Question 1

AD - AS Shocks
  
-On the graph above, an example of a negative demand shock is the movement from point ________ to point ________.

Accepted Answer

A)  F; G 
B)  H; I 
C)  F; H 
D)  H; F 
E)  none of the above 
A)  F; G 
B)  H; I 
C)  F; H 
D)  H; F 
E)  none of the above

Question 2

The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse, a financial crisis hit the U.S. economy starting in August of 2007. Which of the following is an appropriate description of the mechanism that would have ensued?

Accepted Answer

A)  The increase in the price of oil would have immediately shifted the AS curve to the right 
B)  The financial crisis would have led to a sharp contraction in spending shifting the AD curve to the right 
C)  Shifts in both the AD and the AS curve would have ensued in the short-run but as long as neither shock had an impact on potential output, ultimately unemployment will have been unaffected in the long run 
D)  all of the above 
E)  none of the above 
A)  The increase in the price of oil would have immediately shifted the AS curve to the right 
B)  The financial crisis would have led to a sharp contraction in spending shifting the AD curve to the right 
C)  Shifts in both the AD and the AS curve would have ensued in the short-run but as long as neither shock had an impact on potential output, ultimately unemployment will have been unaffected in the long run 
D)  all of the above 
E)  none of the above

Question 3

AD - AS Shocks
  
-On the graph above, a movement from point ________ to point ________ might represent a negative supply shock.

Accepted Answer

A)  H: G 
B)  H: F 
C)  F; I 
D)  F; G 
E)  none of the above 
A)  H: G 
B)  H: F 
C)  F; I 
D)  F; G 
E)  none of the above

Question 4

The March 2000 "tech bubble" burst caused the aggregate demand curve to shift to the left by ________.

Accepted Answer

A)  causing an upward spike in the real interest rate 
B)  reducing autonomous spending by households and businesses 
C)  reducing government spending on high-tech equipment 
D)  all of the above 
E)  none of the above 
A)  causing an upward spike in the real interest rate 
B)  reducing autonomous spending by households and businesses 
C)  reducing government spending on high-tech equipment 
D)  all of the above 
E)  none of the above

Question 5

In the 1960s and 1970s, research funding by the U.S. government and some universities led to revolutionary advances in network computing. These advances in communication and network technology remained largely isolated to governmental and academic use. By the mid-to-late 1990s, the Internet began to be widely adopted with massive increases in productivity (which journalists dubbed the "new economy"). Which of the following is an appropriate description of the mechanism behind this supply shock?

Accepted Answer

A)  Since this "new economy" was a new paradigm, the transition from a pre-internet to an internet economy was initially costly. Thus, the AS curve likely shifted to the left and unemployment likely increased in the short-run 
B)  The ensuing increase in productive capacity led to the rightward shift of the LRAS which is a likely explanation for the protracted decline in the unemployment rate of the 1990s 
C)  A negative output gap would have resulted in the short-run, but it was eventually closed by a rightward shift of the LRAS which is a likely explanation for the protracted decline in the inflation rate of the 1990s 
D)  all of the above 
E)  none of the above 
A)  Since this "new economy" was a new paradigm, the transition from a pre-internet to an internet economy was initially costly. Thus, the AS curve likely shifted to the left and unemployment likely increased in the short-run 
B)  The ensuing increase in productive capacity led to the rightward shift of the LRAS which is a likely explanation for the protracted decline in the unemployment rate of the 1990s 
C)  A negative output gap would have resulted in the short-run, but it was eventually closed by a rightward shift of the LRAS which is a likely explanation for the protracted decline in the inflation rate of the 1990s 
D)  all of the above 
E)  none of the above

Question 6

The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse, a financial crisis hit the U.S. economy starting in August of 2007. Which of the following is true of the United Kingdom's experience?

Accepted Answer

A)  The increase in the price of oil immediately shifted the AS curve to the left 
B)  The financial crisis did not take hold right away so the AD curve did not immediately shift 
C)  Eventually, the Lehman Brothers bankruptcy caused a negative demand shock leading to a further fall in output and an increase in the unemployment rate 
D)  all of the above 
E)  none of the above 
A)  The increase in the price of oil immediately shifted the AS curve to the left 
B)  The financial crisis did not take hold right away so the AD curve did not immediately shift 
C)  Eventually, the Lehman Brothers bankruptcy caused a negative demand shock leading to a further fall in output and an increase in the unemployment rate 
D)  all of the above 
E)  none of the above

Question 7

In 1973, the Organization of Petroleum Exporting Countries (OPEC) engineered a quadrupling of oil prices by restricting oil production. Which of the following is an appropriate description of this negative supply shock?

