Question 1

Which of the following will shift the aggregate demand curve to the right,ceteris paribus?

Accepted Answer

A) an increase in interest rates 
B) a decrease in disposable income 
C) a decrease in expected profits for firms 
D) an increase in net exports

Question 2

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

Question 3

Most economists agree that an automatic mechanism brings the economy back to potential GDP in the long run.In mid-2011,two years after the recession of 2007-2009 had ended,real GDP in the United States

Accepted Answer

A) had returned to potential GDP. 
B) had exceeded potential GDP by 1.5 percent. 
C) remained more than 7 percent below potential GDP. 
D) was predicted to never return to potential GDP.

Question 4

Figure 13-4 
-Refer to Figure 13-4.In the figure above,LRAS1 and SRAS1 denote LRAS and SRAS in year 1,while LRAS2 and SRAS2 denote LRAS and SRAS in year 2.Given the economy is at point A in year 1,what is the growth rate in potential GDP in year 2?

Accepted Answer

A) 8% 
B) 9.1% 
C) 10% 
D) 12%

Question 5

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

Question 6

Explain how each of the following events would affect the long-run aggregate supply curve.
a.A lower price level
b.A decrease in the labor force
c.A decrease in the quantity of capital goods
d.Technological change

Accepted Answer

The answer of Explain how each of the following events...

Question 7

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

Question 8

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

Question 9

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.

Question 10

The long-run aggregate supply curve shows the relationship between

Accepted Answer

A) short-run aggregate supply and short-run aggregate demand. 
B) the price level and quantity of real GDP supplied. 
C) the real interest rate and the nominal interest rate. 
D) the quantity of real GDP supplied and the quantity of nominal GDP supplied.

Question 11

On the long-run aggregate supply curve,

Accepted Answer

A) an increase in the price level increases the aggregate quantity of GDP supplied. 
B) an increase in the price level reduces the aggregate quantity of GDP supplied. 
C) an increase in the price level has no effect on the aggregate quantity of GDP supplied. 
D) an increase in the price level increases the level of potential GDP.

Question 12

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

Accepted Answer

The answer of Using an aggregate demand graph,illustrate the impact...

Question 13

Declines in spending on residential construction are often due to increases in interest rates.The collapse in residential construction prior to and during the recession of 2007-2009 was due more to ________ than to higher interest rates.

Accepted Answer

A) the financial crisis that began in 2007 
B) the rapid inflation of the early 2000s 
C) increases in the price of lumber 
D) rising wages in the construction industry

Question 14

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

Accepted Answer

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

Question 15

Figure 13-3 
-Refer to Figure 13-3.Suppose the economy is at point A.If investment spending increases in the economy,where will the eventual long-run equilibrium be?

Accepted Answer

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

Question 16

________ 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

Question 17

Figure 13-2 
-Refer to Figure 13-2.Ceteris paribus,an increase in productivity 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.

Question 18

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

Accepted Answer

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

Question 19

The long-run aggregate supply curve

Accepted Answer

A) has a negative slope. 
B) has a steep but positive slope. 
C) is horizontal. 
D) is vertical.

Question 20

After an unexpected ________ in the price of oil,the long-run adjustment decreases the price level and ________ the unemployment rate as they return to their original levels.

Accepted Answer

A) increase; increases 
B) increase; decreases 
C) decrease; increases 
D) decrease; decreases

Exam 13: Aggregate Demand and Aggregate Supply Analysis

Which of the following will shift the aggregate demand curve to the right,ceteris paribus?

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

Most economists agree that an automatic mechanism brings the economy back to potential GDP in the long run.In mid-2011,two years after the recession of 2007-2009 had ended,real GDP in the United States

Figure 13-4 -Refer to Figure 13-4.In the figure above,LRAS₁ and SRAS₁ denote LRAS and SRAS in year 1,while LRAS₂ and SRAS₂ denote LRAS and SRAS in year 2.Given the economy is at point A in year 1,what is the growth rate in potential GDP in year 2?

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

Explain how each of the following events would affect the long-run aggregate supply curve. a.A lower price level b.A decrease in the labor force c.A decrease in the quantity of capital goods d.Technological change

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

Figure 13-2 -Refer to Figure 13-2.Ceteris paribus,a decrease in productivity would be represented by a movement from

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

The long-run aggregate supply curve shows the relationship between

On the long-run aggregate supply curve,

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

Declines in spending on residential construction are often due to increases in interest rates.The collapse in residential construction prior to and during the recession of 2007-2009 was due more to ________ than to higher interest rates.

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

Figure 13-3 -Refer to Figure 13-3.Suppose the economy is at point A.If investment spending increases in the economy,where will the eventual long-run equilibrium be?

of unemployment during make it easier for workers to wages.

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

of unemployment during make it easier for workers to wages.

The long-run aggregate supply curve

After an unexpected in the price of oil,the long-run adjustment decreases the price level and the unemployment rate as they return to their original levels.

Exam 13: Aggregate Demand and Aggregate Supply Analysis

Which of the following will shift the aggregate demand curve to the right,ceteris paribus?

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

Most economists agree that an automatic mechanism brings the economy back to potential GDP in the long run.In mid-2011,two years after the recession of 2007-2009 had ended,real GDP in the United States

Figure 13-4 -Refer to Figure 13-4.In the figure above,LRAS1 and SRAS1 denote LRAS and SRAS in year 1,while LRAS2 and SRAS2 denote LRAS and SRAS in year 2.Given the economy is at point A in year 1,what is the growth rate in potential GDP in year 2?

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

Explain how each of the following events would affect the long-run aggregate supply curve. a.A lower price level b.A decrease in the labor force c.A decrease in the quantity of capital goods d.Technological change

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

Figure 13-2 -Refer to Figure 13-2.Ceteris paribus,a decrease in productivity would be represented by a movement from

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

The long-run aggregate supply curve shows the relationship between

On the long-run aggregate supply curve,

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

Declines in spending on residential construction are often due to increases in interest rates.The collapse in residential construction prior to and during the recession of 2007-2009 was due more to ________ than to higher interest rates.

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

Figure 13-3 -Refer to Figure 13-3.Suppose the economy is at point A.If investment spending increases in the economy,where will the eventual long-run equilibrium be?

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

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

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

The long-run aggregate supply curve

After an unexpected ________ in the price of oil,the long-run adjustment decreases the price level and ________ the unemployment rate as they return to their original levels.

Figure 13-4 -Refer to Figure 13-4.In the figure above,LRAS₁ and SRAS₁ denote LRAS and SRAS in year 1,while LRAS₂ and SRAS₂ denote LRAS and SRAS in year 2.Given the economy is at point A in year 1,what is the growth rate in potential GDP in year 2?

of unemployment during make it easier for workers to wages.

of unemployment during make it easier for workers to wages.

After an unexpected in the price of oil,the long-run adjustment decreases the price level and the unemployment rate as they return to their original levels.