Question 1

What is the relationship among the AD,SRAS and LRAS curves when the economy is in macroeconomic equilibrium?

Accepted Answer

When the economy is in long-ru

Question 2

Which of the following would cause the short-run aggregate supply curve to shift to the left?

Accepted Answer

A) an increase in the price level 
B) an increase in inflation expectations 
C) a technological advance 
D) a decrease in interest rates 
A) an increase in the price level 
B) an increase in inflation expectations 
C) a technological advance 
D) a decrease in interest rates

Question 3

Starting from long-run equilibrium,use the basic aggregate demand and aggregate supply diagram to show what happens in both the long run and the short run when there is an increase in wealth.

Accepted Answer

@#IMG-DLM& Before the increase in demand,the econo

Question 4

Explain the three reasons the aggregate demand curve slopes downward.

Accepted Answer

The three reasons are the wealth effect,

Question 5

What variables cause the short-run aggregate supply curve to shift? For each variable,identify whether an increase in that variable will cause the short-run aggregate supply curve to shift to the right or to the left.

Accepted Answer

The variables that will cause the short-

Question 6

Deflation will

Accepted Answer

A) increase aggregate demand. 
B) increase the quantity of real GDP demanded. 
C) decrease aggregate demand. 
D) decrease the quantity of real GDP demanded. 
A) increase aggregate demand. 
B) increase the quantity of real GDP demanded. 
C) decrease aggregate demand. 
D) decrease the quantity of real GDP demanded.

Question 7

The proponents of rational expectations and monetarism think that the Federal Reserve should adopt

Accepted Answer

A) an inflation target. 
B) a monetary aggregate target. 
C) a constant monetary growth rule. 
D) an interest rate target. 
A) an inflation target. 
B) a monetary aggregate target. 
C) a constant monetary growth rule. 
D) an interest rate target.

Question 8

Figure 13-2  
-Refer to Figure 13-2.Ceteris paribus,an increase in the expected future price level 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 9

The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off

Accepted Answer

A) government spending. 
B) government spending and unplanned investment. 
C) investment and consumption spending. 
D) net exports. 
A) government spending. 
B) government spending and unplanned investment. 
C) investment and consumption spending. 
D) net exports.

Question 10

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

Accepted Answer

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

Question 11

Figure 13-4  
-Refer to Figure 13-4.Given the economy is at point A in year 1,what is the difference between the actual growth rate in GDP in year 2 and the potential growth rate in GDP in year 2?

Accepted Answer

A) 0.3% 
B) 1.1% 
C) 2.7% 
D) 3.7% 
A) 0.3% 
B) 1.1% 
C) 2.7% 
D) 3.7%

Question 12

Using an aggregate demand graph,illustrate the impact of an increase in the interest rate.

Accepted Answer

@#IMG-DLM& The increase in the interest rate will

Question 13

If the U.S.dollar increases in value relative to other currencies,how does this affect the aggregate demand curve?

Accepted Answer

A) This will move the economy up along a stationary aggregate demand curve. 
B) This will move the economy down along a stationary aggregate demand curve. 
C) This will shift the aggregate demand curve to the left. 
D) This will shift the aggregate demand curve to the right. 
A) This will move the economy up along a stationary aggregate demand curve. 
B) This will move the economy down along a stationary aggregate demand curve. 
C) This will shift the aggregate demand curve to the left. 
D) This will shift the aggregate demand curve to the right.

Question 14

The real business cycle model focuses on how

Accepted Answer

A) wage and price stickiness explains fluctuations in real GDP. 
B) the labor theory of value is the best measure of value of a good or service. 
C) the Federal Reserve should adopt a monetary growth rule. 
D) productivity shocks explain fluctuations in real GDP. 
A) wage and price stickiness explains fluctuations in real GDP. 
B) the labor theory of value is the best measure of value of a good or service. 
C) the Federal Reserve should adopt a monetary growth rule. 
D) productivity shocks explain fluctuations in real GDP.

Question 15

Explain how the economy moves back to full employment from recession.Be sure to detail what happens to short-run aggregate supply,unemployment,equilibrium GDP and the price level.

Accepted Answer

When an economy enters a recession,sales

Question 16

The automatic mechanism ________ the price level in the case of ________ and ________ the price level in the case of ________.

Accepted Answer

A) raises;recession;lowers;expansion 
B) raises;expansion raises;recession 
C) lowers;expansion;lowers;recession 
D) lowers;recession;raises;expansion 
A) raises;recession;lowers;expansion 
B) raises;expansion raises;recession 
C) lowers;expansion;lowers;recession 
D) lowers;recession;raises;expansion

Question 17

In the dynamic aggregated demand and aggregate supply model,if AD shifts faster than AS,

Accepted Answer

A) inflation occurs. 
B) deflation occurs. 
C) stagflation occurs. 
D) disinflation occurs. 
A) inflation occurs. 
B) deflation occurs. 
C) stagflation occurs. 
D) disinflation occurs.

Question 18

Interest rates in the economy have risen.How will this affect aggregate demand and equilibrium in the short run?

Accepted Answer

A) Aggregate demand will fall,the equilibrium price level will fall,and the equilibrium level of GDP will fall. 
B) Aggregate demand will fall,the equilibrium price level will rise,and the equilibrium level of GDP will fall. 
C) Aggregate demand will rise,the equilibrium price level will rise,and the equilibrium level of GDP will rise. 
D) Aggregate demand will rise,the equilibrium price level will fall,and the equilibrium level of GDP will rise. 
A) Aggregate demand will fall,the equilibrium price level will fall,and the equilibrium level of GDP will fall. 
B) Aggregate demand will fall,the equilibrium price level will rise,and the equilibrium level of GDP will fall. 
C) Aggregate demand will rise,the equilibrium price level will rise,and the equilibrium level of GDP will rise. 
D) Aggregate demand will rise,the equilibrium price level will fall,and the equilibrium level of GDP will rise.

Question 19

According to the real business cycle model,

Accepted Answer

A) increases in aggregate demand raise GDP. 
B) increases in aggregate demand lower GDP. 
C) increases in aggregate demand do not affect GDP. 
D) increases in aggregate demand lower the price level. 
A) increases in aggregate demand raise GDP. 
B) increases in aggregate demand lower GDP. 
C) increases in aggregate demand do not affect GDP. 
D) increases in aggregate demand lower the price level.

Question 20

Full-employment GDP is also known as

Accepted Answer

A) realized GDP. 
B) potential GDP. 
C) politico-economic GDP. 
D) balanced-budget GDP. 
A) realized GDP. 
B) potential GDP. 
C) politico-economic GDP. 
D) balanced-budget GDP.

What is the relationship among the AD,SRAS and LRAS curves when the economy is in macroeconomic equilibrium?

Which of the following would cause the short-run aggregate supply curve to shift to the left?

Starting from long-run equilibrium,use the basic aggregate demand and aggregate supply diagram to show what happens in both the long run and the short run when there is an increase in wealth.

Explain the three reasons the aggregate demand curve slopes downward.

What variables cause the short-run aggregate supply curve to shift? For each variable,identify whether an increase in that variable will cause the short-run aggregate supply curve to shift to the right or to the left.

Deflation will

The proponents of rational expectations and monetarism think that the Federal Reserve should adopt

Figure 13-2 -Refer to Figure 13-2.Ceteris paribus,an increase in the expected future price level would be represented by a movement from

The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off

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

Figure 13-4 -Refer to Figure 13-4.Given the economy is at point A in year 1,what is the difference between the actual growth rate in GDP in year 2 and the potential growth rate in GDP in year 2?

Using an aggregate demand graph,illustrate the impact of an increase in the interest rate.

If the U.S.dollar increases in value relative to other currencies,how does this affect the aggregate demand curve?

The real business cycle model focuses on how

Explain how the economy moves back to full employment from recession.Be sure to detail what happens to short-run aggregate supply,unemployment,equilibrium GDP and the price level.

The automatic mechanism the price level in the case of and the price level in the case of .

In the dynamic aggregated demand and aggregate supply model,if AD shifts faster than AS,

Interest rates in the economy have risen.How will this affect aggregate demand and equilibrium in the short run?

According to the real business cycle model,

Full-employment GDP is also known as

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

What is the relationship among the AD,SRAS and LRAS curves when the economy is in macroeconomic equilibrium?

Which of the following would cause the short-run aggregate supply curve to shift to the left?

Starting from long-run equilibrium,use the basic aggregate demand and aggregate supply diagram to show what happens in both the long run and the short run when there is an increase in wealth.

Explain the three reasons the aggregate demand curve slopes downward.

What variables cause the short-run aggregate supply curve to shift? For each variable,identify whether an increase in that variable will cause the short-run aggregate supply curve to shift to the right or to the left.

Deflation will

The proponents of rational expectations and monetarism think that the Federal Reserve should adopt

Figure 13-2 -Refer to Figure 13-2.Ceteris paribus,an increase in the expected future price level would be represented by a movement from

The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off

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

Figure 13-4 -Refer to Figure 13-4.Given the economy is at point A in year 1,what is the difference between the actual growth rate in GDP in year 2 and the potential growth rate in GDP in year 2?

Using an aggregate demand graph,illustrate the impact of an increase in the interest rate.

If the U.S.dollar increases in value relative to other currencies,how does this affect the aggregate demand curve?

The real business cycle model focuses on how

Explain how the economy moves back to full employment from recession.Be sure to detail what happens to short-run aggregate supply,unemployment,equilibrium GDP and the price level.

The automatic mechanism ________ the price level in the case of ________ and ________ the price level in the case of ________.

In the dynamic aggregated demand and aggregate supply model,if AD shifts faster than AS,

Interest rates in the economy have risen.How will this affect aggregate demand and equilibrium in the short run?

According to the real business cycle model,

Full-employment GDP is also known as

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 automatic mechanism the price level in the case of and the price level in the case of .