Question 1

The short-run aggregate supply curve is vertical at the level of real output that corresponds to the natural rate of employment.

Accepted Answer

A) True 
 B)False

Question 2

The long run in macroeconomic analysis is a period

Accepted Answer

A)  in which wages and some other prices are sticky. 
B)  in which full wage and price flexibility and market adjustment have been achieved. 
C)  greater than 12 months. 
D)  in which the capital stock is held constant. 
A)  in which wages and some other prices are sticky. 
B)  in which full wage and price flexibility and market adjustment have been achieved. 
C)  greater than 12 months. 
D)  in which the capital stock is held constant.

Question 3

Figure 7-1  
-Refer to Figure 7-1. A movement from point B to point E on could be due to

Accepted Answer

A)  an increase in consumer confidence. 
B)  an increase in the market interest rate. 
C)  an increase in personal income taxes. 
D)  a decrease in transfer payments. 
A)  an increase in consumer confidence. 
B)  an increase in the market interest rate. 
C)  an increase in personal income taxes. 
D)  a decrease in transfer payments.

Question 4

Figure 7-6  
-Refer to Figure 7-6. Suppose the economy is initially at point A. Now suppose that there is an increase in government purchases. In the short-run,

Accepted Answer

A)  the price level rises to Pb and real GDP increases to Yb. 
B)  the price level rises to Pd. 
C)  the aggregate supply curve shifts up to SRAS2. 
D)  the economy's potential output increases to Yb. 
A)  the price level rises to Pb and real GDP increases to Yb. 
B)  the price level rises to Pd. 
C)  the aggregate supply curve shifts up to SRAS2. 
D)  the economy's potential output increases to Yb.

Question 5

Using the aggregate demand-aggregate supply model, predict what happens in the short run if an increase in health insurance premiums paid by firms raises the cost of employing each worker.

Accepted Answer

A)  The aggregate supply curve shifts right; the aggregate demand curve is not affected; price level decreases; real GDP increases. 
B)  The aggregate demand curve shifts right; the aggregate supply curve is not affected; price level and real GDP increase. 
C)  The aggregate demand curve shifts left; the aggregate supply curve is not affected; price level and real GDP decrease. 
D)  The aggregate supply curve shifts left; the aggregate demand curve is not affected; price level increases; real GDP decreases. 
A)  The aggregate supply curve shifts right; the aggregate demand curve is not affected; price level decreases; real GDP increases. 
B)  The aggregate demand curve shifts right; the aggregate supply curve is not affected; price level and real GDP increase. 
C)  The aggregate demand curve shifts left; the aggregate supply curve is not affected; price level and real GDP decrease. 
D)  The aggregate supply curve shifts left; the aggregate demand curve is not affected; price level increases; real GDP decreases.

Question 6

The multiplier is given by

Accepted Answer

A)  the ratio of the initial change in a component of aggregate demand to the change in the quantity of real GDP demanded at each price level. 
B)  the ratio of the change in the quantity of real GDP demanded at each price level to the initial change in a component of aggregate demand that produced it. 
C)  the amount by which the quantity of real GDP demanded at each price level changes in response to an initial change in a component of aggregate demand. 
D)  the percentage change between the initial change in a component of aggregate demand and the final change in the quantity of real GDP demanded at each price level. 
A)  the ratio of the initial change in a component of aggregate demand to the change in the quantity of real GDP demanded at each price level. 
B)  the ratio of the change in the quantity of real GDP demanded at each price level to the initial change in a component of aggregate demand that produced it. 
C)  the amount by which the quantity of real GDP demanded at each price level changes in response to an initial change in a component of aggregate demand. 
D)  the percentage change between the initial change in a component of aggregate demand and the final change in the quantity of real GDP demanded at each price level.

The short-run aggregate supply curve is vertical at the level of real output that corresponds to the natural rate of employment.

The long run in macroeconomic analysis is a period

Figure 7-1 -Refer to Figure 7-1. A movement from point B to point E on could be due to

Figure 7-6 -Refer to Figure 7-6. Suppose the economy is initially at point A. Now suppose that there is an increase in government purchases. In the short-run,

Using the aggregate demand-aggregate supply model, predict what happens in the short run if an increase in health insurance premiums paid by firms raises the cost of employing each worker.

The multiplier is given by

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

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Exam 7: Aggregate Demand and Aggregate Supply

The short-run aggregate supply curve is vertical at the level of real output that corresponds to the natural rate of employment.

The long run in macroeconomic analysis is a period

Figure 7-1 -Refer to Figure 7-1. A movement from point B to point E on could be due to

Figure 7-6 -Refer to Figure 7-6. Suppose the economy is initially at point A. Now suppose that there is an increase in government purchases. In the short-run,

Using the aggregate demand-aggregate supply model, predict what happens in the short run if an increase in health insurance premiums paid by firms raises the cost of employing each worker.

The multiplier is given by

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters