Question 1

The real business cycle model focuses on how

Accepted Answer

A) wage and price stickiness explains fluctuations in real GDP. 
B) the labor theory of value is the best measure of value of a good or service. 
C) the Federal Reserve should adopt a monetary growth rule. 
D) productivity shocks explain fluctuations in real GDP 
A) wage and price stickiness explains fluctuations in real GDP. 
B) the labor theory of value is the best measure of value of a good or service. 
C) the Federal Reserve should adopt a monetary growth rule. 
D) productivity shocks explain fluctuations in real GDP

Question 2

The new classical model has as its central idea that

Accepted Answer

A) wage and price stickiness explains fluctuations in real GDP. 
B) workers and firms have rational expectations. 
C) the Federal Reserve should adopt a monetary growth rule. 
D) shifts in aggregate demand have no impact on real GDP. 
A) wage and price stickiness explains fluctuations in real GDP. 
B) workers and firms have rational expectations. 
C) the Federal Reserve should adopt a monetary growth rule. 
D) shifts in aggregate demand have no impact on real GDP.

Question 3

Figure 15-1  
-Refer to Figure 15-1.Ceteris paribus,a decrease in firms' expectations of the future profitability of investment spending would be represented by a movement from

Accepted Answer

A) AD1 to AD2. 
B) AD2 to AD1. 
C) point A to point B. 
D) point B to point A. 
A) AD1 to AD2. 
B) AD2 to AD1. 
C) point A to point B. 
D) point B to point A.

Question 4

Stagflation occurs when

Accepted Answer

A) inflation rises and GDP rises. 
B) inflation falls and GDP rises. 
C) inflation rises and GDP falls. 
D) inflation falls and GDP falls. 
A) inflation rises and GDP rises. 
B) inflation falls and GDP rises. 
C) inflation rises and GDP falls. 
D) inflation falls and GDP falls.

Question 5

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 6

When the price of oil rises unexpectedly,the equilibrium price level ________ and the unemployment rate ________ in the short run.

Accepted Answer

A) rises;falls 
B) rises;rises 
C) falls;falls 
D) falls;rises 
A) rises;falls 
B) rises;rises 
C) falls;falls 
D) falls;rises

Question 7

According to Marx,which of the following factors of production did not contribute anything of value to production?

Accepted Answer

A) labor 
B) capital 
C) natural resources 
D) entrepreneurship 
A) labor 
B) capital 
C) natural resources 
D) entrepreneurship

Question 8

Use the dynamic model of aggregate demand and supply to illustrate a situation where the economy is growing but experiencing inflation in the long run.

Accepted Answer

@#IMG-DLM& If the aggregate demand curve shifts to

Question 9

Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico which subsequently drove up natural gas,gasoline,and heating oil prices.Three years later,once the refining capacity was restored,these prices came back down.The restoration of refining capacity should

Accepted Answer

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

Question 10

Workers expect inflation to rise from 3% to 5% next year.As a result,this should

Accepted Answer

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

Question 11

The proponents of ________ and ________ think that the Federal Reserve should adopt a constant monetary growth rule.

Accepted Answer

A) new Keynesianism;the new classical model 
B) the real business cycle model;Marxism 
C) rational expectations;monetarism 
D) the monetarist model;the Keynesian model 
A) new Keynesianism;the new classical model 
B) the real business cycle model;Marxism 
C) rational expectations;monetarism 
D) the monetarist model;the Keynesian model

Question 12

Higher personal income taxes

Accepted Answer

A) increase aggregate demand. 
B) increase disposable income. 
C) decrease aggregate demand. 
D) both B and C 
A) increase aggregate demand. 
B) increase disposable income. 
C) decrease aggregate demand. 
D) both B and C

Question 13

Which of the following could explain why there is an increase in potential GDP but the equilibrium level of GDP does not rise?

Accepted Answer

A) SRAS shifted to the right by more than LRAS. 
B) AD shifted to the right by more than SRAS. 
C) AD shifted to the right by less than SRAS. 
D) SRAS and AD do not shift. 
A) SRAS shifted to the right by more than LRAS. 
B) AD shifted to the right by more than SRAS. 
C) AD shifted to the right by less than SRAS. 
D) SRAS and AD do not shift.