Accepted Answer

A)  The AS curve likely shifted to the left and output likely fell because of this adverse shock 
B)  In the short-run there was a movement out of general equilibrium leading to an increase in inflation as a likely result of this adverse shock 
C)  In the short-run there was a movement out of general equilibrium leading to an increase in unemployment as a likely result of this adverse shock 
D)  all of the above 
E)  none of the above 
A)  The AS curve likely shifted to the left and output likely fell because of this adverse shock 
B)  In the short-run there was a movement out of general equilibrium leading to an increase in inflation as a likely result of this adverse shock 
C)  In the short-run there was a movement out of general equilibrium leading to an increase in unemployment as a likely result of this adverse shock 
D)  all of the above 
E)  none of the above

AD - AS Shocks -On the graph above, an example of a negative demand shock is the movement from point to point .

The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse, a financial crisis hit the U.S. economy starting in August of 2007. Which of the following is an appropriate description of the mechanism that would have ensued?

AD - AS Shocks -On the graph above, a movement from point to point might represent a negative supply shock.

The March 2000 "tech bubble" burst caused the aggregate demand curve to shift to the left by ________.

The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse, a financial crisis hit the U.S. economy starting in August of 2007. Which of the following is true of the United Kingdom's experience?

In 1973, the Organization of Petroleum Exporting Countries (OPEC) engineered a quadrupling of oil prices by restricting oil production. Which of the following is an appropriate description of this negative supply shock?

The Policy and Practice of Macroeconomics

Measuring Macroeconomic Data

Aggregate Production and Productivity

Saving and Investment in Closed and Open Economies

Money and Inflation

The Sources of Growth and the Solow Model

Drivers of Growth: Technology, Policy, and Institutions

Business Cycles: an Introduction

The Is Curve

Monetary Policy and Aggregate Demand

Aggregate Supply and the Phillips Curve

Macroeconomic Policy and Aggregate Demand and Supply Analysis

The Financial System and Economic Growth

Financial Crises and the Economy

Fiscal Policy and the Government Budget

Exchange Rates and International Economic Policy

Consumption and Saving

Investment

The Labor Market, Employment, and Unemployment

The Role of Expectations in Macroeconomic Policy

Modern Business Cycle Theory

Filters

Exam 12: The Aggregate Demand and Supply Model

AD - AS Shocks -On the graph above, an example of a negative demand shock is the movement from point ________ to point ________.

The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse, a financial crisis hit the U.S. economy starting in August of 2007. Which of the following is an appropriate description of the mechanism that would have ensued?

AD - AS Shocks -On the graph above, a movement from point ________ to point ________ might represent a negative supply shock.

The March 2000 "tech bubble" burst caused the aggregate demand curve to shift to the left by ________.

The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse, a financial crisis hit the U.S. economy starting in August of 2007. Which of the following is true of the United Kingdom's experience?

In 1973, the Organization of Petroleum Exporting Countries (OPEC) engineered a quadrupling of oil prices by restricting oil production. Which of the following is an appropriate description of this negative supply shock?

The Policy and Practice of Macroeconomics

Measuring Macroeconomic Data

Aggregate Production and Productivity

Saving and Investment in Closed and Open Economies

Money and Inflation

The Sources of Growth and the Solow Model

Drivers of Growth: Technology, Policy, and Institutions

Business Cycles: an Introduction

The Is Curve

Monetary Policy and Aggregate Demand

Aggregate Supply and the Phillips Curve

Macroeconomic Policy and Aggregate Demand and Supply Analysis

The Financial System and Economic Growth

Financial Crises and the Economy

Fiscal Policy and the Government Budget

Exchange Rates and International Economic Policy

Consumption and Saving

Investment

The Labor Market, Employment, and Unemployment

The Role of Expectations in Macroeconomic Policy

Modern Business Cycle Theory

Filters

AD - AS Shocks -On the graph above, an example of a negative demand shock is the movement from point to point .

AD - AS Shocks -On the graph above, a movement from point to point might represent a negative supply shock.