Question 1

Figure 24-2  
-Refer to Figure 24-2. Ceteris paribus, a decrease in productivity 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 2

The monetary growth rule is a plan for increasing the quantity of money

Accepted Answer

A)  at a fixed rate that does not respond to changes in the economic condition. 
B)  at a rate which increases as the economy grows. 
C)  at a rate which decreases as the economy declines. 
D)  at a rate which increases during recessions and decreases during expansions. 
A)  at a fixed rate that does not respond to changes in the economic condition. 
B)  at a rate which increases as the economy grows. 
C)  at a rate which decreases as the economy declines. 
D)  at a rate which increases during recessions and decreases during expansions.

Question 3

If stricter immigration laws are imposed and many foreign workers in the United States are forced to go back to their home countries

Accepted Answer

A)  the long-run aggregate supply curve will shift to the right. 
B)  the long-run aggregate supply curve will shift to the left. 
C)  we will move up along the long-run aggregate supply curve. 
D)  we will move down along the long-run aggregate supply curve. 
A)  the long-run aggregate supply curve will shift to the right. 
B)  the long-run aggregate supply curve will shift to the left. 
C)  we will move up along the long-run aggregate supply curve. 
D)  we will move down along the long-run aggregate supply curve.

Question 4

An increase in the value of which of the following would not increase household wealth?

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 5

Last week, 13 Mexican pesos could purchase one U.S. dollar. This week, it takes 11 Mexican pesos to purchase one U.S. dollar. This change in the value of the dollar will ________ exports from the United States to Mexico and ________ U.S. aggregate demand.

Accepted Answer

A)  increase; increase 
B)  decrease; decrease 
C)  increase; decrease 
D)  decrease; increase 
A)  increase; increase 
B)  decrease; decrease 
C)  increase; decrease 
D)  decrease; increase

Question 6

Starting from long-run equilibrium, use the basic aggregate demand and aggregate supply diagram to show what happens in both the long run and the short run when there is a decline in wealth.

Accepted Answer

@#IMG-DLM& Before the decline in demand, the econo

Question 7

What are sticky prices, and how can contracts make them "sticky"?

Accepted Answer

Prices or wages are said to be "sticky"

Question 8

The aggregate demand curve shows the relationship between the ________ and ________.

Accepted Answer

A)  inflation rate; quantity of real GDP demanded 
B)  real interest rate; quantity of real GDP supplied 
C)  nominal interest rate; quantity of real GDP demanded 
D)  price level; quantity of real GDP demanded 
A)  inflation rate; quantity of real GDP demanded 
B)  real interest rate; quantity of real GDP supplied 
C)  nominal interest rate; quantity of real GDP demanded 
D)  price level; quantity of real GDP demanded

Question 9

Figure 24-3  
-Refer to Figure 24-3. Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y1 represents potential GDP.

Accepted Answer

A)  A and B 
B)  A and C 
C)  C and D 
D)  B and D 
A)  A and B 
B)  A and C 
C)  C and D 
D)  B and D

Question 10

Figure 24-2  
-Refer to Figure 24-2. Ceteris paribus, an increase in the number of workers and firms adjusting to having previously underestimated the 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 11

When the economy enters a recession, your employer is unlikely to reduce your wages because ________ during a recession.

Accepted Answer

A)  output and input prices generally fall 
B)  lower wages increase your incentive to find employment elsewhere. 
C)  output prices always fall 
D)  output prices generally fall and input prices generally rise 
A)  output and input prices generally fall 
B)  lower wages increase your incentive to find employment elsewhere. 
C)  output prices always fall 
D)  output prices generally fall and input prices generally rise

Question 12

An increase in government spending will result in an increase in the price level and an increase in real GDP in the long run.

Accepted Answer

A) True 
 B)False

Question 13

According to the "wealth effect," when the ________ falls, the ________ rises.

Accepted Answer

A)  inflation rate; nominal value of household assets 
B)  unemployment rate; average level of household income 
C)  price level; the nominal value of household wealth 
D)  price level; the real value of household wealth 
A)  inflation rate; nominal value of household assets 
B)  unemployment rate; average level of household income 
C)  price level; the nominal value of household wealth 
D)  price level; the real value of household wealth

Question 14

Which aggregate supply curve has a positive slope?

Accepted Answer

A)  long run only 
B)  short run only 
C)  both long run and short run 
D)  neither long run nor short run 
A)  long run only 
B)  short run only 
C)  both long run and short run 
D)  neither long run nor short run

Question 15

Which of the following is one explanation as to why the aggregate demand curve slopes downward?

