Question 1

Figure 33-5.  
-Refer to Figure 33-5.The shift of the short-run aggregate-supply curve from SRAS1 to SRAS2

Accepted Answer

A) could be caused by an outbreak of war in the Middle East. 
B) could be caused by a decrease in the expected price level. 
C) causes the economy to experience an increase in the unemployment rate. 
D) causes the economy to experience stagflation. 
A) could be caused by an outbreak of war in the Middle East. 
B) could be caused by a decrease in the expected price level. 
C) causes the economy to experience an increase in the unemployment rate. 
D) causes the economy to experience stagflation.

Question 2

If the government repeals an investment tax credit and increases income taxes,

Accepted Answer

A) real GDP rises,and the price level could rise,fall,or stay the same. 
B) real GDP falls,and the price level could rise,fall,or stay the same. 
C) real GDP and the price level rise. 
D) real GDP and the price level fall. 
A) real GDP rises,and the price level could rise,fall,or stay the same. 
B) real GDP falls,and the price level could rise,fall,or stay the same. 
C) real GDP and the price level rise. 
D) real GDP and the price level fall.

Question 3

Which of the following correctly describes actions of the U.S.government during the recession of 2008-2009?

Accepted Answer

A) It refused to provide banks funding and made no significant changes in government spending. 
B) It refused to provide banks funding but made a large increase in government spending. 
C) It became part owner of some banks but made no significant change in government spending 
D) It became part owner of some banks and made a large increase in government spending. 
A) It refused to provide banks funding and made no significant changes in government spending. 
B) It refused to provide banks funding but made a large increase in government spending. 
C) It became part owner of some banks but made no significant change in government spending 
D) It became part owner of some banks and made a large increase in government spending.

Question 4

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.

-Refer to Stock Market Boom 2015.In the long run,the change in price expectations created by the stock market boom shifts

Accepted Answer

A) long-run aggregate supply right. 
B) long-run aggregate supply left. 
C) short-run aggregate supply right. 
D) short-run aggregate supply left. 
A) long-run aggregate supply right. 
B) long-run aggregate supply left. 
C) short-run aggregate supply right. 
D) short-run aggregate supply left.

Question 5

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.

-Refer to Pessimism.What happens to the expected price level and what's the result for wage bargaining?

Accepted Answer

A) The expected price level rises.Bargains are struck for higher wages. 
B) The expected price level rises.Bargains are struck for lower wages. 
C) The expected price level falls.Bargains are struck for higher wages. 
D) The expected price level falls.Bargains are struck for lower wages. 
A) The expected price level rises.Bargains are struck for higher wages. 
B) The expected price level rises.Bargains are struck for lower wages. 
C) The expected price level falls.Bargains are struck for higher wages. 
D) The expected price level falls.Bargains are struck for lower wages.

Question 6

Which of the following will reduce the price level and real output in the short run?

Accepted Answer

A) an increase in government purchases. 
B) an decrease in oil prices 
C) a decrease in the money supply 
D) technical progress 
A) an increase in government purchases. 
B) an decrease in oil prices 
C) a decrease in the money supply 
D) technical progress

Question 7

If the economy is initially at long-run equilibrium and aggregate demand declines,then in the long run the price level

Accepted Answer

A) and output are higher than in the original long-run equilibrium. 
B) and output are lower than in the original long-run equilibrium. 
C) is lower and output is the same as the original long-run equilibrium. 
D) is the same and output is lower than in the original long-run equilibrium. 
A) and output are higher than in the original long-run equilibrium. 
B) and output are lower than in the original long-run equilibrium. 
C) is lower and output is the same as the original long-run equilibrium. 
D) is the same and output is lower than in the original long-run equilibrium.

Question 8

Suppose the economy is in long-run equilibrium.In a short span of time,there is a sharp rise in the stock market,an increase in government purchases,an increase in the money supply and a decline in the value of the dollar.In the short run

Accepted Answer

A) the price level and real GDP will both rise. 
B) the price level and real GDP will both fall. 
C) neither the price leave nor real GDP will change. 
D) All of the above are possible. 
A) the price level and real GDP will both rise. 
B) the price level and real GDP will both fall. 
C) neither the price leave nor real GDP will change. 
D) All of the above are possible.

