Question 1

Inflation is generally the result of total spending growing faster than total production.

Accepted Answer

A) True 
 B)False

Question 2

A decrease in disposable income will shift the aggregate demand curve to the left.

Accepted Answer

A) True 
 B)False

Question 3

Figure 24-2  
-Refer to Figure 24-2.Ceteris paribus,an increase in the labor force 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 4

Figure 24-2  
-Refer to Figure 24-2.Ceteris paribus,a decrease in the capital stock 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 5

One factor which brought on the recession of 2007-2009 was the end of the housing bubble.

Accepted Answer

A) True 
 B)False

Question 6

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 7

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 8

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 9

An increase in the price level will

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 10

If aggregate demand just increased,which of the following may have caused the increase?

Accepted Answer

A)  an increase in government purchases 
B)  an increase in the interest rate 
C)  an increase in the price level 
D)  an increase in imports 
A)  an increase in government purchases 
B)  an increase in the interest rate 
C)  an increase in the price level 
D)  an increase in imports

Question 11

The dynamic aggregate demand and aggregate supply model assumes that potential GDP increases over time.

Accepted Answer

A) True 
 B)False

Question 12

Figure 24-1  
-Refer to Figure 24-1.Ceteris paribus,a decrease in government spending 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 13

Which of the following best describes the "wealth effect"?

Accepted Answer

A)  When the price level falls, the real value of household wealth falls. 
B)  When the price level falls, the nominal value of household wealth falls. 
C)  When the price level falls, the nominal value of household wealth rises. 
D)  When the price level falls, the real value of household wealth rises. 
A)  When the price level falls, the real value of household wealth falls. 
B)  When the price level falls, the nominal value of household wealth falls. 
C)  When the price level falls, the nominal value of household wealth rises. 
D)  When the price level falls, the real value of household wealth rises.

Question 14

The long-run aggregate supply curve will shift to the right if the economy

Accepted Answer

A)  experiences technological change. 
B)  has a decrease in population. 
C)  experiences high levels of inflation. 
D)  net exports decrease. 
A)  experiences technological change. 
B)  has a decrease in population. 
C)  experiences high levels of inflation. 
D)  net exports decrease.

Question 15

Which of the following is considered a negative supply shock?

Accepted Answer

A)  increasing immigration in the economy causes the labor supply to rise 
B)  an improvement in technology 
C)  an increase in unemployment 
D)  an unexpected decrease in the refining capacity for oil 
A)  increasing immigration in the economy causes the labor supply to rise 
B)  an improvement in technology 
C)  an increase in unemployment 
D)  an unexpected decrease in the refining capacity for oil

Question 16

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 17

An increase in the price level results in a(n)________ in the quantity of real GDP demanded because ________.

Accepted Answer

A)  decrease; a higher price level reduces consumption, investment, and net exports. 
B)  increase; a higher price level reduces consumption, investment, and net exports. 
C)  decrease; a higher price level increases consumption, investment, and net exports. 
D)  increase; a higher price level increases consumption, investment, and net exports. 
A)  decrease; a higher price level reduces consumption, investment, and net exports. 
B)  increase; a higher price level reduces consumption, investment, and net exports. 
C)  decrease; a higher price level increases consumption, investment, and net exports. 
D)  increase; a higher price level increases consumption, investment, and net exports.

Question 18

When the aggregate demand curve and the short-run aggregate supply curve intersect,

Accepted Answer

A)  the long-run aggregate supply curve must also intersect at the same point. 
B)  inflation must be increasing. 
C)  structural and frictional unemployment equal zero. 
D)  the economy is in short-run macroeconomic equilibrium. 
A)  the long-run aggregate supply curve must also intersect at the same point. 
B)  inflation must be increasing. 
C)  structural and frictional unemployment equal zero. 
D)  the economy is in short-run macroeconomic equilibrium.

Question 19

Briefly describe monetarism and the monetary growth rule.

Accepted Answer

Monetarism refers to the macroeconomic t

Question 20

An increase in the price level shifts the aggregate demand curve to the left.

Accepted Answer

A) True 
 B)False

Exam 24: Aggregate Demand and Aggregate Supply Analysis

Inflation is generally the result of total spending growing faster than total production.

A decrease in disposable income will shift the aggregate demand curve to the left.

Figure 24-2 -Refer to Figure 24-2.Ceteris paribus,an increase in the labor force would be represented by a movement from

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

One factor which brought on the recession of 2007-2009 was the end of the housing bubble.

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

The long-run aggregate supply curve

Stagflation occurs when

An increase in the price level will

If aggregate demand just increased,which of the following may have caused the increase?

The dynamic aggregate demand and aggregate supply model assumes that potential GDP increases over time.

Figure 24-1 -Refer to Figure 24-1.Ceteris paribus,a decrease in government spending would be represented by a movement from

Which of the following best describes the "wealth effect"?

The long-run aggregate supply curve will shift to the right if the economy

Which of the following is considered a negative supply shock?

An increase in the price level will

An increase in the price level results in a(n)________ in the quantity of real GDP demanded because ________.

When the aggregate demand curve and the short-run aggregate supply curve intersect,

Briefly describe monetarism and the monetary growth rule.

An increase in the price level shifts the aggregate demand curve to the left.

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

An increase in the price level results in a(n) in the quantity of real GDP demanded because .