Question 1

Which of the following is considered a negative supply shock?

Accepted Answer

A) increasing immigration in the economy causes the labor supply to rise 
B) an improvement in technology 
C) an increase in unemployment 
D) an unexpected decrease in the refining capacity for oil 
A) increasing immigration in the economy causes the labor supply to rise 
B) an improvement in technology 
C) an increase in unemployment 
D) an unexpected decrease in the refining capacity for oil

Question 2

For the recession of 2007-2009,it took ________ for employment to return to its cyclical peak.

Accepted Answer

A) about 18 months 
B) about 2.5 years 
C) about 3.5 years 
D) more than 6 years 
A) about 18 months 
B) about 2.5 years 
C) about 3.5 years 
D) more than 6 years

Question 3

In the dynamic aggregate demand and aggregate supply model,what is the result of aggregate demand increasing slower than potential real GDP?

Accepted Answer

Aggregate demand inc

Question 4

Figure 13-3  
-Refer to Figure 13-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y1 represents potential GDP.

Accepted Answer

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

Question 5

Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico which subsequently drove up natural gas,gasoline,and heating oil prices.Three years later,once the refining capacity was restored,these prices came back down.The restoration of refining capacity should

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 6

If aggregate demand just decreased,which of the following may have caused the decrease?

Accepted Answer

A) a decrease in exports 
B) a decrease in the interest rate 
C) a decrease in the price level 
D) a decrease in imports 
A) a decrease in exports 
B) a decrease in the interest rate 
C) a decrease in the price level 
D) a decrease in imports

Question 7

If firms and workers could predict the future price level exactly,the short-run aggregate supply curve would be

Accepted Answer

A) upward sloping. 
B) downward sloping. 
C) horizontal. 
D) vertical. 
A) upward sloping. 
B) downward sloping. 
C) horizontal. 
D) vertical.

Question 8

Changes in the price level

Accepted Answer

A) increase the level of aggregate supply in the long run. 
B) decrease the level of aggregate supply in the long run. 
C) do not affect the level of aggregate supply in the long run. 
D) increase the level of aggregate supply in the long run only at very high levels of output. 
A) increase the level of aggregate supply in the long run. 
B) decrease the level of aggregate supply in the long run. 
C) do not affect the level of aggregate supply in the long run. 
D) increase the level of aggregate supply in the long run only at very high levels of output.

Question 9

Stagflation usually results from

Accepted Answer

A) a supply shock. 
B) a decrease in aggregate demand. 
C) an increase in aggregate supply. 
D) an increase in aggregate demand. 
A) a supply shock. 
B) a decrease in aggregate demand. 
C) an increase in aggregate supply. 
D) an increase in aggregate demand.

Question 10

At a short-run macroeconomic equilibrium,real GDP is always equal to potential GDP.

Accepted Answer

A) True 
 B)False

Question 11

________ of unemployment during ________ make it easier for workers to ________ wages.

Accepted Answer

A) High levels;a recession;negotiate higher 
B) Low levels;an expansion;negotiate higher 
C) Low levels;a recession;accept lower 
D) High levels;an expansion;accept lower 
A) High levels;a recession;negotiate higher 
B) Low levels;an expansion;negotiate higher 
C) Low levels;a recession;accept lower 
D) High levels;an expansion;accept lower

Question 12

During the recession of 2007-2009 in the United States,________ relative to potential GDP.

Accepted Answer

A) business fixed investment spending rose and net export spending declined 
B) consumption spending rose and residential construction spending declined 
C) federal government purchases rose and changes in business inventories declined 
D) net export spending rose and consumption spending declined 
A) business fixed investment spending rose and net export spending declined 
B) consumption spending rose and residential construction spending declined 
C) federal government purchases rose and changes in business inventories declined 
D) net export spending rose and consumption spending declined

Question 13

A decrease in the price level will

Accepted Answer

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

Question 14

For the recession of 2007-2009,it took ________ for real GDP to return to its cyclical peak.

Accepted Answer

A) about 18 months 
B) about 2 year 
C) about 3.5 years 
D) almost 5 years 
A) about 18 months 
B) about 2 year 
C) about 3.5 years 
D) almost 5 years

Question 15

New classical macroeconomic theory emphasizes the role of "sticky" prices in the economy.

