Question 1

If the economy is on the flat portion of the AS curve,

Accepted Answer

A) there is little crowding out of planned investment. 
B) there is almost complete crowding out of planned investment. 
C) consumption,but not government spending,crowds out planned investment. 
D) government spending,but not consumption,crowds out planned investment. 
A) there is little crowding out of planned investment. 
B) there is almost complete crowding out of planned investment. 
C) consumption,but not government spending,crowds out planned investment. 
D) government spending,but not consumption,crowds out planned investment.

Question 2

Refer to the information provided in Figure 13.2 below to answer the questions that follow.
   Figure 13.2
-Refer to Figure 13.2.Planned investment would experience the greatest amount of crowding out when the aggregate demand curve shifts from

Accepted Answer

A) AD1 to AD2. 
B) AD3 to AD4. 
C) AD5 to AD6. 
D) The amount of crowding out is the same for all AD curve shifts shown in the figure. 
A) AD1 to AD2. 
B) AD3 to AD4. 
C) AD5 to AD6. 
D) The amount of crowding out is the same for all AD curve shifts shown in the figure.

Question 3

When analyzing the effects of government spending,net taxes,and the Z factors,what primarily matters is the shape of

Accepted Answer

A) the AD curve. 
B) the AS curve. 
C) both the AD curve and the AS curve. 
D) neither the AD curve nor the AS curve. 
A) the AD curve. 
B) the AS curve. 
C) both the AD curve and the AS curve. 
D) neither the AD curve nor the AS curve.

Question 4

Refer to the information provided in Figure 13.4 below to answer the questions that follow.
   Figure 13.4
-Refer to Figure 13.4.If the economy is currently at the intersection of AS and AD,stagflation would be caused by

Accepted Answer

A) an increase in AS. 
B) a decrease in AS. 
C) an increase in AD. 
D) a decrease in AD. 
A) an increase in AS. 
B) a decrease in AS. 
C) an increase in AD. 
D) a decrease in AD.

Question 5

Since 1970,the United States experienced stagflation

Accepted Answer

A) during all five recessionary periods. 
B) during none of the five recessionary periods. 
C) only during the first two recessionary periods. 
D) only during the most recent recessionary period. 
A) during all five recessionary periods. 
B) during none of the five recessionary periods. 
C) only during the first two recessionary periods. 
D) only during the most recent recessionary period.

Question 6

Refer to the information provided in Figure 13.4 below to answer the questions that follow.
   Figure 13.4
-Refer to Figure 13.4.Stagflation would NOT be caused by a

Accepted Answer

A) decrease in AS. 
B) higher price level with lower output. 
C) higher price level with higher unemployment. 
D) shift to the right of AD. 
A) decrease in AS. 
B) higher price level with lower output. 
C) higher price level with higher unemployment. 
D) shift to the right of AD.

Question 7

In a binding situation,the ________ curve is ________.

Accepted Answer

A) AD; horizontal 
B) AD; vertical 
C) AS; horizontal 
D) AS; vertical 
A) AD; horizontal 
B) AD; vertical 
C) AS; horizontal 
D) AS; vertical

Question 8

Refer to the information provided in Figure 13.2 below to answer the questions that follow.
   Figure 13.2
-Refer to Figure 13.2.In response to an increase in government spending,the Fed would increase the interest rate by the greatest amount when the aggregate demand curve shifts from

Accepted Answer

A) AD1 to AD2. 
B) AD3 to AD4. 
C) AD5 to AD6. 
D) AD6 to AD1. 
A) AD1 to AD2. 
B) AD3 to AD4. 
C) AD5 to AD6. 
D) AD6 to AD1.

Question 9

In a binding situation,changes in government spending do not shift the AD curve.

Accepted Answer

A) True 
 B)False

Question 10

An increase in aggregate demand causes stagflation.

Accepted Answer

A) True 
 B)False

Question 11

Refer to the information provided in Figure 13.2 below to answer the questions that follow.
   Figure 13.2
-Refer to Figure 13.2.In response to a decrease in net taxes,the Fed would increase the interest rate by the least amount when the aggregate demand curve shifts from

Accepted Answer

A) AD1 to AD2. 
B) AD3 to AD4. 
C) AD5 to AD6. 
D) AD1 to AD6. 
A) AD1 to AD2. 
B) AD3 to AD4. 
C) AD5 to AD6. 
D) AD1 to AD6.

Question 12

Refer to the information provided in Figure 13.2 below to answer the questions that follow.
   Figure 13.2
-Refer to Figure 13.2.Firms respond to a decrease in net taxes by mostly increasing output when the aggregate demand curve shifts from

Accepted Answer

A) AD1 to AD2. 
B) AD3 to AD4. 
C) AD5 to AD6. 
D) AD6 to AD1. 
A) AD1 to AD2. 
B) AD3 to AD4. 
C) AD5 to AD6. 
D) AD6 to AD1.

