Question 1

Changes in ________ do not affect the level of aggregate supply in the long run.

Accepted Answer

A)  technology
B)  the number of workers in the economy
C)  the price level
D)  the amount of accumulated capital equipmentE) A) and B)
F) B) and C)

Question 2

An increase in exports decreases aggregate demand.

Accepted Answer

A) True 
 B)False

Question 3

What does the phrase "Keynesian revolution" refer to?

Accepted Answer

The Keynesian revolution is th...

Question 4

An increase 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.E) A) and B)
F) A) and C)

Question 5

Why does the short-run aggregate supply curve shift to the right in the long run,following a decrease 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) All of the above
F) A) and C)

Question 6

Figure 13-1 
-Refer to Figure 13-1.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) A) and D)

Question 7

Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

Accepted Answer

A)  Output will increase.
B)  Prices will decline.
C)  Unemployment will decline.
D)  Short-run aggregate supply will shift to the left.E) A) and C)
F) B) and C)

Question 8

Figure 13-1 
-Refer to Figure 13-1.Ceteris paribus,an increase in firms' expectations of the future profitability of investment spending 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 B)
F) B) and C)

Question 9

Stagflation occurs when

Accepted Answer

A)  inflation rises and GDP rises.
B)  inflation falls and GDP rises.
C)  inflation rises and GDP falls.
D)  inflation falls and GDP falls.E) A) and D)
F) A) and C)

Question 10

The recession of 2007-2009 began in ________,with the end of the economic expansion that had begun in ________.

Accepted Answer

A)  January 2007;April 1984
B)  December 2007;November 2001
C)  July 2007;August 2006
D)  March 2007;March 1995E) A) and B)
F) A) and C)

Question 11

According to Marx,which of the following factors of production did not contribute anything of value to production?

Accepted Answer

A)  labor
B)  capital
C)  natural resources
D)  entrepreneurshipE) All of the above
F) A) and B)

Question 12

When the price level in the United States falls relative to the price level of other countries,________ will fall,________ will rise,and ________ will rise.

Accepted Answer

A)  imports;exports;net exports
B)  exports;imports;net exports
C)  net exports;exports;imports
D)  net exports;imports;exportsE) A) and B)
F) A) and C)

Question 13

The international trade effect states that a(n) ________ in the price level will ________ net exports.

Accepted Answer

A)  increase;increase
B)  increase;decrease
C)  decrease;decrease
D)  decrease;not affectE) A) and B)
F) A) and C)

Question 14

If workers leave a country to seek out better opportunities in another country,then this will

Accepted Answer

A)  shift the short-run aggregate supply curve of the original country to the left.
B)  shift the short-run aggregate supply curve of the original country to the right.
C)  move the original economy up along a stationary short-run aggregate supply curve.
D)  move the original economy down along a stationary short-run aggregate supply curve.E) B) and C)
F) A) and C)

Question 15

Which of the following best describes the "wealth effect"?

Accepted Answer

A)  When the price level falls,the real value of household wealth falls.
B)  When the price level falls,the nominal value of household wealth falls.
C)  When the price level falls,the nominal value of household wealth rises.
D)  When the price level falls,the real value of household wealth rises.E) B) and D)
F) B) and C)

Question 16

Which of the following best describes the "interest rate effect"?

Accepted Answer

A)  An increase in the price level raises the interest rate and chokes off government spending.
B)  An increase in the price level lowers the interest rate and chokes off government spending.
C)  An increase in the price level raises the interest rate and chokes off investment and consumption spending.
D)  An increase in the price level lowers the interest rate and chokes off investment and consumption spending.E) C) and D)
F) B) and C)

Question 17

The invention of the cotton gin ushered in the Industrial Revolution and began a long period of technological innovation.What did this technological change do the short-run supply curve?

Accepted Answer

A)  It shifted the short-run aggregate supply curve to the left.
B)  It shifted the short-run aggregate supply curve to the right.
C)  It moved the economy up along a stationary short-run aggregate supply curve.
D)  It moved the economy down along a stationary short-run aggregate supply curve.E) All of the above
F) B) and D)

Question 18

The long-run aggregate supply curve is vertical.

Accepted Answer

A) True 
 B)False

Question 19

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) B) and C)
F) C) and D)

Question 20

Which of the following models focuses on how productivity shocks explain fluctuations in real GDP?

Accepted Answer

A)  the monetarist model
B)  the new classical model
C)  the real business cycle model
D)  the new Keynesian modelE) None of the above
F) A) and B)

Exam 13: Aggregate Demand and Aggregate Supply Analysis

The long-run aggregate supply curve is vertical.

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Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,an increase in firms' expectations of the future profitability of investment spending would be represented by a movement from

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Why does the short-run aggregate supply curve shift to the right in the long run,following a decrease in aggregate demand?

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What does the phrase "Keynesian revolution" refer to?

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

According to Marx,which of the following factors of production did not contribute anything of value to production?

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An increase in exports decreases aggregate demand.

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If workers leave a country to seek out better opportunities in another country,then this will

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Which of the following best describes the "interest rate effect"?

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Changes in ________ do not affect the level of aggregate supply in the long run.

Correct AnswerverifiedShow Answer

Which of the following models focuses on how productivity shocks explain fluctuations in real GDP?

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Stagflation occurs when

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Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,a decrease in interest rates would be represented by a movement from

Correct AnswerverifiedShow Answer

Potential GDP is also referred to as

Correct AnswerverifiedShow Answer

The recession of 2007-2009 began in ________,with the end of the economic expansion that had begun in ________.

Correct AnswerverifiedShow Answer

The international trade effect states that a(n) ________ in the price level will ________ net exports.

Correct AnswerverifiedShow Answer

Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

Correct AnswerverifiedShow Answer

The invention of the cotton gin ushered in the Industrial Revolution and began a long period of technological innovation.What did this technological change do the short-run supply curve?

Correct AnswerverifiedShow Answer

An increase in the price level will

Correct AnswerverifiedShow Answer

Which of the following best describes the "wealth effect"?

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When the price level in the United States falls relative to the price level of other countries,________ will fall,________ will rise,and ________ will rise.

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The Keynesian revolution is th...
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The recession of 2007-2009 began in ,with the end of the economic expansion that had begun in .

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The international trade effect states that a(n) in the price level will net exports.

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When the price level in the United States falls relative to the price level of other countries, will fall, will rise,and will rise.

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