Question 9

Figure 33-8.  
-Refer to Figure 33-8.Suppose the economy starts at Z.If changes occur that move the economy to a new short run equilibrium of P1 and Y1 ,then it must be the case that

Accepted Answer

A) short run aggregate supply has decreased. 
B) short run aggregate supply has increased. 
C) aggregate demand has increased. 
D) aggregate demand has decreased. 
A) short run aggregate supply has decreased. 
B) short run aggregate supply has increased. 
C) aggregate demand has increased. 
D) aggregate demand has decreased.

Question 10

Imagine the U.S.economy is in long-run equilibrium.Then suppose the aggregate demand increases.We would expect that in the long-run the price level would

Accepted Answer

A) ​increase. 
B) ​decrease. 
C) ​stay the same. 
D) ​decrease by the same amount as the increase in aggregate demand. 
A) ​increase. 
B) ​decrease. 
C) ​stay the same. 
D) ​decrease by the same amount as the increase in aggregate demand.

Question 11

Suppose a shift in aggregate demand creates an economic contraction.If policymakers can respond with sufficient speed and precision,they can offset the initial shift by shifting

Accepted Answer

A) aggregate supply right. 
B) aggregate supply left. 
C) aggregate demand right. 
D) aggregate demand left. 
A) aggregate supply right. 
B) aggregate supply left. 
C) aggregate demand right. 
D) aggregate demand left.

Question 12

During the 2008-2009 unemployment rose from about 4.4% to about

Accepted Answer

A) 6% 
B) 8% 
C) 10% 
D) 12% 
A) 6% 
B) 8% 
C) 10% 
D) 12%

Question 13

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.

-Refer to Stock Market Boom 2015.How is the new long-run equilibrium different from the original one?

Accepted Answer

A) the price level and real GDP are higher 
B) the price level and real GDP are lower. 
C) the price level is higher and real GDP is the same. 
D) the price level is the same and real GDP is higher. 
A) the price level and real GDP are higher 
B) the price level and real GDP are lower. 
C) the price level is higher and real GDP is the same. 
D) the price level is the same and real GDP is higher.

Question 14

In 1986,OPEC countries increased their production of oil.This caused

Accepted Answer

A) the price level to rise. 
B) aggregate supply to shift right. 
C) unemployment to rise. 
D) None of the above is correct. 
A) the price level to rise. 
B) aggregate supply to shift right. 
C) unemployment to rise. 
D) None of the above is correct.

Question 15

Figure 33-5.  
-Refer to Figure 33-5.The appearance of the long-run aggregate-supply (LRAS)curve

Accepted Answer

A) is consistent with the concept of monetary neutrality. 
B) is consistent with the idea that point A represents a long-run equilibrium and a short-run equilibrium when the relevant short-run aggregate-supply curve is SRAS1. 
C) indicates that Y1 is the natural rate of output. 
D) All of the above are correct. 
A) is consistent with the concept of monetary neutrality. 
B) is consistent with the idea that point A represents a long-run equilibrium and a short-run equilibrium when the relevant short-run aggregate-supply curve is SRAS1. 
C) indicates that Y1 is the natural rate of output. 
D) All of the above are correct.

Question 16

When production costs rise,

Accepted Answer

A) the short-run aggregate supply curve shifts to the right. 
B) the short-run aggregate supply curve shifts to the left. 
C) the aggregate demand curve shifts to the right. 
D) the aggregate demand curve shifts to the left. 
A) the short-run aggregate supply curve shifts to the right. 
B) the short-run aggregate supply curve shifts to the left. 
C) the aggregate demand curve shifts to the right. 
D) the aggregate demand curve shifts to the left.

Question 17

Consider the exhibit below for the following questions.
Figure 33-4  
-Refer to Figure 33-4.The economy would be moving to long-run equilibrium if it started at

Accepted Answer

A) A and moved to B. 
B) C and moved to B. 
C) D and moved to C. 
D) None of the above is correct. 
A) A and moved to B. 
B) C and moved to B. 
C) D and moved to C. 
D) None of the above is correct.