Question 13

Other things equal,a decrease in the Z factors will ________ the equilibrium price level and ________ equilibrium output.

Accepted Answer

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

Question 14

If the aggregate supply curve is vertical in the long-run,then neither monetary nor fiscal policy will affect aggregate output in the long-run.

Accepted Answer

A) True 
 B)False

Question 15

An intended goal of contractionary fiscal policy and a tightening of monetary policy is

Accepted Answer

A) an increase in interest rates. 
B) an increase in the price level. 
C) a decrease in the unemployment rate. 
D) a decrease in the level of aggregate output. 
A) an increase in interest rates. 
B) an increase in the price level. 
C) a decrease in the unemployment rate. 
D) a decrease in the level of aggregate output.

Question 16

Expansionary economic policies are things the government can do to decrease aggregate demand or aggregate supply.

Accepted Answer

A) True 
 B)False

Question 17

The aggregate demand curve would shift to the left if

Accepted Answer

A) government spending were increased. 
B) net taxes were increased. 
C) the money supply were increased. 
D) the cost of energy were to decrease. 
A) government spending were increased. 
B) net taxes were increased. 
C) the money supply were increased. 
D) the cost of energy were to decrease.

Question 18

An increase in inflationary expectations that causes firms to increase their prices shifts the

Accepted Answer

A) aggregate supply curve to the left. 
B) aggregate demand curve to the left. 
C) aggregate supply curve to the right. 
D) aggregate demand curve to the right. 
A) aggregate supply curve to the left. 
B) aggregate demand curve to the left. 
C) aggregate supply curve to the right. 
D) aggregate demand curve to the right.

Question 19

Refer to the information provided in Figure 13.1 below to answer the questions that follow.
   Figure 13.1
-Refer to Figure 13.1.Suppose the economy is at Point A,an increase in the price level can cause a movement to Point

Accepted Answer

A) E. 
B) B. 
C) C. 
D) D. 
A) E. 
B) B. 
C) C. 
D) D.

Question 20

In a binding situation,the AD curve is vertical.

Accepted Answer

A) True 
 B)False

Exam 13: Policy Effects and Costs Shocks in the Asad Model

If the economy is on the flat portion of the AS curve,

Refer to the information provided in Figure 13.2 below to answer the questions that follow. Figure 13.2 -Refer to Figure 13.2.Planned investment would experience the greatest amount of crowding out when the aggregate demand curve shifts from

When analyzing the effects of government spending,net taxes,and the Z factors,what primarily matters is the shape of

Refer to the information provided in Figure 13.4 below to answer the questions that follow. Figure 13.4 -Refer to Figure 13.4.If the economy is currently at the intersection of AS and AD,stagflation would be caused by

Since 1970,the United States experienced stagflation

Refer to the information provided in Figure 13.4 below to answer the questions that follow. Figure 13.4 -Refer to Figure 13.4.Stagflation would NOT be caused by a

In a binding situation,the ________ curve is ________.

Refer to the information provided in Figure 13.2 below to answer the questions that follow. Figure 13.2 -Refer to Figure 13.2.In response to an increase in government spending,the Fed would increase the interest rate by the greatest amount when the aggregate demand curve shifts from

In a binding situation,changes in government spending do not shift the AD curve.

An increase in aggregate demand causes stagflation.

Refer to the information provided in Figure 13.2 below to answer the questions that follow. Figure 13.2 -Refer to Figure 13.2.In response to a decrease in net taxes,the Fed would increase the interest rate by the least amount when the aggregate demand curve shifts from

Refer to the information provided in Figure 13.2 below to answer the questions that follow. Figure 13.2 -Refer to Figure 13.2.Firms respond to a decrease in net taxes by mostly increasing output when the aggregate demand curve shifts from

Other things equal,a decrease in the Z factors will ________ the equilibrium price level and ________ equilibrium output.

If the aggregate supply curve is vertical in the long-run,then neither monetary nor fiscal policy will affect aggregate output in the long-run.

An intended goal of contractionary fiscal policy and a tightening of monetary policy is

Expansionary economic policies are things the government can do to decrease aggregate demand or aggregate supply.

The aggregate demand curve would shift to the left if

An increase in inflationary expectations that causes firms to increase their prices shifts the

Refer to the information provided in Figure 13.1 below to answer the questions that follow. Figure 13.1 -Refer to Figure 13.1.Suppose the economy is at Point A,an increase in the price level can cause a movement to Point

In a binding situation,the AD curve is vertical.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand,supply,and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment,inflation,and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

The Money Supply and the Federal Reserve System

Money Demand and the Equilibrium Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

The Labor Market in the Macroeconomy

Financial Crises, stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing and Transitional Economies

Filters

In a binding situation,the curve is .

Other things equal,a decrease in the Z factors will the equilibrium price level and equilibrium output.