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100 Cards in this Set

  • Front
  • Back
Which of the following is not a component of the aggregate demand curve?
a. Consumption (C).
b. Investment (I).
c. Government spending (G).
d. Net exports (X M).
e. All of the above are components.
Which of the following is not a component of the aggregate demand curve?
ANSWER:
e. All of the above are components.
Which of the following is not a reason for the downward slope of an aggregate demand curve?
a. Real balance or wealth effect.
b. Real interest rate effect.
c. Net exports effect.
d. All of the above are reasons.
Which of the following is not a reason for the downward slope of an aggregate demand curve?
ANSWER:
d. All of the above are reasons.
The aggregate demand curve shows how real GDP purchased varies with changes in:
a. unemployment.
b. output.
c. the price level.
d. the interest rate.
The aggregate demand curve shows how real GDP purchased varies with changes in:
ANSWER:
c. the price level.
The aggregate demand curve is drawn downward-sloping, because increases in the price level cause decreases in:
a. unemployment.
b. total spending (real GDP).
c. households' savings.
d. the value of the dollar.
The aggregate demand curve is drawn downward-sloping, because increases in the price level cause decreases in:
ANSWER:
b. total spending (real GDP).
Which of the following is not a reason for the downward slope of the aggregate demand curve?
a. Real balances effect
b. Interest-rate effect
c. Net exports effect
d. Government spending effect
Which of the following is not a reason for the downward slope of the aggregate demand curve?
ANSWER:
d. Government spending effect
Which of the following is not a component of the aggregate demand curve?
a. Government spending (G).
b. Investment (I).
c. Consumption (C).
d. Net exports (X M).
e. Saving.
Which of the following is not a component of the aggregate demand curve?
ANSWER:
e. Saving.
The aggregate demand curve:
a. shows the level of real GDP purchased in the economy at different possible price levels during a period of time.
b. shows the level of real GDP produced in the economy at different possible price levels during a period of time.
c. shifts to the left whenever there is an increase in aggregate expenditures.
d. slopes upward.
The aggregate demand curve:
ANSWER:
a. shows the level of real GDP purchased in the economy at different possible price levels during a period of time.
Aggregate demand’s downward-sloping character reflects three principal influences as shown in which of the following?
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. Recession phases of the business cycle, upturns, and downturns.
Aggregate demand’s downward-sloping character reflects three principal influences as shown in which of the following?
ANSWER:
a. People’s desire to maintain real wealth holdings, the interest rate, and international trade.
When price level in the United States rises,
a. there is a increased demand for borrowed money.
b. producers’ demand for new machinery increases, contributing to an increase in aggregate demand.
c. Americans tend to buy more foreign goods and services.
d. the French, Canadians, and Japanese would find our exports more attractive.
e. to replenish the value of your real wealth, you would save less and consume more.
When price level in the United States rises,
ANSWER:
c. Americans tend to buy more foreign goods and services.
The aggregate demand curve:
a. would be little affected by a technological advancement.
b. shifts to the right when spending decreases.
c. shifts to the left when there is a decrease in taxes.
d. cannot move independently of the aggregate supply curve.
e. shifts to the right when there is an expectation that future income will fall.
The aggregate demand curve:
ANSWER:
a. would be little affected by a technological advancement.
The total quantity of goods and services demanded by households, firms, foreigners, and government at varying price levels is:
a. gross domestic product.
b. aggregate demand.
c. aggregate expenditure.
d. total demand.
e. total expenditure.
The total quantity of goods and services demanded by households, firms, foreigners, and government at varying price levels is:
ANSWER:
b. aggregate demand.
When the price level falls, the total quantities of goods and services demanded:
a. decreases.
b. stays the same.
c. increases.
d. increases and then decreases.
e. decreases and then increases.
When the price level falls, the total quantities of goods and services demanded:
ANSWER:
c. increases.
The real balances effect occurs because a higher price level will reduce the real value of people's:
a. financial assets.
b. wages.
c. unpaid debt.
d. physical investments.
The real balances effect occurs because a higher price level will reduce the real value of people's:
ANSWER:
a. financial assets.
The real balance effect or wealth effect is the impact on real GDP caused by the _________ relationship between the price level and the real value of financial assets.
a. direct
b. inverse
c. independent
d. linear
The real balance effect or wealth effect is the impact on real GDP caused by the _________ relationship between the price level and the real value of financial assets.
