Question 1

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

Accepted Answer

A) unlikely; output and input prices generally fall during recession 
B) unlikely; lower wages reduce productivity and morale 
C) likely; output prices always fall during recession 
D) likely; aggregate demand is vertical in the long run 
A) unlikely; output and input prices generally fall during recession 
B) unlikely; lower wages reduce productivity and morale 
C) likely; output prices always fall during recession 
D) likely; aggregate demand is vertical in the long run

Question 2

At the beginning of the recession of 2007-2009,real GDP in the United States was ________ potential GDP,and in June 2009,real GDP was ________ potential GDP.

Accepted Answer

A) below; above 
B) below; below 
C) above; below 
D) above; above 
A) below; above 
B) below; below 
C) above; below 
D) above; above

Question 3

An increase in the price level will

Accepted Answer

A) shift the aggregate demand curve to the left. 
B) shift the aggregate demand curve to the right. 
C) move the economy up along a stationary aggregate demand curve. 
D) move the economy down along a stationary aggregate demand curve. 
A) shift the aggregate demand curve to the left. 
B) shift the aggregate demand curve to the right. 
C) move the economy up along a stationary aggregate demand curve. 
D) move the economy down along a stationary aggregate demand curve.

Question 4

Figure 15-1
  
-Refer to Figure 15-1.Ceteris paribus,a decrease in the price level would be represented by a movement from

Accepted Answer

A) AD₁ to AD₂. 
B) AD₂ to AD₁. 
C) point A to point B. 
D) point B to point A. 
A) AD₁ to AD₂. 
B) AD₂ to AD₁. 
C) point A to point B. 
D) point B to point A.

Question 5

Higher personal income taxes

Accepted Answer

A) increase aggregate demand. 
B) increase disposable income. 
C) decrease aggregate demand. 
D) both B and C 
A) increase aggregate demand. 
B) increase disposable income. 
C) decrease aggregate demand. 
D) both B and C

Question 6

The long-run adjustment to a negative supply shock results in

Accepted Answer

A) the short-run aggregate supply curve shifting to the right. 
B) the price level rising. 
C) unemployment rising. 
D) workers being willing to accept higher wages. 
A) the short-run aggregate supply curve shifting to the right. 
B) the price level rising. 
C) unemployment rising. 
D) workers being willing to accept higher wages.

Question 7

Workers expect inflation to rise from 3% to 5% next year.As a result,this should

Accepted Answer

A) shift the short-run aggregate supply curve to the left. 
B) shift the short-run aggregate supply curve to the right. 
C) move the economy up along a stationary short-run aggregate supply curve. 
D) move the economy down along a stationary short-run aggregate supply curve. 
A) shift the short-run aggregate supply curve to the left. 
B) shift the short-run aggregate supply curve to the right. 
C) move the economy up along a stationary short-run aggregate supply curve. 
D) move the economy down along a stationary short-run aggregate supply curve.

Question 8

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

Question 9

Figure 15-2
  
-Refer to Figure 15-2.Ceteris paribus,an increase in the expected price of an important natural resource 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 10

Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

Accepted Answer

A) falling oil prices 
B) an increase in net exports 
C) the end of the housing bubble 
D) a decline in government spending 
A) falling oil prices 
B) an increase in net exports 
C) the end of the housing bubble 
D) a decline in government spending

Question 11

Figure 15-1
  
-Refer to Figure 15-1.Ceteris paribus,a decrease in households' expectations of their future income would be represented by a movement from

Accepted Answer

A) AD₁ to AD₂. 
B) AD₂ to AD₁. 
C) point A to point B. 
D) point B to point A. 
A) AD₁ to AD₂. 
B) AD₂ to AD₁. 
C) point A to point B. 
D) point B to point A.

Question 12

A decrease in government spending will result in a decrease in the price level and a decrease in real GDP in the long run.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following best describes the "interest rate effect"?

Accepted Answer

A) An increase in the price level raises the interest rate and chokes off government spending. 
B) An increase in the price level lowers the interest rate and chokes off government spending. 
C) An increase in the price level raises the interest rate and chokes off investment and consumption spending. 
D) An increase in the price level lowers the interest rate and chokes off investment and consumption spending. 
A) An increase in the price level raises the interest rate and chokes off government spending. 
B) An increase in the price level lowers the interest rate and chokes off government spending. 
C) An increase in the price level raises the interest rate and chokes off investment and consumption spending. 
D) An increase in the price level lowers the interest rate and chokes off investment and consumption spending.

Question 14

The long-run aggregate supply curve

Accepted Answer

A) has a negative slope. 
B) has a steep but positive slope. 
C) is horizontal. 
D) is vertical. 
A) has a negative slope. 
B) has a steep but positive slope. 
C) is horizontal. 
D) is vertical.

Question 15

Which of the following models advocate that the quantity of money should be increased at a constant rate?

Accepted Answer

A) the monetarist model 
B) the new classical model 
C) the real business cycle model 
D) the new Keynesian model 
A) the monetarist model 
B) the new classical model 
C) the real business cycle model 
D) the new Keynesian model

Question 16

Long-run macroeconomic equilibrium occurs when

Accepted Answer

A) aggregate demand equals short-run aggregate supply. 
B) aggregate demand equals short-run aggregate supply and they intersect at a point on the long-run supply curve. 
C) structural and frictional unemployment equals zero. 
D) output is above potential GDP. 
A) aggregate demand equals short-run aggregate supply. 
B) aggregate demand equals short-run aggregate supply and they intersect at a point on the long-run supply curve. 
C) structural and frictional unemployment equals zero. 
D) output is above potential GDP.

Question 17

The international trade effect states that

Accepted Answer

A) an increase in the price level will raise net exports. 
B) an increase in the price level will lower net exports. 
C) an increase in the price level will raise exports. 
D) an increase in the price level will lower imports. 
A) an increase in the price level will raise net exports. 
B) an increase in the price level will lower net exports. 
C) an increase in the price level will raise exports. 
D) an increase in the price level will lower imports.

Question 18

How do changes in income tax policies affect aggregate demand?

Accepted Answer

A) Higher taxes increase disposable income, consumption, and aggregate demand. 
B) Higher taxes reduce disposable income, consumption, and aggregate demand. 
C) Higher taxes increase corporate investment and aggregate demand. 
D) Higher taxes increase aggregate supply and thus increase aggregate demand as well. 
A) Higher taxes increase disposable income, consumption, and aggregate demand. 
B) Higher taxes reduce disposable income, consumption, and aggregate demand. 
C) Higher taxes increase corporate investment and aggregate demand. 
D) Higher taxes increase aggregate supply and thus increase aggregate demand as well.

Question 19

Stagflation occurs when

Accepted Answer

A) inflation rises and GDP rises. 
B) inflation falls and GDP rises. 
C) inflation rises and GDP falls. 
D) inflation falls and GDP falls. 
A) inflation rises and GDP rises. 
B) inflation falls and GDP rises. 
C) inflation rises and GDP falls. 
D) inflation falls and GDP falls.

Question 20

Using an aggregate demand graph,illustrate the impact of an increase in the price level on aggregate demand.

Accepted Answer

@#IMG-DLM& This illustrates an increase in the pri

When the economy enters into a recession,your employer is to reduce your wages because .

At the beginning of the recession of 2007-2009,real GDP in the United States was potential GDP,and in June 2009,real GDP was potential GDP.

An increase in the price level will

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in the price level would be represented by a movement from

Higher personal income taxes

The long-run adjustment to a negative supply shock results in

Workers expect inflation to rise from 3% to 5% next year.As a result,this should

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.

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,an increase in the expected price of an important natural resource would be represented by a movement from

Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in households' expectations of their future income would be represented by a movement from

A decrease in government spending will result in a decrease in the price level and a decrease in real GDP in the long run.

Which of the following best describes the "interest rate effect"?

The long-run aggregate supply curve

Which of the following models advocate that the quantity of money should be increased at a constant rate?

Long-run macroeconomic equilibrium occurs when

The international trade effect states that

How do changes in income tax policies affect aggregate demand?

Stagflation occurs when

Using an aggregate demand graph,illustrate the impact of an increase in the price level on aggregate demand.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 15: Aggregate Demand and Aggregate Supply Analysis

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

At the beginning of the recession of 2007-2009,real GDP in the United States was ________ potential GDP,and in June 2009,real GDP was ________ potential GDP.

An increase in the price level will

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in the price level would be represented by a movement from

Higher personal income taxes

The long-run adjustment to a negative supply shock results in

Workers expect inflation to rise from 3% to 5% next year.As a result,this should

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.

Figure 15-2 -Refer to Figure 15-2.Ceteris paribus,an increase in the expected price of an important natural resource would be represented by a movement from

Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,a decrease in households' expectations of their future income would be represented by a movement from

A decrease in government spending will result in a decrease in the price level and a decrease in real GDP in the long run.

Which of the following best describes the "interest rate effect"?

The long-run aggregate supply curve

Which of the following models advocate that the quantity of money should be increased at a constant rate?

Long-run macroeconomic equilibrium occurs when

The international trade effect states that

How do changes in income tax policies affect aggregate demand?

Stagflation occurs when

Using an aggregate demand graph,illustrate the impact of an increase in the price level on aggregate demand.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

When the economy enters into a recession,your employer is to reduce your wages because .

At the beginning of the recession of 2007-2009,real GDP in the United States was potential GDP,and in June 2009,real GDP was potential GDP.

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.