Question 1

Which of the following events shifts the short-run aggregate supply curve to the right?

Accepted Answer

A) An increase in government spending on military equipment 
B) A drop in oil prices 
C) An increase in price expectations 
D) None of the above is correct. 
A) An increase in government spending on military equipment 
B) A drop in oil prices 
C) An increase in price expectations 
D) None of the above is correct.

Question 2

As the multiplier process is working on the demand side,

Accepted Answer

A) firms will meet the additional demand without raising prices. 
B) firms will meet the additional demand only by raising prices. 
C) firms will not meet the additional demand. 
D) the multiplier process will cease creating demand. 
A) firms will meet the additional demand without raising prices. 
B) firms will meet the additional demand only by raising prices. 
C) firms will not meet the additional demand. 
D) the multiplier process will cease creating demand.

Question 3

In 1986, OPEC countries increased their production of oil.This caused

Accepted Answer

A) the price level to rise. 
B) aggregate supply to shift right. 
C) unemployment to rise. 
D) All of these responses are correct. 
A) the price level to rise. 
B) aggregate supply to shift right. 
C) unemployment to rise. 
D) All of these responses are correct.

Question 4

Holding wages constant, any increase in productivity will decrease business costs, improve profitability, and encourage more production.

Accepted Answer

A) True 
 B)False

Question 5

In response to the demands of environmentalists, large sections of timberlands are put off limits to logging.What effect will this have on the aggregate supply curve?

Accepted Answer

A) Shift the curve outward. 
B) Shift the curve inward. 
C) Move the economy up along the curve. 
D) Move the economy down along the curve. 
A) Shift the curve outward. 
B) Shift the curve inward. 
C) Move the economy up along the curve. 
D) Move the economy down along the curve.

Question 6

Figure 10-6
​  
-In Figure 10-6, which graph best illustrates the effect of the beginning of the Iraq war in 2003?

Accepted Answer

A) (1) 
B) (2) 
C) (3) 
D) (4) 
A) (1) 
B) (2) 
C) (3) 
D) (4)

Question 7

One complication that tends to prolong recessionary gaps is that wages

Accepted Answer

A) are fixed by unions, which represent nearly all workers in the United States. 
B) tend to rise rapidly. 
C) rarely fall. 
D) tend to move in the opposite direction from prices. 
A) are fixed by unions, which represent nearly all workers in the United States. 
B) tend to rise rapidly. 
C) rarely fall. 
D) tend to move in the opposite direction from prices.

Question 8

The 2002-2008 OPEC price increases caused by conflict in the Middle East caused the aggregate

Accepted Answer

A) demand curve to shift outward. 
B) demand curve to shift inward. 
C) supply curve to shift outward. 
D) supply curve to shift inward. 
A) demand curve to shift outward. 
B) demand curve to shift inward. 
C) supply curve to shift outward. 
D) supply curve to shift inward.

Question 9

If aggregate demand is $2,000 billion and aggregate supply is $2,300 billion, the price level will rise.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following would cause stagflation?

Accepted Answer

A) Aggregate demand shifts left. 
B) Aggregate demand shifts right. 
C) Aggregate supply shifts left. 
D) Aggregate supply shifts right. 
A) Aggregate demand shifts left. 
B) Aggregate demand shifts right. 
C) Aggregate supply shifts left. 
D) Aggregate supply shifts right.

Question 11

How is it possible for the economy to have a recessionary gap?

Accepted Answer

A) Equilibrium is at a GDP level below full employment. 
B) Equilibrium is at a GDP level equal to full employment. 
C) Equilibrium is at a GDP level above full employment. 
D) GDP is rising at full employment. 
E) GDP is falling at full employment. 
A) Equilibrium is at a GDP level below full employment. 
B) Equilibrium is at a GDP level equal to full employment. 
C) Equilibrium is at a GDP level above full employment. 
D) GDP is rising at full employment. 
E) GDP is falling at full employment.

Question 12

What causes the aggregate supply curve to have an upward slope in the short run, but a vertical slope in the long run?

Accepted Answer

When there is substantial unemployment i

Question 13

Quantity supplied of all goods and services at different price levels is known as

Accepted Answer

A) aggregate supply. 
B) aggregate demand. 
C) productivity. 
D) All of these responses are correct. 
A) aggregate supply. 
B) aggregate demand. 
C) productivity. 
D) All of these responses are correct.