Accepted Answer

A) True 
 B)False

Question 16

On average,in the recessions since 1950,it has taken ________ for employment 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

Suppose the economy is at full employment and firms become more pessimistic about the future profitability of new investment.Which of the following will happen in the short run?

Accepted Answer

A) Output will rise. 
B) Prices will rise. 
C) Unemployment will rise. 
D) The aggregate demand curve will shift to the right. 
A) Output will rise. 
B) Prices will rise. 
C) Unemployment will rise. 
D) The aggregate demand curve will shift to the right.

Question 18

An increase in aggregate demand causes an increase in ________ only in the short run,but causes an increase in ________ in both the short run and the long run.

Accepted Answer

A) the price level;real GDP 
B) real GDP;real GDP 
C) the price level;the price level 
D) real GDP;the price level 
A) the price level;real GDP 
B) real GDP;real GDP 
C) the price level;the price level 
D) real GDP;the price level

Question 19

Figure 13-2  
-Refer to Figure 13-2.Ceteris paribus,an increase in the capital stock 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 20

Figure 13-2  
-Refer to Figure 13-2.Ceteris paribus,a decrease 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.

Which of the following is considered a negative supply shock?

For the recession of 2007-2009,it took ________ for employment to return to its cyclical peak.

In the dynamic aggregate demand and aggregate supply model,what is the result of aggregate demand increasing slower than potential real GDP?

Figure 13-3 -Refer to Figure 13-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y1 represents potential GDP.

Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico which subsequently drove up natural gas,gasoline,and heating oil prices.Three years later,once the refining capacity was restored,these prices came back down.The restoration of refining capacity should

If aggregate demand just decreased,which of the following may have caused the decrease?

If firms and workers could predict the future price level exactly,the short-run aggregate supply curve would be

Changes in the price level

Stagflation usually results from

At a short-run macroeconomic equilibrium,real GDP is always equal to potential GDP.

of unemployment during make it easier for workers to wages.

During the recession of 2007-2009 in the United States,________ relative to potential GDP.

A decrease in the price level will

For the recession of 2007-2009,it took ________ for real GDP to return to its cyclical peak.

New classical macroeconomic theory emphasizes the role of "sticky" prices in the economy.

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

Suppose the economy is at full employment and firms become more pessimistic about the future profitability of new investment.Which of the following will happen in the short run?

An increase in aggregate demand causes an increase in only in the short run,but causes an increase in in both the short run and the long run.

Figure 13-2 -Refer to Figure 13-2.Ceteris paribus,an increase in the capital stock would be represented by a movement from

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

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

Which of the following is considered a negative supply shock?

For the recession of 2007-2009,it took ________ for employment to return to its cyclical peak.

In the dynamic aggregate demand and aggregate supply model,what is the result of aggregate demand increasing slower than potential real GDP?

Figure 13-3 -Refer to Figure 13-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y1 represents potential GDP.

Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico which subsequently drove up natural gas,gasoline,and heating oil prices.Three years later,once the refining capacity was restored,these prices came back down.The restoration of refining capacity should

If aggregate demand just decreased,which of the following may have caused the decrease?

If firms and workers could predict the future price level exactly,the short-run aggregate supply curve would be

Changes in the price level

Stagflation usually results from

At a short-run macroeconomic equilibrium,real GDP is always equal to potential GDP.

________ of unemployment during ________ make it easier for workers to ________ wages.

During the recession of 2007-2009 in the United States,________ relative to potential GDP.

A decrease in the price level will

For the recession of 2007-2009,it took ________ for real GDP to return to its cyclical peak.

New classical macroeconomic theory emphasizes the role of "sticky" prices in the economy.

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

Suppose the economy is at full employment and firms become more pessimistic about the future profitability of new investment.Which of the following will happen in the short run?

An increase in aggregate demand causes an increase in ________ only in the short run,but causes an increase in ________ in both the short run and the long run.

Figure 13-2 -Refer to Figure 13-2.Ceteris paribus,an increase in the capital stock would be represented by a movement from

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

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

of unemployment during make it easier for workers to wages.

An increase in aggregate demand causes an increase in only in the short run,but causes an increase in in both the short run and the long run.