Question 1

Figure 24-4
 
-Refer to Figure 24-4. In the figure above,AD₁, LRAS₁ and SRAS₁ denote AD,LRAS and SRAS in year 1,while AD₂,LRAS₂ and SRAS₂ denote AD,LRAS and SRAS in year 2. Given the economy is at point A in year 1,what is the actual growth rate in GDP in year 2?

Accepted Answer

A)   2.5%
B)   7.3%
C)   8.0%
D)   10.0%E) B) and C)
F) C) and D)

Question 2

When people became ________ concerned with the underlying value of their houses and became ________ with the expectations of the prices of their houses increasing,a housing bubble occurred.

Accepted Answer

A)   less; less
B)   less; more
C)   more; less
D)   more; moreE) B) and C)
F) A) and B)

Question 3

Figure 24-1
 
-Refer to Figure 24-1.Ceteris paribus,a decrease in interest rates 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.E) B) and C)
F) None of the above

Question 4

What does the phrase "Keynesian revolution" refer to?

Accepted Answer

The Keynesian revolution is th...

Question 5

A rapid increase in the price of oil will tend to

Accepted Answer

A)   shift short-run aggregate supply to the left.
B)   shift long-run aggregate supply to the left.
C)   shift long-run aggregate supply to the right.
D)   shift aggregate demand to the right.E) A) and D)
F) B) and C)

Question 6

Figure 24-1
 
-Refer to Figure 24-1.Ceteris paribus,a decrease in the value of the domestic currency relative to foreign currencies 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.E) A) and C)
F) B) and C)

Question 7

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.E) C) and D)
F) B) and D)

Question 8

Why does the short-run aggregate supply curve shift to the left in the long run,following an increase in aggregate demand?

Accepted Answer

A)   Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices.
B)   Workers and firms adjust their expectations of wages and prices downward and they push for higher wages and prices.
C)   Workers and firms adjust their expectations of wages and prices upward and they push for higher wages and prices.
D)   Workers and firms adjust their expectations of wages and prices upward and they accept lower wages and prices.E) A) and D)
F) B) and D)

Question 9

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.E) C) and D)
F) None of the above

Question 10

Inflation is generally the result of total spending growing slower than total production.

Accepted Answer

A) True 
 B)False

Question 11

Workers expect inflation to fall from 4% to 1% next year. As a result,this 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.E) B) and D)
F) All of the above

Question 12

Figure 24-4
 
-Refer to Figure 24-4. 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%E) B) and D)
F) All of the above

Question 13

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 demandE) B) and C)
F) A) and C)

Question 14

An adverse supply shock causes the short-run aggregate supply curve to shift left,increasing the price level.

Accepted Answer

A) True 
 B)False

Question 15

Potential GDP is also referred to as

Accepted Answer

A)   realized GDP.
B)   full-employment GDP.
C)   politico-economic GDP.
D)   balanced-budget GDP.E) None of the above
F) All of the above

Question 16

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 importsE) A) and B)
F) A) and C)

Question 17

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 wealthE) A) and B)
F) All of the above

Question 18

Monetarists believe that the quantity of money should be increased at a constant rate.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)   increases; increases
B)   increases; decreases
C)   decreases; increases
D)   decreases; decreasesE) A) and B)
F) A) and C)

Question 20

Figure 24-2
 
-Refer to Figure 24-2.Ceteris paribus,a decrease in the labor force 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.E) All of the above
F) C) and D)

Exam 13: Aggregate Demand and Aggregate Supply Analysis

What does the phrase "Keynesian revolution" refer to?

Correct AnswerverifiedThe Keynesian revolution is th...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

When people became ________ concerned with the underlying value of their houses and became ________ with the expectations of the prices of their houses increasing,a housing bubble occurred.

Correct AnswerverifiedShow Answer

Figure 24-1 -Refer to Figure 24-1.Ceteris paribus,a decrease in the value of the domestic currency relative to foreign currencies would be represented by a movement from

Correct AnswerverifiedShow Answer

Figure 24-4 -Refer to Figure 24-4. In the figure above,AD₁, LRAS₁ and SRAS₁ denote AD,LRAS and SRAS in year 1,while AD₂,LRAS₂ and SRAS₂ denote AD,LRAS and SRAS in year 2. Given the economy is at point A in year 1,what is the actual growth rate in GDP in year 2?

Correct AnswerverifiedShow Answer

Workers expect inflation to fall from 4% to 1% next year. As a result,this should

Correct AnswerverifiedShow Answer

Inflation is generally the result of total spending growing slower than total production.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 24-1 -Refer to Figure 24-1.Ceteris paribus,a decrease in interest rates would be represented by a movement from

Correct AnswerverifiedShow Answer

A rapid increase in the price of oil will tend to

Correct AnswerverifiedShow Answer

Monetarists believe that the quantity of money should be increased at a constant rate.

Correct AnswerverifiedShow Answer

Figure 24-2 -Refer to Figure 24-2.Ceteris paribus,a decrease in the labor force would be represented by a movement from

Correct AnswerverifiedShow Answer

Potential GDP is also referred to as

Correct AnswerverifiedShow Answer

An adverse supply shock causes the short-run aggregate supply curve to shift left,increasing the price level.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 24-4 -Refer to Figure 24-4. 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?

Correct AnswerverifiedShow Answer

Why does the short-run aggregate supply curve shift to the left in the long run,following an increase in aggregate demand?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The short-run aggregate supply curve has a

Correct AnswerverifiedShow Answer

Correct Answer
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The Keynesian revolution is th...
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Correct Answer
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When people became concerned with the underlying value of their houses and became with the expectations of the prices of their houses increasing,a housing bubble occurred.

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

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

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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