Question 18

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.

-Refer to Financial Crisis.What happens to the price level and real GDP in the short run?

Accepted Answer

A) both the price level and real GDP rise 
B) the price level rises and real GDP falls 
C) the price level falls and real GDP rises 
D) both the price level and real GDP fall 
A) both the price level and real GDP rise 
B) the price level rises and real GDP falls 
C) the price level falls and real GDP rises 
D) both the price level and real GDP fall

Question 19

Figure 33-5.  
-Refer to Figure 33-5.Starting from point B and assuming that aggregate demand is held constant,in the long run the economy is likely to experience

Accepted Answer

A) a falling price level and a falling level of output,as the economy moves to point C. 
B) a falling price level and a rising level of output,as the economy moves to point A. 
C) a rising price level and a falling level of output,as the economy moves to point A. 
D) a rising price level and a rising level of output,as the economy moves to point C. 
A) a falling price level and a falling level of output,as the economy moves to point C. 
B) a falling price level and a rising level of output,as the economy moves to point A. 
C) a rising price level and a falling level of output,as the economy moves to point A. 
D) a rising price level and a rising level of output,as the economy moves to point C.

Question 20

Figure 33-8.  
-Refer to Figure 33-8.Suppose the economy starts at Z.If changes occur that move the economy to a new short run equilibrium of P3 and Y3 ,then it must be the case that

Accepted Answer

A) short run aggregate supply has decreased. 
B) short run aggregate supply has increased. 
C) aggregate demand has increased. 
D) aggregate demand has decreased. 
A) short run aggregate supply has decreased. 
B) short run aggregate supply has increased. 
C) aggregate demand has increased. 
D) aggregate demand has decreased.

Exam 20: Aggregate Demand and Aggregate Supply: Two Causes of Economic Fluctuations

Figure 33-5. -Refer to Figure 33-5.The shift of the short-run aggregate-supply curve from SRAS1 to SRAS2

If the government repeals an investment tax credit and increases income taxes,

Which of the following correctly describes actions of the U.S.government during the recession of 2008-2009?

Which of the following will reduce the price level and real output in the short run?

If the economy is initially at long-run equilibrium and aggregate demand declines,then in the long run the price level

Suppose the economy is in long-run equilibrium.In a short span of time,there is a sharp rise in the stock market,an increase in government purchases,an increase in the money supply and a decline in the value of the dollar.In the short run

Figure 33-8. -Refer to Figure 33-8.Suppose the economy starts at Z.If changes occur that move the economy to a new short run equilibrium of P1 and Y1 ,then it must be the case that

Imagine the U.S.economy is in long-run equilibrium.Then suppose the aggregate demand increases.We would expect that in the long-run the price level would

Suppose a shift in aggregate demand creates an economic contraction.If policymakers can respond with sufficient speed and precision,they can offset the initial shift by shifting

During the 2008-2009 unemployment rose from about 4.4% to about

In 1986,OPEC countries increased their production of oil.This caused

Figure 33-5. -Refer to Figure 33-5.The appearance of the long-run aggregate-supply (LRAS)curve

When production costs rise,

Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4.The economy would be moving to long-run equilibrium if it started at

Figure 33-5. -Refer to Figure 33-5.Starting from point B and assuming that aggregate demand is held constant,in the long run the economy is likely to experience

Figure 33-8. -Refer to Figure 33-8.Suppose the economy starts at Z.If changes occur that move the economy to a new short run equilibrium of P3 and Y3 ,then it must be the case that

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A

Application International Trade: Part B

Measuring a Nations Income

Measuring a Nations Income: The Economy's Income and Expenditure

Figure 33-5. -Refer to Figure 33-5.The shift of the short-run aggregate-supply curve from SRAS₁ to SRAS₂

Figure 33-8. -Refer to Figure 33-8.Suppose the economy starts at Z.If changes occur that move the economy to a new short run equilibrium of P₁ and Y₁ ,then it must be the case that

Figure 33-8. -Refer to Figure 33-8.Suppose the economy starts at Z.If changes occur that move the economy to a new short run equilibrium of P₃ and Y₃ ,then it must be the case that