Question 14

The economy does have a self-correcting mechanism that tends to eliminate either unemployment or inflation and tends to act slowly and unevenly.

Accepted Answer

A) True 
 B)False

Question 15

The underlying cause of inflation is

Accepted Answer

A) labor unions demanding higher wages. 
B) businesses charging higher prices. 
C) government raising taxes. 
D) increasing aggregate demand. 
A) labor unions demanding higher wages. 
B) businesses charging higher prices. 
C) government raising taxes. 
D) increasing aggregate demand.

Question 16

The price of imported oil decreased in 2001.How did this affect the aggregate supply curve?

Accepted Answer

A) The aggregate supply curve became steeper. 
B) The aggregate supply curve became flatter. 
C) The aggregate supply curve shifted inward. 
D) The aggregate supply curve shifted outward. 
A) The aggregate supply curve became steeper. 
B) The aggregate supply curve became flatter. 
C) The aggregate supply curve shifted inward. 
D) The aggregate supply curve shifted outward.

Question 17

The years 2002 through 2007 can be described as a period of

Accepted Answer

A) falling output accompanied by increasing inflation. 
B) falling output accompanied by decreasing inflation. 
C) rising output accompanied by increasing inflation. 
D) rising output accompanied by decreasing inflation. 
A) falling output accompanied by increasing inflation. 
B) falling output accompanied by decreasing inflation. 
C) rising output accompanied by increasing inflation. 
D) rising output accompanied by decreasing inflation.

Question 18

For any given growth rate of aggregate supply, a faster growth rate of aggregate demand will lead to more inflation and faster growth of real output.

Accepted Answer

A) True 
 B)False

Question 19

The aggregate supply curve shows the relationship between the ____ and the ____, holding all other factors constant.

Accepted Answer

A) price level; quantity of real GDP supplied 
B) price level; supply of nominal GDP 
C) nominal GDP; price level of real GDP 
D) price level; amount of nominal GDP supplied 
A) price level; quantity of real GDP supplied 
B) price level; supply of nominal GDP 
C) nominal GDP; price level of real GDP 
D) price level; amount of nominal GDP supplied

Question 20

Figure 10-8
​  
-Figure 10-8 describes which of the following periods in the United States?

Accepted Answer

A) 1930s 
B) 1973-1975 
C) late 1990s 
D) 2007-2009 
A) 1930s 
B) 1973-1975 
C) late 1990s 
D) 2007-2009

Exam 26: Bringing in the Supply Side: Unemployment and Inflation

Which of the following events shifts the short-run aggregate supply curve to the right?

As the multiplier process is working on the demand side,

In 1986, OPEC countries increased their production of oil.This caused

Holding wages constant, any increase in productivity will decrease business costs, improve profitability, and encourage more production.

In response to the demands of environmentalists, large sections of timberlands are put off limits to logging.What effect will this have on the aggregate supply curve?

Figure 10-6 ​ -In Figure 10-6, which graph best illustrates the effect of the beginning of the Iraq war in 2003?

One complication that tends to prolong recessionary gaps is that wages

The 2002-2008 OPEC price increases caused by conflict in the Middle East caused the aggregate

If aggregate demand is $2,000 billion and aggregate supply is $2,300 billion, the price level will rise.

Which of the following would cause stagflation?

How is it possible for the economy to have a recessionary gap?

What causes the aggregate supply curve to have an upward slope in the short run, but a vertical slope in the long run?

Quantity supplied of all goods and services at different price levels is known as

The economy does have a self-correcting mechanism that tends to eliminate either unemployment or inflation and tends to act slowly and unevenly.

The underlying cause of inflation is

The price of imported oil decreased in 2001.How did this affect the aggregate supply curve?

The years 2002 through 2007 can be described as a period of

For any given growth rate of aggregate supply, a faster growth rate of aggregate demand will lead to more inflation and faster growth of real output.

The aggregate supply curve shows the relationship between the ____ and the ____, holding all other factors constant.

Figure 10-8 ​ -Figure 10-8 describes which of the following periods in the United States?

What Is Economics

The Economony: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Useconomy

Filters

Figure 10-6 -In Figure 10-6, which graph best illustrates the effect of the beginning of the Iraq war in 2003?

The aggregate supply curve shows the relationship between the and the , holding all other factors constant.

Figure 10-8 -Figure 10-8 describes which of the following periods in the United States?