Question 1

A 'technical recession' is defined as

Accepted Answer

A)  one year of negative economic growth. 
B)  six months of negative economic growth. 
C)  a contraction in the economic growth rate from 5 per cent to 3 per cent. 
D)  a period of rising prices. 
A)  one year of negative economic growth. 
B)  six months of negative economic growth. 
C)  a contraction in the economic growth rate from 5 per cent to 3 per cent. 
D)  a period of rising prices.

Question 2

A decrease in the price level results in a(n)________ in the quantity of real GDP demanded because a lower price level ________ consumption,investment,and net exports.

Accepted Answer

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

Question 3

How does an increase in the price level in Australia relative to the price level of other countries affect the aggregate demand curve,ceteris paribus?

Accepted Answer

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

Question 4

A(n)________ comes to an end with a business cycle ________.

Accepted Answer

A)  recession; peak 
B)  recession; trough 
C)  expansion; trough 
D)  expansion; phase 
A)  recession; peak 
B)  recession; trough 
C)  expansion; trough 
D)  expansion; phase

Question 5

Figure 14.3  
-In Figure 14.3,if the economy is at point J,what will happen?

Accepted Answer

A)  Inventories have fallen below their desired level, and firms decrease production. 
B)  Inventories have fallen below their desired level, and firms increase production. 
C)  Inventories have risen above their desired level, and firms decrease production. 
D)  Inventories have risen above their desired level, and firms increase production. 
A)  Inventories have fallen below their desired level, and firms decrease production. 
B)  Inventories have fallen below their desired level, and firms increase production. 
C)  Inventories have risen above their desired level, and firms decrease production. 
D)  Inventories have risen above their desired level, and firms increase production.

Question 6

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 7

What is the macroeconomic consequence if firms accumulate large amounts of unplanned inventory at the beginning of a recession?

Accepted Answer

Firms will decrease

Question 8

Total motor vehicle sales in Australia

Accepted Answer

A)  have slowly decreased over time. 
B)  decline by a greater percentage than GDP during an economic contraction. 
C)  decline by a smaller percentage than GDP during an economic contraction. 
D)  remain constant during business cycles. 
A)  have slowly decreased over time. 
B)  decline by a greater percentage than GDP during an economic contraction. 
C)  decline by a smaller percentage than GDP during an economic contraction. 
D)  remain constant during business cycles.

Question 9

Why does the short-run aggregate supply curve slope upward?

Accepted Answer

The short-run aggregate supply curve slo

Question 10

The wealth effect occurs when the price level falls,causing the

Accepted Answer

A)  real value of household wealth to fall. 
B)  nominal value of household wealth to fall. 
C)  nominal value of household wealth to rise. 
D)  real value of household wealth to rise. 
A)  real value of household wealth to fall. 
B)  nominal value of household wealth to fall. 
C)  nominal value of household wealth to rise. 
D)  real value of household wealth to rise.

Question 11

Stagflation occurs when short-run aggregate supply decreases.

Accepted Answer

A) True 
 B)False

Question 12

An increase in aggregate demand causes an increase in ________ only in the short run,but causes an increase in ________ in both the short run and the long run.

Accepted Answer

A)  the price level; real GDP 
B)  real GDP; real GDP 
C)  the price level; the price level 
D)  real GDP; the price level 
A)  the price level; real GDP 
B)  real GDP; real GDP 
C)  the price level; the price level 
D)  real GDP; the price level

Question 13

If technological change occurs in the economy,the

Accepted Answer

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

Question 14

Explain the three reasons the aggregate demand curve slopes downward.

Accepted Answer

The three reasons are the wealth effect,

Question 15

The experience of recessions in Australia has shown that

Accepted Answer

A)  cyclical unemployment has been non-existent. 
B)  unemployment continues to rise after a recession ends. 
C)  unemployment falls about 12 months after a recession begins. 
D)  unemployment rises on average about 5 percentage points 12 months after a recession begins. 
A)  cyclical unemployment has been non-existent. 
B)  unemployment continues to rise after a recession ends. 
C)  unemployment falls about 12 months after a recession begins. 
D)  unemployment rises on average about 5 percentage points 12 months after a recession begins.

Question 16

When the price level in Australia rises relative to the price level of other countries,ceteris paribus,________ will rise,________ will fall,and ________ will fall.

Accepted Answer

A)  imports; exports; net exports 
B)  exports; imports; net exports 
C)  net exports; exports; imports 
D)  net exports; imports; exports 
A)  imports; exports; net exports 
B)  exports; imports; net exports 
C)  net exports; exports; imports 
D)  net exports; imports; exports

Question 17

The dynamic aggregate demand and aggregate supply model illustrates that,during most years,aggregate demand and long-run aggregate supply increase.

