Question 1

Deflation can cause the economy's aggregate demand curve to shift inward because debt contracts are:

Accepted Answer

A)  adjusted for inflation. 
B)  not adjusted for inflation. 
C)  adjusted for changes in the interest rate. 
D)  not adjusted for changes in the interest rate. 
A)  adjusted for inflation. 
B)  not adjusted for inflation. 
C)  adjusted for changes in the interest rate. 
D)  not adjusted for changes in the interest rate.

Question 2

Decreased import growth represents a positive AD shock.

Accepted Answer

A) True 
 B)False

Question 3

Business fluctuations are fluctuations in the:

Accepted Answer

A)  level of real GDP around its long-term trend. 
B)  level of nominal GDP around its long-term trend. 
C)  growth rate of real GDP around its trend growth rate. 
D)  growth rate of nominal GDP around its trend growth rate. 
A)  level of real GDP around its long-term trend. 
B)  level of nominal GDP around its long-term trend. 
C)  growth rate of real GDP around its trend growth rate. 
D)  growth rate of nominal GDP around its trend growth rate.

Question 4

The aggregate demand curve shows the relationship between the:

Accepted Answer

A)  growth rate of real output and the inflation rate. 
B)  inflation rate and the growth rate of the money supply. 
C)  growth rate of real output and the growth rate of the money supply. 
D)  growth rate of consumption and the inflation rate. 
A)  growth rate of real output and the inflation rate. 
B)  inflation rate and the growth rate of the money supply. 
C)  growth rate of real output and the growth rate of the money supply. 
D)  growth rate of consumption and the inflation rate.

Question 5

In the AD-AS model,an unexpected increase in the growth rate of the money supply:

Accepted Answer

A)  decreases both the inflation and real growth rates in the short run. 
B)  increases both the inflation and real growth rates in the short run. 
C)  decreases both the inflation and real growth rates in the long run. 
D)  increases both the inflation and real growth rates in the long run. 
A)  decreases both the inflation and real growth rates in the short run. 
B)  increases both the inflation and real growth rates in the short run. 
C)  decreases both the inflation and real growth rates in the long run. 
D)  increases both the inflation and real growth rates in the long run.

Question 6

Increased spending growth shifts the AD curve inward,and decreased spending growth shifts the AD curve outward.

Accepted Answer

A) True 
 B)False

Question 7

An increase in inflation immediately causes a downward shift of the short-run aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 8

The slope of the aggregate demand curve is equal to 1.

Accepted Answer

A) True 
 B)False

Question 9

What was one of the federal government policy failures in 1930 that contributed to the Great Depression?

Accepted Answer

A)  the Smoot-Hawley Tariff 
B)  the declaration of a bank "holiday" 
C)  the elimination of bank deposit insurance 
D)  the creation of the Federal Reserve 
A)  the Smoot-Hawley Tariff 
B)  the declaration of a bank "holiday" 
C)  the elimination of bank deposit insurance 
D)  the creation of the Federal Reserve

Question 10

Business fluctuations are variations in:

Accepted Answer

A)  real income (GDP)growth around its trend growth rate. 
B)  inflation around its trend growth rate. 
C)  the unemployment rate around its trend growth rate. 
D)  mortgage defaults around their trend growth rate. 
A)  real income (GDP)growth around its trend growth rate. 
B)  inflation around its trend growth rate. 
C)  the unemployment rate around its trend growth rate. 
D)  mortgage defaults around their trend growth rate.

Question 11

Which of the following causes the AD curve to shift left?

Accepted Answer

A)  a tax cut 
B)  increased consumer confidence 
C)  increased import growth 
D)  an increase in business investment 
A)  a tax cut 
B)  increased consumer confidence 
C)  increased import growth 
D)  an increase in business investment

Question 12

An increase in spending growth causes:

Accepted Answer

A)  an upward movement along the AD curve. 
B)  a downward movement along the AD curve. 
C)  a rightward shift of the AD curve. 
D)  a leftward shift of the AD curve. 
A)  an upward movement along the AD curve. 
B)  a downward movement along the AD curve. 
C)  a rightward shift of the AD curve. 
D)  a leftward shift of the AD curve.

