Question 1

There has been a decrease in investment.As a result,real GDP will ________ in the short run,and ________ in the long run.

Accepted Answer

A) increase;increase further 
B) increase;decrease to its initial value 
C) decrease;decrease further 
D) decrease;increase to its initial level 
A) increase;increase further 
B) increase;decrease to its initial value 
C) decrease;decrease further 
D) decrease;increase to its initial level D

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 C

Question 3

According to the "wealth effect," when the ________ falls,the ________ rises.

Accepted Answer

A) inflation rate;nominal value of household assets 
B) unemployment rate;average level of household income 
C) price level;the nominal value of household wealth 
D) price level;the real value of household wealth 
A) inflation rate;nominal value of household assets 
B) unemployment rate;average level of household income 
C) price level;the nominal value of household wealth 
D) price level;the real value of household wealth D

Question 4

In the dynamic aggregated demand and aggregate supply model,inflation occurs if

Accepted Answer

A) AD shifts faster than SRAS. 
B) AD shifts slower than SRAS. 
C) SRAS shifts faster than AD. 
D) LRAS shifts faster than AD. 
A) AD shifts faster than SRAS. 
B) AD shifts slower than SRAS. 
C) SRAS shifts faster than AD. 
D) LRAS shifts faster than AD.

Question 5

An increase in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?

Accepted Answer

A) The price level will fall,and the level of GDP will rise. 
B) The price level will fall,and the level of GDP will fall. 
C) The price level will rise,and the level of GDP will fall. 
D) The price level will rise,and the level of GDP will be unaffected. 
A) The price level will fall,and the level of GDP will rise. 
B) The price level will fall,and the level of GDP will fall. 
C) The price level will rise,and the level of GDP will fall. 
D) The price level will rise,and the level of GDP will be unaffected.

Question 6

Long-run macroeconomic equilibrium occurs when aggregate demand ________ short-run aggregate supply and they ________ the long-run supply curve.

Accepted Answer

A) equals;intersect at a point to the right of 
B) equals;intersect at a point on 
C) is greater than;intersect at a point to the left of 
D) is less than;intersect at a point to the right of 
A) equals;intersect at a point to the right of 
B) equals;intersect at a point on 
C) is greater than;intersect at a point to the left of 
D) is less than;intersect at a point to the right of

Question 7

Refer to the Article Summary.The unexpected increase in the supply of oil mentioned in the article summary resulted in a decrease in the price of oil.When the price of oil falls unexpectedly due to a supply shock,the equilibrium price level ________ and the unemployment rate ________ in the short run.

Accepted Answer

A) rises;falls 
B) rises;rises 
C) falls;falls 
D) falls;rises 
A) rises;falls 
B) rises;rises 
C) falls;falls 
D) falls;rises

Question 8

In the long run,

Accepted Answer

A) GDP > potential GDP. 
B) unemployment is at its natural rate. 
C) LRAS and SRAS lie on the same line. 
D) the inflation rate is zero. 
A) GDP > potential GDP. 
B) unemployment is at its natural rate. 
C) LRAS and SRAS lie on the same line. 
D) the inflation rate is zero.

Question 9

The new Keynesians emphasize the importance of

Accepted Answer

A) rational expectations. 
B) the monetary growth rule. 
C) real causes of the business cycle. 
D) sticky wages and prices. 
A) rational expectations. 
B) the monetary growth rule. 
C) real causes of the business cycle. 
D) sticky wages and prices.

Question 10

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

Accepted Answer

A) output and input prices generally fall 
B) lower wages increase your incentive to find employment elsewhere 
C) output prices always fall 
D) output prices generally fall and input prices generally rise 
A) output and input prices generally fall 
B) lower wages increase your incentive to find employment elsewhere 
C) output prices always fall 
D) output prices generally fall and input prices generally rise

Question 11

Proponents of the ________ model argue that the short-run supply curve is vertical.

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 12

The ________ curve has a positive slope because as prices of final goods and services rise,prices of inputs rise more slowly.

Accepted Answer

A) short-run aggregate supply 
B) long-run aggregate supply 
C) short-run aggregate demand 
D) long-run aggregate demand 
A) short-run aggregate supply 
B) long-run aggregate supply 
C) short-run aggregate demand 
D) long-run aggregate demand

Question 13

Figure 13-4  
-Refer to Figure 13-4.Given the economy is at point A in year 1,what will happen to the price level in year 2?

