Question 1

The short-run aggregate supply curve has a

Accepted Answer

A) negative slope. 
B) positive slope. 
C) slope equal to infinity. 
D) slope equal to zero. 
A) negative slope. 
B) positive slope. 
C) slope equal to infinity. 
D) slope equal to zero.

Question 2

Which of the following would not be considered a positive addition to household wealth?

Accepted Answer

A) the equity in one's home 
B) 1,000 shares of Microsoft stock 
C) a credit card balance 
D) the balance in your checking account 
A) the equity in one's home 
B) 1,000 shares of Microsoft stock 
C) a credit card balance 
D) the balance in your checking account

Question 3

The short-run aggregate supply curve is vertical.

Accepted Answer

A) True 
 B)False

Question 4

Beginning with long-run equilibrium,use the aggregate demand and aggregate supply model to illustrate what happens in the short run when the economy suffers a negative supply shock.

Accepted Answer

@#IMG-DLM& The economy is at point A with the pric

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Which of the following models relies on emphasizing the importance of sticky wages and prices?

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 7

President Bush lowered income taxes for individuals in 2001.Explain how lower income taxes affect the aggregate demand curve.

Accepted Answer

Lowering the income tax increases the am

Question 8

If potential GDP is equal to $600 billion,what does the long-run aggregate supply curve look like?

Accepted Answer

A) It is a horizontal line at $600 billion of GDP. 
B) It is a vertical line at a level of GDP below $600 billion. 
C) It is a vertical line at $600 billion of GDP. 
D) It is a vertical line at a level of GDP above $600 billion. 
A) It is a horizontal line at $600 billion of GDP. 
B) It is a vertical line at a level of GDP below $600 billion. 
C) It is a vertical line at $600 billion of GDP. 
D) It is a vertical line at a level of GDP above $600 billion.

Question 9

If,due to a recession,foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended,this will

Accepted Answer

A) shift the short-run aggregate supply curve of the home country to the left. 
B) shift the short-run aggregate supply curve of the home country to the right. 
C) move the home country's economy up along a stationary short-run aggregate supply curve. 
D) move the home country's economy down along a stationary short-run aggregate supply curve. 
A) shift the short-run aggregate supply curve of the home country to the left. 
B) shift the short-run aggregate supply curve of the home country to the right. 
C) move the home country's economy up along a stationary short-run aggregate supply curve. 
D) move the home country's economy down along a stationary short-run aggregate supply curve.

Question 10

If full-employment GDP is equal to $4.2 trillion,what does the long-run aggregate supply curve look like?

Accepted Answer

A) It is a horizontal line at $4.2 trillion of GDP. 
B) It is a vertical line at a level of GDP below $4.2 trillion. 
C) It is a vertical line at $4.2 trillion of GDP. 
D) It is a vertical line at a level of GDP above $4.2 trillion. 
A) It is a horizontal line at $4.2 trillion of GDP. 
B) It is a vertical line at a level of GDP below $4.2 trillion. 
C) It is a vertical line at $4.2 trillion of GDP. 
D) It is a vertical line at a level of GDP above $4.2 trillion.

Question 11

Which of the following could explain why there is an increase in potential GDP but the equilibrium level of GDP falls?

Accepted Answer

A) SRAS shifted to the right by more than LRAS. 
B) AD shifted to the right by more than SRAS. 
C) AD shifted to the right by less than SRAS. 
D) AD did not shift and SRAS shifted to the left. 
A) SRAS shifted to the right by more than LRAS. 
B) AD shifted to the right by more than SRAS. 
C) AD shifted to the right by less than SRAS. 
D) AD did not shift and SRAS shifted to the left.

Question 12

Figure 13-1  
-Refer to Figure 13-1.Ceteris paribus,an increase in the growth rate of domestic GDP relative to the growth rate of foreign GDP 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

A decrease 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 14

An increase in imports increases aggregate demand.

Accepted Answer

A) True 
 B)False

Question 15

The aggregate demand curve shows the relationship between the ________ and ________.

Accepted Answer

A) inflation rate;quantity of real GDP demanded 
B) real interest rate: quantity of real GDP supplied 
C) nominal interest rate;quantity of real GDP demanded 
D) price level;quantity of real GDP demanded 
A) inflation rate;quantity of real GDP demanded 
B) real interest rate: quantity of real GDP supplied 
C) nominal interest rate;quantity of real GDP demanded 
D) price level;quantity of real GDP demanded

Question 16

On average,in the recessions since 1950,it has taken ________ for real GDP to return to its cyclical peak.

Accepted Answer

A) about 6 months 
B) about 1 year 
C) about 18 months 
D) almost 2.5 years 
A) about 6 months 
B) about 1 year 
C) about 18 months 
D) almost 2.5 years

Question 17

If technological change occurs in the economy,

Accepted Answer

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

Question 18

Figure 13-1  
-Refer to Figure 13-1.Ceteris paribus,an increase in the price level 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 19

Why are the long-run effects of an increase in aggregate demand on price and output different from the short-run effects?

Accepted Answer

The long-run effects differ from the sho

Question 20

The level of long-run aggregate supply is affected by all of the following except

Accepted Answer

A) changes in the price level. 
B) changes in the technology. 
C) changes in the capital stock. 
D) changes in the number of workers. 
A) changes in the price level. 
B) changes in the technology. 
C) changes in the capital stock. 
D) changes in the number of workers.

The short-run aggregate supply curve has a

Which of the following would not be considered a positive addition to household wealth?

The short-run aggregate supply curve is vertical.

Beginning with long-run equilibrium,use the aggregate demand and aggregate supply model to illustrate what happens in the short run when the economy suffers a negative supply shock.

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

Which of the following models relies on emphasizing the importance of sticky wages and prices?

President Bush lowered income taxes for individuals in 2001.Explain how lower income taxes affect the aggregate demand curve.

If potential GDP is equal to $600 billion,what does the long-run aggregate supply curve look like?

If,due to a recession,foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended,this will

If full-employment GDP is equal to $4.2 trillion,what does the long-run aggregate supply curve look like?

Which of the following could explain why there is an increase in potential GDP but the equilibrium level of GDP falls?

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,an increase in the growth rate of domestic GDP relative to the growth rate of foreign GDP would be represented by a movement from

A decrease in the price level will

An increase in imports increases aggregate demand.

The aggregate demand curve shows the relationship between the and .

On average,in the recessions since 1950,it has taken ________ for real GDP to return to its cyclical peak.

If technological change occurs in the economy,

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,an increase in the price level would be represented by a movement from

Why are the long-run effects of an increase in aggregate demand on price and output different from the short-run effects?

The level of long-run aggregate supply is affected by all of the following except

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

The short-run aggregate supply curve has a

Which of the following would not be considered a positive addition to household wealth?

The short-run aggregate supply curve is vertical.

Beginning with long-run equilibrium,use the aggregate demand and aggregate supply model to illustrate what happens in the short run when the economy suffers a negative supply shock.

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

Which of the following models relies on emphasizing the importance of sticky wages and prices?

President Bush lowered income taxes for individuals in 2001.Explain how lower income taxes affect the aggregate demand curve.

If potential GDP is equal to $600 billion,what does the long-run aggregate supply curve look like?

If,due to a recession,foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended,this will

If full-employment GDP is equal to $4.2 trillion,what does the long-run aggregate supply curve look like?

Which of the following could explain why there is an increase in potential GDP but the equilibrium level of GDP falls?

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,an increase in the growth rate of domestic GDP relative to the growth rate of foreign GDP would be represented by a movement from

A decrease in the price level will

An increase in imports increases aggregate demand.

The aggregate demand curve shows the relationship between the ________ and ________.

On average,in the recessions since 1950,it has taken ________ for real GDP to return to its cyclical peak.

If technological change occurs in the economy,

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,an increase in the price level would be represented by a movement from

Why are the long-run effects of an increase in aggregate demand on price and output different from the short-run effects?

The level of long-run aggregate supply is affected by all of the following except

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

The aggregate demand curve shows the relationship between the and .