ANSWER:
b. inverse
The idea that higher prices reduce the purchasing power of financial assets and lead to less consumption and more saving is known as the:
a. real wealth effect.
b. interest rate effect.
c. foreign purchases effect.
d. income effect.
e. aggregate demand effect.
The idea that higher prices reduce the purchasing power of financial assets and lead to less consumption and more saving is known as the:
ANSWER:
a. real wealth effect.
The real wealth effect predicts that higher prices:
a. make people worse off by reducing the value of their wealth, leading them to save more and spend less.
b. make people worse off by reducing the value of their wealth, leading them to save less and spend more.
c. make people better off by increasing the value of their wealth, leading them to save less and spend more.
d. increase borrowing, leading to higher interest rates and less investment.
e. make domestic goods relatively more expensive, increasing the demand for domestic goods and decreasing the demand for foreign goods.
The real wealth effect predicts that higher prices:
ANSWER:
a. make people worse off by reducing the value of their wealth, leading them to save more and spend less.
The negative slope of the aggregate demand curve is caused by:
a. the real wealth effect, the interest rate effect, and the price level effect.
b. the real wealth effect, the money supply effect, and the net exports effect.
c. the interest rate effect, the net exports effect, and the real GDP effect.
d. the real wealth effect, the interest rate effect, and the net exports effect.
e. the real wealth effect, the interest rate effect, and the net export effect.
The negative slope of the aggregate demand curve is caused by:
ANSWER:
d. the real wealth effect, the interest rate effect, and the net exports effect.
Suppose the price level falls and real wealth increases. The result is that the:
a. aggregate supply curve would shift to the right.
b. aggregate supply curve would shift to the left.
c. general price level would rise causing a movement up the aggregate demand curve.
d. aggregate demand curve would shift to the left.
e. aggregate demand curve would shift to the right.
Suppose the price level falls and real wealth increases. The result is that the:
ANSWER:
e. aggregate demand curve would shift to the right.
According to the net exports effect, as the price level falls relative to the rest of
the world,
a. foreigners buy fewer goods.
b. foreigners buy more U.S. goods.
c. the aggregate demand curve shifts to the left.
d. the aggregate demand curve shifts to the right.
e. the supply of U.S.-made goods increases.
According to the net exports effect, as the price level falls relative to the rest of
the world,
ANSWER:
b. foreigners buy more U.S. goods.
The interest rate effect is the impact on real GDP caused by the relationship between the price level and the interest rate.
a. direct
b. independent
c. linear
d. inverse
The interest rate effect is the impact on real GDP caused by the relationship between the price level and the interest rate.
a. direct
When the supply of credit is fixed, an increase in the price level stimulates the demand for credit, which in turn reduces consumption and investment spending. This argument is called the:
a. real balances effect.
b. interest-rate effect.
c. net exports effect.
d. substitution effect.
When the supply of credit is fixed, an increase in the price level stimulates the demand for credit, which in turn reduces consumption and investment spending. This argument is called the:
ANSWER:
b. interest-rate effect.
The interest rate effect is the impact on real GDP caused by the direct relationship between the interest rate and the:
a. price level.
b. exports.
c. consumption.
d. investment.
The interest rate effect is the impact on real GDP caused by the direct relationship between the interest rate and the:
ANSWER:
a. price level.
The interest rate effect predicts that higher prices:
a. make it more expensive to borrow, leading to higher interest rates and less investment.
b. make people worse off by reducing the value of their wealth, leading them to save more and spend less.
c. decrease borrowing, leading to higher interest rates and less investment.
d. decrease borrowing, leading to lower interest rates and more investment.
e. increase borrowing, leading to higher interest rates and less investment.
The interest rate effect predicts that higher prices:
ANSWER:
e. increase borrowing, leading to higher interest rates and less investment.
According to the interest rate effect, as the price level:
a. rises, people feel poorer and buy less.
b. rises, United States products become more expensive and foreigners buy less U.S. goods.
c. rises, interest rates fall, and people buy less.
d. rises, interest rates rise, and people buy less.
e. falls, interest rates fall, and people buy less.
According to the interest rate effect, as the price level:
ANSWER:
d. rises, interest rates rise, and people buy less.
The net exports effect is the inverse relationship between net exports and the ________ of an economy.
a. potential real GDP
b. chain-price deflator
c. price level
d. consumption spending
The net exports effect is the inverse relationship between net exports and the ________ of an economy.
