Question 1

If $\vec { v }$ = 4%, $\vec { P }$ = 3%,and $\vec { Y } _ { R }$ = 2%,then $\vec{ M }$ must equal:

Accepted Answer

A)  1%. 
B)  2%. 
C)  6%. 
D)  7%. 
A)  1%. 
B)  2%. 
C)  6%. 
D)  7%.

Question 2

Use the following to answer questions 
Figure: Long-Run Aggregate Supply Curves  
-(Figure: Long-Run Aggregate Supply Curves)Which of the following can explain the shift of the long-run aggregate supply curve from A to B in the figure?

Accepted Answer

A)  development of new technology 
B)  war 
C)  negative supply shock 
D)  oil crisis 
A)  development of new technology 
B)  war 
C)  negative supply shock 
D)  oil crisis

Question 3

Which of the following contributed to the deep economic downturn of the Great Depression?

Accepted Answer

A)  Money growth declined dramatically. 
B)  Consumption growth declined dramatically. 
C)  Investment growth declined dramatically. 
D)  Money growth,consumption growth,and investment growth all declined dramatically. 
A)  Money growth declined dramatically. 
B)  Consumption growth declined dramatically. 
C)  Investment growth declined dramatically. 
D)  Money growth,consumption growth,and investment growth all declined dramatically.

Question 4

The economy's aggregate demand curve shows all combinations of _____ that are consistent with a specified rate of spending growth.

Accepted Answer

A)  inflation and the unemployment rate 
B)  inflation and real GDP growth 
C)  economic growth and the unemployment rate 
D)  the price level and real GDP 
A)  inflation and the unemployment rate 
B)  inflation and real GDP growth 
C)  economic growth and the unemployment rate 
D)  the price level and real GDP

Question 5

The short-run aggregate supply curve is upward-sloping because:

Accepted Answer

A)  in the short run,an increase in spending leads to an increase in output. 
B)  wages increase with an increase in output in the short run. 
C)  wages and prices are sticky in the short run. 
D)  an increase in spending only leads to an increase in prices. 
A)  in the short run,an increase in spending leads to an increase in output. 
B)  wages increase with an increase in output in the short run. 
C)  wages and prices are sticky in the short run. 
D)  an increase in spending only leads to an increase in prices.

Question 6

If the growth rate of the money supply in an economy is 5%,the growth rate of output is 2%,and the velocity of money is constant,what will the inflation rate in this economy be?

Accepted Answer

A)  2% 
B)  3% 
C)  5% 
D)  7% 
A)  2% 
B)  3% 
C)  5% 
D)  7%

Question 7

An increase in the growth rate of real output will cause the aggregate demand curve to shift to the right.

Accepted Answer

A) True 
 B)False

Question 8

An unexpected outward shift of the economy's AD curve will cause real GDP growth to increase in:

Accepted Answer

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

Question 9

In the AD-AS model,changes in the growth rates of C,I,G,and NX are interpreted as changes in:

Accepted Answer

A)  money supply. 
B)  velocity growth. 
C)  price levels. 
D)  money supply growth. 
A)  money supply. 
B)  velocity growth. 
C)  price levels. 
D)  money supply growth.

Question 10

Which of the following best describes the conditions during the Great Depression?

Accepted Answer

A)  Both real GDP growth and inflation were negative. 
B)  Real GDP growth was negative while inflation was very high. 
C)  Both real GDP growth and inflation were historically high. 
D)  Real GDP growth was high while inflation was negative. 
A)  Both real GDP growth and inflation were negative. 
B)  Real GDP growth was negative while inflation was very high. 
C)  Both real GDP growth and inflation were historically high. 
D)  Real GDP growth was high while inflation was negative.

Question 11

Which of the following explains why the inflation rate is slow to adjust over time?

Accepted Answer

A)  People can perfectly predict the inflation rate. 
B)  There are high menu costs of changing prices. 
C)  Workers respond to nominal wages instead of real wages. 
D)  Too many shocks exist in an economy. 
A)  People can perfectly predict the inflation rate. 
B)  There are high menu costs of changing prices. 
C)  Workers respond to nominal wages instead of real wages. 
D)  Too many shocks exist in an economy.

Question 12

The aggregate demand curve shows all the combinations of _____ that are consistent with a specified rate of spending growth.

Accepted Answer

A)  employment rates and price levels 
B)  inflation and real GDP growth rates 
C)  nominal GDP and real GDP 
D)  money velocity and money supply 
A)  employment rates and price levels 
B)  inflation and real GDP growth rates 
C)  nominal GDP and real GDP 
D)  money velocity and money supply

Question 13

As a result of an increase in expected inflation,the:

Accepted Answer

A)  LRAS curve shifts to the left. 
B)  LRAS curve shifts to the right. 
C)  SRAS curve shifts up and to the left. 
D)  SRAS curve shifts down and to the right. 
A)  LRAS curve shifts to the left. 
B)  LRAS curve shifts to the right. 
C)  SRAS curve shifts up and to the left. 
D)  SRAS curve shifts down and to the right.

Question 14

The aggregate demand curve has a slope of -1,so that a one-percentage point reduction in inflation contributes to a one-percentage point increase in real GDP growth,other things equal.

Accepted Answer

A) True 
 B)False

Question 15

If the growth rate of money is 3% and the growth rate of velocity is 1%,the growth rate of nominal GDP is:

Accepted Answer

A)  0%. 
B)  1%. 
C)  2%. 
D)  4%. 
A)  0%. 
B)  1%. 
C)  2%. 
D)  4%.

Question 16

The short-run aggregate supply curve slopes upward because prices and wages are sticky.

Accepted Answer

A) True 
 B)False

Question 17

A temporary decrease in spending decreases inflation but not real growth in the long run.

Accepted Answer

A) True 
 B)False

Question 18

A negative real shock causes:

Accepted Answer

A)  a lower inflation rate and a lower real growth rate. 
B)  a lower inflation rate and a higher real growth rate. 
C)  a higher inflation rate and a lower real growth rate. 
D)  a higher inflation rate and a higher real growth rate. 
A)  a lower inflation rate and a lower real growth rate. 
B)  a lower inflation rate and a higher real growth rate. 
C)  a higher inflation rate and a lower real growth rate. 
D)  a higher inflation rate and a higher real growth rate.

Question 19

If $\vec{ M }$ = 5%, $\vec { v }$ = -3%,and $\vec{ P }$ = 2%,then $\vec { Y } _ { R }$ must equal:

Accepted Answer

A)  -3% 
B)  -2% 
C)  0% 
D)  2% 
A)  -3% 
B)  -2% 
C)  0% 
D)  2%

Question 20

A temporary positive shock to spending growth will lead to an increase in:

Accepted Answer

A)  output in both the short run and the long run. 
B)  both output and prices in the short run,but only prices in the long run. 
C)  both prices and output in the short run,but only output in the long run. 
D)  output and prices in the short run,but no change in either in the long run. 
A)  output in both the short run and the long run. 
B)  both output and prices in the short run,but only prices in the long run. 
C)  both prices and output in the short run,but only output in the long run. 
D)  output and prices in the short run,but no change in either in the long run.

Exam 13: Business Fluctuations

If v⃗\vec { v }v = 4%, P⃗\vec { P }P = 3%,and Y⃗R\vec { Y } _ { R }YR​ = 2%,then M⃗\vec{ M }M must equal:

Use the following to answer questions Figure: Long-Run Aggregate Supply Curves -(Figure: Long-Run Aggregate Supply Curves)Which of the following can explain the shift of the long-run aggregate supply curve from A to B in the figure?

Which of the following contributed to the deep economic downturn of the Great Depression?

The economy's aggregate demand curve shows all combinations of _____ that are consistent with a specified rate of spending growth.

The short-run aggregate supply curve is upward-sloping because:

If the growth rate of the money supply in an economy is 5%,the growth rate of output is 2%,and the velocity of money is constant,what will the inflation rate in this economy be?

An increase in the growth rate of real output will cause the aggregate demand curve to shift to the right.

An unexpected outward shift of the economy's AD curve will cause real GDP growth to increase in:

In the AD-AS model,changes in the growth rates of C,I,G,and NX are interpreted as changes in:

Which of the following best describes the conditions during the Great Depression?

Which of the following explains why the inflation rate is slow to adjust over time?

The aggregate demand curve shows all the combinations of _____ that are consistent with a specified rate of spending growth.

As a result of an increase in expected inflation,the:

The aggregate demand curve has a slope of -1,so that a one-percentage point reduction in inflation contributes to a one-percentage point increase in real GDP growth,other things equal.

If the growth rate of money is 3% and the growth rate of velocity is 1%,the growth rate of nominal GDP is:

The short-run aggregate supply curve slopes upward because prices and wages are sticky.

A temporary decrease in spending decreases inflation but not real growth in the long run.

A negative real shock causes:

If M⃗\vec{ M }M = 5%, v⃗\vec { v }v = -3%,and P⃗\vec{ P }P = 2%,then Y⃗R\vec { Y } _ { R }YR​ must equal:

A temporary positive shock to spending growth will lead to an increase in:

The Big Ideas

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

If $\vec { v }$ = 4%, $\vec { P }$ = 3%,and $\vec { Y } _ { R }$ = 2%,then $\vec{ M }$ must equal:

If $\vec{ M }$ = 5%, $\vec { v }$ = -3%,and $\vec{ P }$ = 2%,then $\vec { Y } _ { R }$ must equal: