Exam 8: The Business Cycle

Which of the following is not associated with the aggregate supply curve?

The only policy lever that is effective against unemployment when the AS curve is vertical is

Which of the following economic perspectives focuses on the need for government to use spending and taxes to shift aggregate demand and thus correct problems of unemployment and inflation?

In the long run,an increase in aggregate demand will lead to

Assume the economy is initially in equilibrium on AD₂ and AS₂.Which curve would have shifted,and in what direction would it have shifted,if a new equilibrium were to occur at an output level of $300 billion and a price level of P₃ in Figure 8.3?

According to Keynes,which of the following should the government do when the economy overheats?

Choose the letter below that best represents the type of shift that would occur in the following situation in the United States: In 2001 interest rates dropped to 40-year lows,which decreased the cost of borrowing for consumers.(See Figure 8.6. )

One World View article titled "Global Depression" states,"The Great Depression wasn't confined to the U.S.economy." This implies that many other countries

In the long run,shifts in the aggregate demand curve affect the price level but not the level of output.

Which of the following results if at a particular price level,the aggregate quantity supplied exceeds the aggregate quantity demanded?

At which of the following price levels would a shortage occur in Figure 8.4?

Given AD₁ and AS₁ in Figure 8.3,the Keynesian approach to achieving a higher level of output would be to

Choose the letter below that best represents the type of shift that would occur in the following situation in the United States: On October 24,1929,the U.S.stock market crashed.By the end of the year,over $40 billion of wealth had vanished.(See Figure 8.6. )

As output rises,the profit effect results from

Choose the letter below that best represents the type of shift that would occur in the following situation in the United States: OPEC raises the price of its oil significantly.(See Figure 8.6. )

Two potential problems with macro equilibrium are

When the AS curve is vertical,increases in AD will

Real GDP is better than nominal GDP for measuring growth because real GDP has been adjusted for changes in

Keynes believed that a market-driven economy was inherently unstable.

Ceteris paribus,if average prices in the U.S.economy fall,then the