Question 13

In the AD-AS model, $\vec { M }$ represents the:

Accepted Answer

A)  money supply. 
B)  money velocity. 
C)  rate of money supply growth. 
D)  rate of money velocity growth. 
A)  money supply. 
B)  money velocity. 
C)  rate of money supply growth. 
D)  rate of money velocity growth.

Question 14

(Figure: Three AD Curves)In the accompanying diagram,the economy's long-run growth rate following a positive money shock would be:

Accepted Answer

A)  2%. 
B)  3%. 
C)  4%. 
D)  6%. 
A)  2%. 
B)  3%. 
C)  4%. 
D)  6%.

Question 15

The AD-AS model is most useful for explaining what causes:

Accepted Answer

A)  the economy's long-run growth rate. 
B)  inflation. 
C)  stock market fluctuations. 
D)  fluctuations in GDP growth around its trend rate. 
A)  the economy's long-run growth rate. 
B)  inflation. 
C)  stock market fluctuations. 
D)  fluctuations in GDP growth around its trend rate.

Question 16

A temporary decrease in spending decreases both inflation and real growth in the long run.

Accepted Answer

A) True 
 B)False

Question 17

An increase in the growth rate of velocity shifts the aggregate demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 18

In a diagram with the inflation rate on the vertical axis and the real growth rate on the horizontal axis,the long-run aggregate supply curve is:

Accepted Answer

A)  upward sloping. 
B)  downward sloping. 
C)  a vertical line at the Solow growth rate. 
D)  a horizontal line at the expected inflation rate. 
A)  upward sloping. 
B)  downward sloping. 
C)  a vertical line at the Solow growth rate. 
D)  a horizontal line at the expected inflation rate.

Question 19

Money is always neutral in the AD-AS model.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following scenarios could result in a recession?

Accepted Answer

A)  Aggregate demand decreases,and wages are flexible. 
B)  Aggregate demand decreases,and wages are sticky. 
C)  Aggregate demand increases,and wages are flexible. 
D)  Aggregate demand increases,and wages are sticky. 
A)  Aggregate demand decreases,and wages are flexible. 
B)  Aggregate demand decreases,and wages are sticky. 
C)  Aggregate demand increases,and wages are flexible. 
D)  Aggregate demand increases,and wages are sticky.

Exam 13: Business Fluctuations

Deflation can cause the economy's aggregate demand curve to shift inward because debt contracts are:

Decreased import growth represents a positive AD shock.

Business fluctuations are fluctuations in the:

The aggregate demand curve shows the relationship between the:

In the AD-AS model,an unexpected increase in the growth rate of the money supply:

Increased spending growth shifts the AD curve inward,and decreased spending growth shifts the AD curve outward.

An increase in inflation immediately causes a downward shift of the short-run aggregate supply curve.

The slope of the aggregate demand curve is equal to 1.

What was one of the federal government policy failures in 1930 that contributed to the Great Depression?

Business fluctuations are variations in:

Which of the following causes the AD curve to shift left?

An increase in spending growth causes:

In the AD-AS model, M⃗\vec { M }M represents the:

(Figure: Three AD Curves)In the accompanying diagram,the economy's long-run growth rate following a positive money shock would be:

The AD-AS model is most useful for explaining what causes:

A temporary decrease in spending decreases both inflation and real growth in the long run.

An increase in the growth rate of velocity shifts the aggregate demand curve to the right.

In a diagram with the inflation rate on the vertical axis and the real growth rate on the horizontal axis,the long-run aggregate supply curve is:

Money is always neutral in the AD-AS model.

Which of the following scenarios could result in a recession?

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

In the AD-AS model, $\vec { M }$ represents the: