Question 1

A severe drought hits a country and reduces farm output by 50%.This will impact:

Accepted Answer

A)  short-run aggregate supply. 
B)  short-run and long-run aggregate supply. 
C)  long-run aggregate supply. 
D)  aggregate demand. 
E)  short-run aggregate supply and aggregate demand.

Question 2

Consider the following data that identifies real GDP in comparison to the long-run trend of real GDP to answer the questions that follow.
 
-On average,what percentage does real GDP grow over the long run?

Accepted Answer

A)  1% 
B)  2% 
C)  3% 
D)  4% 
E)  5%

Question 3

The Great Recession lasted from ________ to ________.

Accepted Answer

A)  August 1929; March 1933 
B)  May 1937; June 1938 
C)  March 2001; November 2001 
D)  December 2007; June 2009 
E)  July 1991; June 1992

Question 4

The Great Recession was most similar to which of the following downturns?

Accepted Answer

A)  the Great Depression 
B)  the 2001 recession 
C)  the 1990 recession 
D)  the 1982 recession 
E)  the 1930 recession

Question 5

A recognition lag happens because:

Accepted Answer

A)  it takes time to recognize the true long-run growth rate in the economy. 
B)  it is difficult to determine when the economy is turning up or down. 
C)  in most nations, one or more governing bodies must approve government spending or new tax policies. 
D)  it takes time for the complete effects of monetary and fiscal policy to materialize. 
E)  it is difficult to recognize what the unemployment rate is.

Question 6

Refer to the following figure to answer the questions that follow.
 
-Based on the figure,if the economy is currently at point B,then in the long run,we can expect the economy to be at point:

Accepted Answer

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

Question 7

Depth of a business cycle refers to:

Accepted Answer

A)  the length of time from one business cycle peak to the next. 
B)  how low a trough or how high a peak of a business cycle is. 
C)  which segments of the economy are affected by a recession in a business cycle. 
D)  whether the bottom of the cycle is a depression. 
E)  what percentage of businesses exit their industry.

Question 8

Input prices are ________ in the short run and ________ in the long run.

Accepted Answer

A)  sticky; sticky 
B)  flexible; flexible 
C)  increasing; increasing 
D)  flexible; sticky 
E)  sticky; flexible

Question 9

Consider the following figure to answer the questions that follow.
 
-During which period was the economy in a contraction?

Accepted Answer

A)  2001-2005 
B)  2008-2009 
C)  2004-2008 
D)  2005-2008 
E)  2000-2004

Question 10

Which of the following is true about recessions in the United States?

Accepted Answer

A)  They are more common today than in the past. 
B)  They are rarer today than in the past. 
C)  They occur predictably about every two years. 
D)  They occur predictably about every eight years. 
E)  They are often caused by changes in government policy.

Question 11

A rightward shift of the long-run aggregate supply curve means there has been:

Accepted Answer

A)  a decrease in the unemployment rate. 
B)  an increase in the unemployment rate. 
C)  an increase in the price level. 
D)  a decrease in the price level. 
E)  economic growth.

Question 12

GDP is best defined as the total market value of all:

Accepted Answer

A)  goods and services produced within a country within a given time. 
B)  final goods and services produced within a country within a given time. 
C)  services produced within a country within a given time. 
D)  goods produced within a country within a given time. 
E)  final goods produced within a country within a given time.

Question 13

The phase of the business cycle where the economy is growing slower than usual is called:

Accepted Answer

A)  an economic trough. 
B)  the long-run trend of GDP. 
C)  an economic expansion. 
D)  an economic contraction. 
E)  an economic peak.

Question 14

Refer to the following figure to answer the questions that follow.
 
-Based on the figure,if the economy is initially at point B and new technology leads to an increase in labor productivity,then in the long run we will end up at point:

Accepted Answer

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

Question 15

The aggregate demand curve slopes downward because:

Accepted Answer

A)  a higher price will increase investment. 
B)  a higher price level will cause an increase in expected income. 
C)  a higher price level will increase purchasing power. 
D)  a higher price level that foreigners must pay will increase exports. 
E)  a higher price level for future purchases reduces wealth.

Question 16

Consider the following figure to answer the questions that follow.
 
-In which year was the economy growing at the long-run average growth rate?

Accepted Answer

A)  2001 
B)  2004 
C)  2005 
D)  2009 
E)  2013

Question 17

An increase in the general price level will lead to:

Accepted Answer

A)  an upward movement along the short-run aggregate supply curve as firms increase output. 
B)  a rightward shift of the short-run aggregate supply curve as firms increase output. 
C)  a downward movement along the short-run aggregate supply curve as firms decrease output. 
D)  a leftward shift of the short-run aggregate supply curve as firms decrease output. 
E)  no change in output because input prices are sticky.

Question 18

When an economy experiences economic growth,the:

Accepted Answer

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

Question 19

Suppose there is a surge in stock market values.In the short run,we would expect the price level to ________ and the unemployment rate to ________.

Accepted Answer

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

Question 20

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

Exam 12: Aggregate Demand and Aggregate Supply

A severe drought hits a country and reduces farm output by 50%.This will impact:

Consider the following data that identifies real GDP in comparison to the long-run trend of real GDP to answer the questions that follow. -On average,what percentage does real GDP grow over the long run?

The Great Recession lasted from to .

The Great Recession was most similar to which of the following downturns?

A recognition lag happens because:

Refer to the following figure to answer the questions that follow. -Based on the figure,if the economy is currently at point B,then in the long run,we can expect the economy to be at point:

Depth of a business cycle refers to:

Input prices are in the short run and in the long run.

Consider the following figure to answer the questions that follow. -During which period was the economy in a contraction?

Which of the following is true about recessions in the United States?

A rightward shift of the long-run aggregate supply curve means there has been:

GDP is best defined as the total market value of all:

The phase of the business cycle where the economy is growing slower than usual is called:

Refer to the following figure to answer the questions that follow. -Based on the figure,if the economy is initially at point B and new technology leads to an increase in labor productivity,then in the long run we will end up at point:

The aggregate demand curve slopes downward because:

Consider the following figure to answer the questions that follow. -In which year was the economy growing at the long-run average growth rate?

An increase in the general price level will lead to:

When an economy experiences economic growth,the:

Suppose there is a surge in stock market values.In the short run,we would expect the price level to and the unemployment rate to .

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