Accepted Answer

A)  Decreases in the price level raise the interest rate and increase consumption spending. 
B)  Decreases in the price level raise the interest rate and increase investment spending. 
C)  Decreases in the U.S. price level relative to the price level in other countries lower net exports. 
D)  Decreases in the price level raise real wealth and increase consumption spending. 
A)  Decreases in the price level raise the interest rate and increase consumption spending. 
B)  Decreases in the price level raise the interest rate and increase investment spending. 
C)  Decreases in the U.S. price level relative to the price level in other countries lower net exports. 
D)  Decreases in the price level raise real wealth and increase consumption spending.

Question 16

Just before and during the recession of 2007-2009, net exports in the United States

Accepted Answer

A)  fell and remained negative. 
B)  fell, but remained positive. 
C)  rose and became positive. 
D)  rose, but remained negative. 
A)  fell and remained negative. 
B)  fell, but remained positive. 
C)  rose and became positive. 
D)  rose, but remained negative.

Question 17

For the recession of 2007-2009, it took ________ for employment to return to its cyclical peak.

Accepted Answer

A)  about 18 months 
B)  about 2.5 years 
C)  about 3.5 years 
D)  more than 6 years 
A)  about 18 months 
B)  about 2.5 years 
C)  about 3.5 years 
D)  more than 6 years

Question 18

In the long run,

Accepted Answer

A)  GDP > potential GDP. 
B)  unemployment is at its natural rate. 
C)  LRAS and SRAS lie on the same line. 
D)  the inflation rate is zero. 
A)  GDP > potential GDP. 
B)  unemployment is at its natural rate. 
C)  LRAS and SRAS lie on the same line. 
D)  the inflation rate is zero.

Question 19

An adverse supply shock causes the short-run aggregate supply curve to shift left, increasing the price level.

Accepted Answer

A) True 
 B)False

Question 20

Last week, six Swedish kronor could purchase one U.S. dollar. This week, it takes eight Swedish kronor to purchase one U.S. dollar. This change in the value of the dollar will ________ exports from the United States to Sweden and ________ U.S. aggregate demand.

Accepted Answer

A)  increase; increase 
B)  decrease; decrease 
C)  increase; decrease 
D)  decrease; increase 
A)  increase; increase 
B)  decrease; decrease 
C)  increase; decrease 
D)  decrease; increase

Exam 24: Aggregate Demand and Aggregate Supply Analysis

Figure 24-2 -Refer to Figure 24-2. Ceteris paribus, a decrease in productivity would be represented by a movement from

The monetary growth rule is a plan for increasing the quantity of money

If stricter immigration laws are imposed and many foreign workers in the United States are forced to go back to their home countries

An increase in the value of which of the following would not increase household wealth?

Last week, 13 Mexican pesos could purchase one U.S. dollar. This week, it takes 11 Mexican pesos to purchase one U.S. dollar. This change in the value of the dollar will ________ exports from the United States to Mexico and ________ U.S. aggregate demand.

Starting from long-run equilibrium, use the basic aggregate demand and aggregate supply diagram to show what happens in both the long run and the short run when there is a decline in wealth.

What are sticky prices, and how can contracts make them "sticky"?

The aggregate demand curve shows the relationship between the ________ and ________.

Figure 24-3 -Refer to Figure 24-3. Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y1 represents potential GDP.

Figure 24-2 -Refer to Figure 24-2. Ceteris paribus, an increase in the number of workers and firms adjusting to having previously underestimated the price level would be represented by a movement from

When the economy enters a recession, your employer is unlikely to reduce your wages because ________ during a recession.

An increase in government spending will result in an increase in the price level and an increase in real GDP in the long run.

According to the "wealth effect," when the ________ falls, the ________ rises.

Which aggregate supply curve has a positive slope?

Which of the following is one explanation as to why the aggregate demand curve slopes downward?

Just before and during the recession of 2007-2009, net exports in the United States

For the recession of 2007-2009, it took ________ for employment to return to its cyclical peak.

In the long run,

An adverse supply shock causes the short-run aggregate supply curve to shift left, increasing the price level.

Last week, six Swedish kronor could purchase one U.S. dollar. This week, it takes eight Swedish kronor to purchase one U.S. dollar. This change in the value of the dollar will ________ exports from the United States to Sweden and ________ U.S. aggregate demand.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Last week, 13 Mexican pesos could purchase one U.S. dollar. This week, it takes 11 Mexican pesos to purchase one U.S. dollar. This change in the value of the dollar will exports from the United States to Mexico and U.S. aggregate demand.

The aggregate demand curve shows the relationship between the and .

Figure 24-3 -Refer to Figure 24-3. Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y₁ represents potential GDP.

According to the "wealth effect," when the falls, the rises.

Last week, six Swedish kronor could purchase one U.S. dollar. This week, it takes eight Swedish kronor to purchase one U.S. dollar. This change in the value of the dollar will exports from the United States to Sweden and U.S. aggregate demand.