Question 1

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 industryE) All of the above
F) B) and C)

Question 2

________ 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 higherE) A) and B)
F) All of the above

Question 3

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)  DE) A) and D)
F) A) and C)

Question 4

Figure 13-1 1 to AD2. B) AD2 to AD1. C) point A to point B. D) point B to point A." class="answers-bank-image d-inline" rel="preload" >
-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.E) A) and B)
F) A) and D)

Question 5

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

Question 6

Figure 13-2 1 to SRAS2. B) SRAS2 to SRAS1. C) point A to point B. D) point B to point A." class="answers-bank-image d-inline" rel="preload" >
-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.E) A) and D)
F) All of the above

Question 7

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

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> The increase in the interest rate will ...

Question 8

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; decreasesE) None of the above
F) All of the above

Question 9

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

Question 10

Figure 13-2 1 to SRAS2. B) SRAS2 to SRAS1. C) point A to point B. D) point B to point A." class="answers-bank-image d-inline" rel="preload" >
-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.E) All of the above
F) C) and D)

Question 11

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 exportsE) A) and B)
F) B) and D)

Question 12

Figure 13-4 1 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? A) 8% B) 9.1% C) 10% D) 12%" class="answers-bank-image d-inline" rel="preload" >
-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%E) A) and D)
F) All of the above

Question 13

________ 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 lowerE) B) and C)
F) A) and D)

Question 14

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

a.A lower price level would cause a move...

Question 15

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.E) B) and C)
F) All of the above

Question 16

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

Question 17

Figure 13-2 1 to SRAS2. B) SRAS2 to SRAS1. C) point A to point B. D) point B to point A." class="answers-bank-image d-inline" rel="preload" >
-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.E) B) and C)
F) B) and D)

Question 18

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 importsE) B) and D)
F) None of the above

Question 19

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)  unrelatedE) A) and B)
F) None of the above

Question 20

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.E) A) and D)
F) A) and C)

Exam 13: Aggregate Demand and Aggregate Supply Analysis

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

On the long-run aggregate supply curve,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct Answerverified The increase in the interest rate will ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve shows the relationship between

Correct AnswerverifiedShow Answer

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

Correct Answerverifieda.A lower price level would cause a move...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

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The long-run aggregate supply curve

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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?

Correct Answer
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The increase in the interest rate will ...
View Answer

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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.

Correct Answer
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of unemployment during make it easier for workers to wages.

Correct Answer
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Correct Answer
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Correct Answer
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a.A lower price level would cause a move...
View Answer

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of unemployment during make it easier for workers to wages.

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