Question 1

In the long run, wages and prices are considered to be:

Accepted Answer

A)   fixed.
B)    sticky.
C)   flexible.
D)   unstable.E) All of the above
F) B) and D)

Question 2

When the price level falls, the total quantities of goods and services demanded:

Accepted Answer

A)   decrease.
B)   stay the same.
C)   increase.
D)   increases and then decreases.E) None of the above
F) All of the above

Question 3

In the aggregate demand and supply model, the:

Accepted Answer

A)   aggregate supply curve is horizontal at full-employment real GDP.
B)   vertical axis measures real GDP.
C)   vertical axis measures the overall price level.
D)   horizontal axis measures the overall price level.E) A) and C)
F) B) and C)

Question 4

A reduction in regulation will shift the aggregate:

Accepted Answer

A)   supply curve leftward.
B)   supply curve rightward.
C)   demand curve leftward.
D)   demand curve rightward.E) A) and D)
F) C) and D)

Question 5

Why does the aggregate demand (AD) curve slope downward? What could cause the AD curve to shift to the right? What impact would a rightward shift of the AD curve have on the economy?

Accepted Answer

The AD curve slopes downward because of ...

Question 6

An explanation for why the short-run aggregate supply curve is upward-sloping is because:

Accepted Answer

A)   the quantity of real output supplied is inversely related to the aggregate supply curve.
B)   nominal incomes are fixed.
C)   the capital-output ratio is fixed.
D)   an increase in price will increase the marginal aggregate output.E) A) and B)
F) A) and C)

Question 7

According to classical theory, if the aggregate demand curve decreased and the economy experienced unemployment, then:

Accepted Answer

A)   the economy would remain in this condition indefinitely.
B)   the government must increase spending to restore full employment.
C)   prices and wages would fall quickly to restore full employment.
D)   the supply of money would increase until the economy returned to full employment.E) B) and D)
F) A) and D)

Question 8

Economic growth is represented by a:

Accepted Answer

A)   leftward shift of a production possibilities curve.
B)   rightward shift of the long-run aggregate supply curve (LRAS) .
C)   horizontal long-run aggregate supply curve (LRAS) .
D)   downward shift of an aggregate production function.E) A) and D)
F) B) and D)

Question 9

Exhibit 14-7 Aggregate supply and demand curves
2 and the aggregate supply curve reflect an economy in which A)  full employment is at $1,000 billion GDP. B)  excess aggregate supply is created when there is a shift from AD1 to AD2. C)  excess aggregate demand forces prices up to P = 120. D)  excess aggregate demand causes prices to stabilize at P = 110." class="answers-bank-image d-inline" rel="preload" >
At point A in Exhibit 14-7, the aggregate demand AD2 and the aggregate supply curve reflect an economy in which

Accepted Answer

A)   full employment is at $1,000 billion GDP.
B)   excess aggregate supply is created when there is a shift from AD1 to AD2.
C)   excess aggregate demand forces prices up to P = 120.
D)   excess aggregate demand causes prices to stabilize at P = 110.E) All of the above
F) B) and D)

Question 10

Along the short-run supply curve (SRAS) , a decrease in the aggregate demand curve will decrease:

Accepted Answer

A)   both the price level and real GDP.
B)   real GDP without raising the price level.
C)   the price level without affecting real GDP.
D)   the price level but increase real GDP .E) B) and C)
F) A) and D)

Question 11

Exhibit 14A-1 Aggregate demand and supply model
2 in Exhibit 10A-1, the economy's movement to a new position of long-run equilibrium would best be described as: A)  a movement along the AD 2  curve with a shift in the SRAS 1  curve. B)  a movement along the SRAS 2  curve with a shift in the AD 2  curve. C)   a shift in the LRAS curve to an intersection at E 1 . D)  no shift of any kind." class="answers-bank-image d-inline" rel="preload" >
Beginning from short-run equilibrium at point E2 in Exhibit 10A-1, the economy's movement to a new position of long-run equilibrium would best be described as:

Accepted Answer

A)   a movement along the AD 2  curve with a shift in the SRAS 1  curve.
B)   a movement along the SRAS 2  curve with a shift in the AD 2  curve.
C)    a shift in the LRAS curve to an intersection at E 1 .
D)   no shift of any kind.E) C) and D)
F) B) and C)

Question 12

To illustrate the classical argument that "supply creates its own demand," the aggregate supply curve should be drawn:

Accepted Answer

A)   downward-sloping.
B)   upward-sloping.
C)   horizontal.
D)   vertical.E) A) and D)
F) All of the above

Question 13

Aggregate demand's downward-sloping character reflects three principal influences as shown in which of the following?

Accepted Answer

A)   People's desire to maintain real wealth holdings, the interest rate, and international trade.
B)   People's desire to increase the price level, the interest rate, and the economic growth effect.
C)   The interest rate, the economic growth effect, and international trade.
D)   Cost-pull inflation, demand-pull inflation, and the need to maintain real wealth holdings.E) A) and D)
F) B) and C)

Question 14

One reason for the short-run aggregate supply curve (SRAS)  is:

Accepted Answer

A)   a fixed CPI market basket.
B)   perfect knowledge of workers.
C)   fixed-wage contracts.
D)   the upward-sloping production function.E) A) and B)
F) A) and C)

Question 15

Exhibit 14-7 Aggregate supply and demand curves
1 to AD2, A)  output and prices will increase. B)  output and prices will decrease. C)  output alone will increase. D)  prices alone will increase." class="answers-bank-image d-inline" rel="preload" >
In Exhibit 14-7, if aggregate demand increases from AD1 to AD2,

Accepted Answer

A)   output and prices will increase.
B)   output and prices will decrease.
C)   output alone will increase.
D)   prices alone will increase.E) A) and B)
F) None of the above

Question 16

The net exports effect is the inverse relationship between net exports and the ____ of an economy.