Accepted Answer

A) It will rise. 
B) It will fall. 
C) It will remain constant. 
D) not enough information to answer the question 
A) It will rise. 
B) It will fall. 
C) It will remain constant. 
D) not enough information to answer the question

Question 14

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 15

Figure 13-3  
-Refer to Figure 13-3.Which of the points in the above graph are possible short-run equilibria?

Accepted Answer

A) A and B 
B) A and C 
C) A and D 
D) A,B,C,and D 
A) A and B 
B) A and C 
C) A and D 
D) A,B,C,and D

Question 16

Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

Accepted Answer

A) Output will decrease. 
B) Prices will increase. 
C) Unemployment will rise. 
D) Short-run aggregate supply will shift to the right. 
A) Output will decrease. 
B) Prices will increase. 
C) Unemployment will rise. 
D) Short-run aggregate supply will shift to the right.

Question 17

Potential GDP refers to the level of

Accepted Answer

A) real GDP in the long run. 
B) nominal GDP in the long run. 
C) real GDP in the short run. 
D) nominal GDP in the short run. 
A) real GDP in the long run. 
B) nominal GDP in the long run. 
C) real GDP in the short run. 
D) nominal GDP in the short run.

Question 18

The basic aggregate demand and aggregate supply curve model helps explain ________ fluctuations in real GDP and the price level.

Accepted Answer

A) short-term 
B) long-term 
C) both short-term and long-term 
D) unrelated 
A) short-term 
B) long-term 
C) both short-term and long-term 
D) unrelated

Question 19

Explain how the aggregate demand and aggregate supply model can be made more dynamic.

Accepted Answer

We can make the aggregate demand and agg

Question 20

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

There has been a decrease in investment.As a result,real GDP will in the short run,and in the long run.

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.

According to the "wealth effect," when the falls,the rises.

In the dynamic aggregated demand and aggregate supply model,inflation occurs if

An increase in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?

Long-run macroeconomic equilibrium occurs when aggregate demand short-run aggregate supply and they the long-run supply curve.

Refer to the Article Summary.The unexpected increase in the supply of oil mentioned in the article summary resulted in a decrease in the price of oil.When the price of oil falls unexpectedly due to a supply shock,the equilibrium price level and the unemployment rate in the short run.

In the long run,

The new Keynesians emphasize the importance of

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

Proponents of the ________ model argue that the short-run supply curve is vertical.

The ________ curve has a positive slope because as prices of final goods and services rise,prices of inputs rise more slowly.

Figure 13-4 -Refer to Figure 13-4.Given the economy is at point A in year 1,what will happen to the price level in year 2?

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 13-3 -Refer to Figure 13-3.Which of the points in the above graph are possible short-run equilibria?

Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

Potential GDP refers to the level of

The basic aggregate demand and aggregate supply curve model helps explain ________ fluctuations in real GDP and the price level.

Explain how the aggregate demand and aggregate supply model can be made more dynamic.

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

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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

Exam 13: Aggregate Demand and Aggregate Supply Analysis

There has been a decrease in investment.As a result,real GDP will ________ in the short run,and ________ in the long run.

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.

According to the "wealth effect," when the ________ falls,the ________ rises.

In the dynamic aggregated demand and aggregate supply model,inflation occurs if

An increase in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?

Long-run macroeconomic equilibrium occurs when aggregate demand ________ short-run aggregate supply and they ________ the long-run supply curve.

In the long run,

The new Keynesians emphasize the importance of

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

Proponents of the ________ model argue that the short-run supply curve is vertical.

The ________ curve has a positive slope because as prices of final goods and services rise,prices of inputs rise more slowly.

Figure 13-4 -Refer to Figure 13-4.Given the economy is at point A in year 1,what will happen to the price level in year 2?

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 13-3 -Refer to Figure 13-3.Which of the points in the above graph are possible short-run equilibria?

Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

Potential GDP refers to the level of

The basic aggregate demand and aggregate supply curve model helps explain ________ fluctuations in real GDP and the price level.

Explain how the aggregate demand and aggregate supply model can be made more dynamic.

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

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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

There has been a decrease in investment.As a result,real GDP will in the short run,and in the long run.

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.

According to the "wealth effect," when the falls,the rises.

Long-run macroeconomic equilibrium occurs when aggregate demand short-run aggregate supply and they the long-run supply curve.

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.