Accepted Answer

A) True 
 B)False

Question 18

In the dynamic aggregate demand and aggregate supply model,the rate of inflation will decrease if

Accepted Answer

A)  AD shifts faster than AS. 
B)  AS shifts slower than AD. 
C)  AS shifts faster than AD. 
D)  the price level falls. 
A)  AD shifts faster than AS. 
B)  AS shifts slower than AD. 
C)  AS shifts faster than AD. 
D)  the price level falls.

Question 19

For all points above the 45° line,planned aggregate expenditure will be less than real GDP.

Accepted Answer

A) True 
 B)False

Question 20

Because a company such as Boeing produces expensive durable goods (aircraft),the demand for their goods

Accepted Answer

A)  is likely to increase during a recession. 
B)  declines when incomes in the economy are rising. 
C)  is consistently high, regardless of the state of the economy. 
D)  tends to follow the business cycle. 
A)  is likely to increase during a recession. 
B)  declines when incomes in the economy are rising. 
C)  is consistently high, regardless of the state of the economy. 
D)  tends to follow the business cycle.

A 'technical recession' is defined as

A decrease in the price level results in a(n) in the quantity of real GDP demanded because a lower price level consumption,investment,and net exports.

How does an increase in the price level in Australia relative to the price level of other countries affect the aggregate demand curve,ceteris paribus?

A(n) comes to an end with a business cycle .

Figure 14.3 -In Figure 14.3,if the economy is at point J,what will happen?

Stagflation occurs when

What is the macroeconomic consequence if firms accumulate large amounts of unplanned inventory at the beginning of a recession?

Total motor vehicle sales in Australia

Why does the short-run aggregate supply curve slope upward?

The wealth effect occurs when the price level falls,causing the

Stagflation occurs when short-run aggregate supply decreases.

An increase in aggregate demand causes an increase in only in the short run,but causes an increase in in both the short run and the long run.

If technological change occurs in the economy,the

Explain the three reasons the aggregate demand curve slopes downward.

The experience of recessions in Australia has shown that

When the price level in Australia rises relative to the price level of other countries,ceteris paribus, will rise, will fall,and will fall.

The dynamic aggregate demand and aggregate supply model illustrates that,during most years,aggregate demand and long-run aggregate supply increase.

In the dynamic aggregate demand and aggregate supply model,the rate of inflation will decrease if

For all points above the 45° line,planned aggregate expenditure will be less than real GDP.

Because a company such as Boeing produces expensive durable goods (aircraft),the demand for their goods

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 Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 14: Economic Growth, the Financial System and Business Cycles

A 'technical recession' is defined as

A decrease in the price level results in a(n)________ in the quantity of real GDP demanded because a lower price level ________ consumption,investment,and net exports.

How does an increase in the price level in Australia relative to the price level of other countries affect the aggregate demand curve,ceteris paribus?

A(n)________ comes to an end with a business cycle ________.

Figure 14.3 -In Figure 14.3,if the economy is at point J,what will happen?

Stagflation occurs when

What is the macroeconomic consequence if firms accumulate large amounts of unplanned inventory at the beginning of a recession?

Total motor vehicle sales in Australia

Why does the short-run aggregate supply curve slope upward?

The wealth effect occurs when the price level falls,causing the

Stagflation occurs when short-run aggregate supply decreases.

An increase in aggregate demand causes an increase in ________ only in the short run,but causes an increase in ________ in both the short run and the long run.

If technological change occurs in the economy,the

Explain the three reasons the aggregate demand curve slopes downward.

The experience of recessions in Australia has shown that

When the price level in Australia rises relative to the price level of other countries,ceteris paribus,________ will rise,________ will fall,and ________ will fall.

The dynamic aggregate demand and aggregate supply model illustrates that,during most years,aggregate demand and long-run aggregate supply increase.

In the dynamic aggregate demand and aggregate supply model,the rate of inflation will decrease if

For all points above the 45° line,planned aggregate expenditure will be less than real GDP.

Because a company such as Boeing produces expensive durable goods (aircraft),the demand for their goods

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 Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

A decrease in the price level results in a(n) in the quantity of real GDP demanded because a lower price level consumption,investment,and net exports.

A(n) comes to an end with a business cycle .

An increase in aggregate demand causes an increase in only in the short run,but causes an increase in in both the short run and the long run.

When the price level in Australia rises relative to the price level of other countries,ceteris paribus, will rise, will fall,and will fall.