Accepted Answer

A)   potential real GDP
B)   chain-price deflator
C)   price level
D)   consumption spendingE) B) and C)
F) B) and D)

Exam 14: Aggregate Demand and Supply

According to classical theory, if the aggregate demand curve decreased and the economy experienced unemployment, then:

Correct Answer
verified

Exhibit 14-7 Aggregate supply and demand curves In Exhibit 14-7, if aggregate demand increases from AD₁ to AD₂,

Correct Answer
verified

Along the short-run supply curve (SRAS) , a decrease in the aggregate demand curve will decrease:

Correct Answer
verified

Exhibit 14-7 Aggregate supply and demand curves At point A in Exhibit 14-7, the aggregate demand AD₂ and the aggregate supply curve reflect an economy in which

Correct Answer
verified

One reason for the short-run aggregate supply curve (SRAS) is:

Correct Answer
verified

In the aggregate demand and supply model, the:

Correct Answer
verified

To illustrate the classical argument that "supply creates its own demand," the aggregate supply curve should be drawn:

Correct Answer
verified

Economic growth is represented by a:

Correct Answer
verified

The net exports effect is the inverse relationship between net exports and the ____ of an economy.

Correct Answer
verified

Exhibit 14A-1 Aggregate demand and supply model Beginning from short-run equilibrium at point E₂ in Exhibit 10A-1, the economy's movement to a new position of long-run equilibrium would best be described as:

Correct Answer
verified

A reduction in regulation will shift the aggregate:

Correct Answer
verified

An explanation for why the short-run aggregate supply curve is upward-sloping is because:

Correct Answer
verified

Aggregate demand's downward-sloping character reflects three principal influences as shown in which of the following?

Correct Answer
verified

In the long run, wages and prices are considered to be:

Correct Answer
verified

Why does the aggregate demand (AD) curve slope downward? What could cause the AD curve to shift to the right? What impact would a rightward shift of the AD curve have on the economy?

Correct Answer
verified
The AD curve slopes downward because of ...
View Answer

When the price level falls, the total quantities of goods and services demanded:

Correct Answer
verified

Exam 14: Aggregate Demand and Supply

According to classical theory, if the aggregate demand curve decreased and the economy experienced unemployment, then:

Correct AnswerverifiedShow Answer

Exhibit 14-7 Aggregate supply and demand curves In Exhibit 14-7, if aggregate demand increases from AD1 to AD2,

Correct AnswerverifiedShow Answer

Along the short-run supply curve (SRAS) , a decrease in the aggregate demand curve will decrease:

Correct AnswerverifiedShow Answer

Exhibit 14-7 Aggregate supply and demand curves At point A in Exhibit 14-7, the aggregate demand AD2 and the aggregate supply curve reflect an economy in which

Correct AnswerverifiedShow Answer

One reason for the short-run aggregate supply curve (SRAS) is:

Correct AnswerverifiedShow Answer

In the aggregate demand and supply model, the:

Correct AnswerverifiedShow Answer

To illustrate the classical argument that "supply creates its own demand," the aggregate supply curve should be drawn:

Correct AnswerverifiedShow Answer

Economic growth is represented by a:

Correct AnswerverifiedShow Answer

The net exports effect is the inverse relationship between net exports and the ____ of an economy.

Correct AnswerverifiedShow Answer

Exhibit 14A-1 Aggregate demand and supply model Beginning from short-run equilibrium at point E2 in Exhibit 10A-1, the economy's movement to a new position of long-run equilibrium would best be described as:

Correct AnswerverifiedShow Answer

A reduction in regulation will shift the aggregate:

Correct AnswerverifiedShow Answer

An explanation for why the short-run aggregate supply curve is upward-sloping is because:

Correct AnswerverifiedShow Answer

Aggregate demand's downward-sloping character reflects three principal influences as shown in which of the following?

Correct AnswerverifiedShow Answer

In the long run, wages and prices are considered to be:

Correct AnswerverifiedShow Answer

Why does the aggregate demand (AD) curve slope downward? What could cause the AD curve to shift to the right? What impact would a rightward shift of the AD curve have on the economy?

Correct AnswerverifiedThe AD curve slopes downward because of ...View AnswerShow Answer

When the price level falls, the total quantities of goods and services demanded:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Exhibit 14-7 Aggregate supply and demand curves In Exhibit 14-7, if aggregate demand increases from AD₁ to AD₂,

Correct Answer
verified

Correct Answer
verified

Exhibit 14-7 Aggregate supply and demand curves At point A in Exhibit 14-7, the aggregate demand AD₂ and the aggregate supply curve reflect an economy in which

Correct Answer
verified

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
verified

Exhibit 14A-1 Aggregate demand and supply model Beginning from short-run equilibrium at point E₂ in Exhibit 10A-1, the economy's movement to a new position of long-run equilibrium would best be described as:

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
The AD curve slopes downward because of ...
View Answer

Correct Answer
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