Question 1

When a change in the price level leads to a change in saving, this is known as the:

Accepted Answer

A)  wealth effect. 
B)  international trade effect. 
C)  savings effect. 
D)  interest rate effect. 
E)  output effect. 
A)  wealth effect. 
B)  international trade effect. 
C)  savings effect. 
D)  interest rate effect. 
E)  output effect.

Question 2

Suppose that many countries in Europe sink into recession. In the short run, output in the United States will __________ and the price level will __________.

Accepted Answer

A)  increase; increase 
B)  decrease; decrease 
C)  remain unaffected; remain unaffected 
D)  decrease; remain unaffected 
E)  increase; remain unaffected 
A)  increase; increase 
B)  decrease; decrease 
C)  remain unaffected; remain unaffected 
D)  decrease; remain unaffected 
E)  increase; remain unaffected

Question 3

Suppose a country's population is aging and the size of the workforce is declining. In the long run, output will _________ and the price level will _________.

Accepted Answer

A)  decrease; increase 
B)  remain unchanged; decrease 
C)  decrease; decrease 
D)  decrease; remain unchanged 
E)  increase; decrease 
A)  decrease; increase 
B)  remain unchanged; decrease 
C)  decrease; decrease 
D)  decrease; remain unchanged 
E)  increase; decrease

Question 4

In the long run, a technological advance that improves communication can be expected to _________ labor productivity and _________ unemployment.

Accepted Answer

A)  have no effect on; have no effect on 
B)  increase; decrease 
C)  increase; increase 
D)  increase; have no effect on 
E)  decrease; increase 
A)  have no effect on; have no effect on 
B)  increase; decrease 
C)  increase; increase 
D)  increase; have no effect on 
E)  decrease; increase

Question 5

The aggregate demand curve slopes downward because:

Accepted Answer

A)  as price rises, consumers substitute cheaper goods for more expensive goods. 
B)  all demand curves slope downward. 
C)  a higher price level will increase purchasing power. 
D)  a higher price level will increase exports. 
E)  a higher price level reduces wealth. 
A)  as price rises, consumers substitute cheaper goods for more expensive goods. 
B)  all demand curves slope downward. 
C)  a higher price level will increase purchasing power. 
D)  a higher price level will increase exports. 
E)  a higher price level reduces wealth.

Question 6

The long run is best defined as a period of time such that:

Accepted Answer

A)  more than one year has passed. 
B)  more than five years have passed. 
C)  some prices have adjusted. 
D)  all prices have adjusted. 
E)  all firms are maximizing profit. 
A)  more than one year has passed. 
B)  more than five years have passed. 
C)  some prices have adjusted. 
D)  all prices have adjusted. 
E)  all firms are maximizing profit.

Question 7

The long-run aggregate supply curve is:

Accepted Answer

A)  vertical because full employment output is independent of the price level. 
B)  upward sloping because the economy grows over time. 
C)  horizontal because full employment output is independent of the price level. 
D)  upward sloping because as the price level rises, firms will increase output. 
E)  downward sloping because rising prices reduce real wealth and spending. 
A)  vertical because full employment output is independent of the price level. 
B)  upward sloping because the economy grows over time. 
C)  horizontal because full employment output is independent of the price level. 
D)  upward sloping because as the price level rises, firms will increase output. 
E)  downward sloping because rising prices reduce real wealth and spending.

Question 8

Explain the difference between the short-run and long-run aggregate supply curves.

Accepted Answer

In the long run, output moves toward ful

Question 9

The economy is in long-run equilibrium when:

Accepted Answer

A)  aggregate demand intersects short-run aggregate supply. 
B)  short-run aggregate supply intersects long-run aggregate supply. 
C)  aggregate demand intersects long-run aggregate supply. 
D)  aggregate demand intersects both long-run and short-run aggregate supply. 
E)  the economy is at full employment output. 
A)  aggregate demand intersects short-run aggregate supply. 
B)  short-run aggregate supply intersects long-run aggregate supply. 
C)  aggregate demand intersects long-run aggregate supply. 
D)  aggregate demand intersects both long-run and short-run aggregate supply. 
E)  the economy is at full employment output.

When a change in the price level leads to a change in saving, this is known as the:

Suppose that many countries in Europe sink into recession. In the short run, output in the United States will and the price level will .

Suppose a country's population is aging and the size of the workforce is declining. In the long run, output will _ and the price level will _.

In the long run, a technological advance that improves communication can be expected to _ labor productivity and _ unemployment.

The aggregate demand curve slopes downward because:

The long run is best defined as a period of time such that:

The long-run aggregate supply curve is:

Explain the difference between the short-run and long-run aggregate supply curves.

The economy is in long-run equilibrium when:

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, Interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

Exam 13: The Aggregate Demandaggregate Supply Model

When a change in the price level leads to a change in saving, this is known as the:

Suppose that many countries in Europe sink into recession. In the short run, output in the United States will __________ and the price level will __________.

Suppose a country's population is aging and the size of the workforce is declining. In the long run, output will _________ and the price level will _________.

In the long run, a technological advance that improves communication can be expected to _________ labor productivity and _________ unemployment.

The aggregate demand curve slopes downward because:

The long run is best defined as a period of time such that:

The long-run aggregate supply curve is:

Explain the difference between the short-run and long-run aggregate supply curves.

The economy is in long-run equilibrium when:

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, Interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

Suppose that many countries in Europe sink into recession. In the short run, output in the United States will and the price level will .

Suppose a country's population is aging and the size of the workforce is declining. In the long run, output will _ and the price level will _.

In the long run, a technological advance that improves communication can be expected to _ labor productivity and _ unemployment.