Question 14

As the recession persisted into 2009,the unemployment rate in the United States rose to ________,the highest rate since the recession of 2001-2002 and the second highest since the Great Depression.

Accepted Answer

A) 5.5 percent 
B) 9.3 percent 
C) 17.6 percent 
D) 25.1 percent 
A) 5.5 percent 
B) 9.3 percent 
C) 17.6 percent 
D) 25.1 percent

Question 15

An increase in imports increases aggregate demand.

Accepted Answer

A) True 
 B)False

Question 16

New classical macroeconomic theory emphasizes the role of "sticky" prices in the economy.

Accepted Answer

A) True 
 B)False

Question 17

The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off

Accepted Answer

A) government spending. 
B) government spending and unplanned investment. 
C) investment and consumption spending. 
D) net exports. 
A) government spending. 
B) government spending and unplanned investment. 
C) investment and consumption spending. 
D) net exports.

Question 18

Explain how the aggregate demand and aggregate supply model can be made more dynamic.

Accepted Answer

We can make the aggregate demand and agg

Question 19

Figure 15-2  
-Refer to Figure 15-2.Ceteris paribus,an increase in the expected future price level would be represented by a movement from

Accepted Answer

A) SRAS1 to SRAS2. 
B) SRAS2 to SRAS1. 
C) point A to point B. 
D) point B to point A. 
A) SRAS1 to SRAS2. 
B) SRAS2 to SRAS1. 
C) point A to point B. 
D) point B to point A.

Question 20

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.

The real business cycle model focuses on how

The new classical model has as its central idea that

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in firms' expectations of the future profitability of investment spending would be represented by a movement from

Stagflation occurs when

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

When the price of oil rises unexpectedly,the equilibrium price level and the unemployment rate in the short run.

According to Marx,which of the following factors of production did not contribute anything of value to production?

Use the dynamic model of aggregate demand and supply to illustrate a situation where the economy is growing but experiencing inflation in the long run.

Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico which subsequently drove up natural gas,gasoline,and heating oil prices.Three years later,once the refining capacity was restored,these prices came back down.The restoration of refining capacity should

Workers expect inflation to rise from 3% to 5% next year.As a result,this should

The proponents of and think that the Federal Reserve should adopt a constant monetary growth rule.

Higher personal income taxes

Which of the following could explain why there is an increase in potential GDP but the equilibrium level of GDP does not rise?

As the recession persisted into 2009,the unemployment rate in the United States rose to ________,the highest rate since the recession of 2001-2002 and the second highest since the Great Depression.

An increase in imports increases aggregate demand.

New classical macroeconomic theory emphasizes the role of "sticky" prices in the economy.

The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off

Explain how the aggregate demand and aggregate supply model can be made more dynamic.

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,an increase in the expected future price level would be represented by a movement from

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

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

Exam 15: Aggregate Demand and Aggregate Supply Analysis

The real business cycle model focuses on how

The new classical model has as its central idea that

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in firms' expectations of the future profitability of investment spending would be represented by a movement from

Stagflation occurs when

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

When the price of oil rises unexpectedly,the equilibrium price level ________ and the unemployment rate ________ in the short run.

According to Marx,which of the following factors of production did not contribute anything of value to production?

Use the dynamic model of aggregate demand and supply to illustrate a situation where the economy is growing but experiencing inflation in the long run.

Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico which subsequently drove up natural gas,gasoline,and heating oil prices.Three years later,once the refining capacity was restored,these prices came back down.The restoration of refining capacity should

Workers expect inflation to rise from 3% to 5% next year.As a result,this should

The proponents of ________ and ________ think that the Federal Reserve should adopt a constant monetary growth rule.

Higher personal income taxes

Which of the following could explain why there is an increase in potential GDP but the equilibrium level of GDP does not rise?

As the recession persisted into 2009,the unemployment rate in the United States rose to ________,the highest rate since the recession of 2001-2002 and the second highest since the Great Depression.

An increase in imports increases aggregate demand.

New classical macroeconomic theory emphasizes the role of "sticky" prices in the economy.

The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off

Explain how the aggregate demand and aggregate supply model can be made more dynamic.

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,an increase in the expected future price level would be represented by a movement from

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

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

When the price of oil rises unexpectedly,the equilibrium price level and the unemployment rate in the short run.

The proponents of and think that the Federal Reserve should adopt a constant monetary growth rule.