A) True 
 B)False

Question 15

A decrease in foreign income will cause aggregate demand to shift to the left.

Accepted Answer

A) True 
 B)False

Question 16

The short-run aggregate supply curve is positively sloped because:

Accepted Answer

A)  a short-run increase in GDP usually is accompanied by an increased rise in the price level. 
B)  many input prices are slow to change in the short run. 
C)  all variables are fixed in the short run. 
D)  a short-run increase in GDP usually is accompanied by a slower rise in the price level. 
A)  a short-run increase in GDP usually is accompanied by an increased rise in the price level. 
B)  many input prices are slow to change in the short run. 
C)  all variables are fixed in the short run. 
D)  a short-run increase in GDP usually is accompanied by a slower rise in the price level.

Question 17

Which are determinants of short-run aggregate supply?

Accepted Answer

A)  changes in government spending,taxes,and business and inflationary expectations 
B)  changes in input prices,taxes,and business and inflationary expectations 
C)  changes in education,taxes,and business and inflationary expectations 
D)  changes in input prices,taxes,and technology 
A)  changes in government spending,taxes,and business and inflationary expectations 
B)  changes in input prices,taxes,and business and inflationary expectations 
C)  changes in education,taxes,and business and inflationary expectations 
D)  changes in input prices,taxes,and technology

Question 18

A(n)_______ in oil prices and a(n)_______ in taxes will shift short-run aggregate supply to the left.

Accepted Answer

A)  increase;increase 
B)  increase;reduction 
C)  reduction;increase 
D)  reduction;reduction 
A)  increase;increase 
B)  increase;reduction 
C)  reduction;increase 
D)  reduction;reduction

Question 19

A breakthrough in solar energy research that halves the cost of electricity will:

Accepted Answer

A)  have no effect on the aggregate supply curve. 
B)  shift the aggregate supply curve to the right. 
C)  shift the aggregate supply curve to the left. 
D)  cause the aggregate supply curve to become vertical. 
A)  have no effect on the aggregate supply curve. 
B)  shift the aggregate supply curve to the right. 
C)  shift the aggregate supply curve to the left. 
D)  cause the aggregate supply curve to become vertical.

Question 20

(Figure: Determining SRAS Shifts 2)   Which of the following might be a cause of the change in short-run aggregate supply?

Accepted Answer

A)  Unions successfully negotiated higher wages. 
B)  Businesses are increasingly optimistic about the future. 
C)  Consumer incomes dropped. 
D)  Taxes on businesses are raised. 
A)  Unions successfully negotiated higher wages. 
B)  Businesses are increasingly optimistic about the future. 
C)  Consumer incomes dropped. 
D)  Taxes on businesses are raised.

Suppose a booming stock market encourages consumption spending to rise dramatically.What would be the most likely long-run impact?

One reason the price level did not rise after the 2008-2009 stimulus policy actions is that it may not have shifted aggregate demand to the right.

The idea that new spending creates more new spending is known as:

The difference between the Keynesian model and the aggregate demand/aggregate supply (AD/AS)model is that the:

Aggregate supply increases when:

Analyze the aggregate supply curve and differentiate between the short run and long run.Support your response with a graph.

Which is a determinant of aggregate supply?

Assume initially the economy is at full employment.If aggregate demand increases,the aggregate price level and costs will ,and ultimately,the short run aggregate supply curve shifts to the _.

If the amount of regulation in an economy increases,the aggregate supply curve shifts _ and output supplied will be _.

(Figure: Determining SRAS Shifts 3) Which of the following might be a cause of the change in short-run aggregate supply?

Cost-push inflation occurs when aggregate demand expands so much that equilibrium output exceeds full employment output.

Which of the following events causes an increase in aggregate demand?

Which of the following events will NOT cause the aggregate demand curve to shift?

If the prices of U.S.goods decrease overall,those goods become less competitive in the foreign market.

A decrease in foreign income will cause aggregate demand to shift to the left.

The short-run aggregate supply curve is positively sloped because:

Which are determinants of short-run aggregate supply?

A(n)_ in oil prices and a(n)_ in taxes will shift short-run aggregate supply to the left.

A breakthrough in solar energy research that halves the cost of electricity will:

(Figure: Determining SRAS Shifts 2) Which of the following might be a cause of the change in short-run aggregate supply?

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomic

Filters

Exam 9: Aggregate Demand and Supply

Suppose a booming stock market encourages consumption spending to rise dramatically.What would be the most likely long-run impact?

One reason the price level did not rise after the 2008-2009 stimulus policy actions is that it may not have shifted aggregate demand to the right.

The idea that new spending creates more new spending is known as:

The difference between the Keynesian model and the aggregate demand/aggregate supply (AD/AS)model is that the:

Aggregate supply increases when:

Analyze the aggregate supply curve and differentiate between the short run and long run.Support your response with a graph.

Which is a determinant of aggregate supply?

Assume initially the economy is at full employment.If aggregate demand increases,the aggregate price level and costs will ______,and ultimately,the short run aggregate supply curve shifts to the _______.

If the amount of regulation in an economy increases,the aggregate supply curve shifts _____ and output supplied will be _____.

(Figure: Determining SRAS Shifts 3) Which of the following might be a cause of the change in short-run aggregate supply?

Cost-push inflation occurs when aggregate demand expands so much that equilibrium output exceeds full employment output.

Which of the following events causes an increase in aggregate demand?

Which of the following events will NOT cause the aggregate demand curve to shift?

If the prices of U.S.goods decrease overall,those goods become less competitive in the foreign market.

A decrease in foreign income will cause aggregate demand to shift to the left.

The short-run aggregate supply curve is positively sloped because:

Which are determinants of short-run aggregate supply?

A(n)_______ in oil prices and a(n)_______ in taxes will shift short-run aggregate supply to the left.

A breakthrough in solar energy research that halves the cost of electricity will:

(Figure: Determining SRAS Shifts 2) Which of the following might be a cause of the change in short-run aggregate supply?

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomic

Filters

Assume initially the economy is at full employment.If aggregate demand increases,the aggregate price level and costs will ,and ultimately,the short run aggregate supply curve shifts to the _.

If the amount of regulation in an economy increases,the aggregate supply curve shifts _ and output supplied will be _.

A(n)_ in oil prices and a(n)_ in taxes will shift short-run aggregate supply to the left.