ANSWER:
c. price level
The net exports effect is the relationship between net exports and the price level of an economy.
a. inverse
b. independent
c. direct
d. linear
The net exports effect is the relationship between net exports and the price level of an economy.
ANSWER
a. inverse
The aggregate demand curve is downward sloping because:
a. an increase in the price level will cause an increase in spending.
b. at lower price levels, real wealth decreases, causing a decrease in the quantities of goods and services demanded.
c. at lower price levels, interest rates decrease, causing a decrease in the quantities of goods and services demanded.
d. at lower price levels, exports increase, causing an increase in real GDP.
e. increases in the price level do not affect people’s real wealth.
The aggregate demand curve is downward sloping because:
ANSWER
d. at lower price levels, exports increase, causing an increase in real GDP.
Which of the following would shift the aggregate demand curve to the left?
a. An increase in exports.
b. An increase in investment.
c. An increase in government spending.
d. A decrease in government spending.
Which of the following would shift the aggregate demand curve to the left?
ANSWER
d. A decrease in government spending.
Which of the following will not shift the aggregate demand curve to the right?
a. Consumers becoming more optimistic about the future.
b. An increase in government spending.
c. Business optimism increases.
d. Consumers become pessimistic about the future.
Which of the following will not shift the aggregate demand curve to the right?
ANSWER
d. Consumers become pessimistic about the future.
Which of the following could be expected to shift the aggregate demand curve?
a. An increase in government spending.
b. Consumption spending decreases.
c. Net exports fall.
d. All of the above.
Which of the following could be expected to shift the aggregate demand curve?
ANSWER
d. All of the above.
Which of the following could not be expected to shift the aggregate demand curve?
a. Net exports fall.
b. Consumption spending decreases.
c. An increase in government spending.
d. A change in real GDP.
Which of the following could not be expected to shift the aggregate demand curve?
ANSWER
d. A change in real GDP.
In the classical range of the aggregate supply curve, greater spending for consumer and investment goods results in:
a. stagflation.
b. more unemployment.
c. greater output.
d. a higher price level.
In the classical range of the aggregate supply curve, greater spending for consumer and investment goods results in:
ANSWER
d. a higher price level.
A rightward shift in the aggregate demand curve can be caused by an increase in:
a. the price level.
b. business investment spending.
c. taxes.
d. production costs.
A rightward shift in the aggregate demand curve can be caused by an increase in:
ANSWER
b. business investment spending.
Suppose workers become pessimistic about their future employment, which causes them to save more and spend less. If the economy is on the intermediate range of the aggregate supply curve, then:
a. both real GDP and the price level will fall.
b. real GDP will fall and the price level will rise.
c. real GDP will rise and the price level will fall.
d. both real GDP and the price level will rise.
Suppose workers become pessimistic about their future employment, which causes them to save more and spend less. If the economy is on the intermediate range of the aggregate supply curve, then:
a. both real GDP and the price level will fall.
A cut in government spending, a decrease in income abroad, an increase in taxes, or an expectation that future consumer income will fall will all cause aggregate:
a. demand to shift outward.
b. demand to shift inward.
c. supply to shift outward.
d. supply to shift inward.
e. supply and aggregate demand to both shift equally inward.
A cut in government spending, a decrease in income abroad, an increase in taxes, or an expectation that future consumer income will fall will all cause aggregate:
ANSWER
b. demand to shift inward.
The aggregate demand curve will shift rightward when there is:
a. a decrease in government spending.
b. a decrease in incomes abroad.
c. a tax increase.
d. the expectation that future consumer income will rise.
The aggregate demand curve will shift rightward when there is:
ANSWER
d. the expectation that future consumer income will rise.
A change in which of the following would shift the aggregate demand curve?
a. Consumption (C)
b. Investment (I)
c. Government spending (G)
d. Net Exports (NX)
e. All of the above
A change in which of the following would shift the aggregate demand curve?
ANSWER
e. All of the above
The aggregate supply curve is defined as:
a. net national product.
b. the sum of wages, rent, interest, and profits.
c. the real GDP produced at different price levels.
d. the total dollar value of household expenditures.
The aggregate supply curve is defined as:
ANSWER
c. the real GDP produced at different price levels.
The aggregate supply curve:
a. shows the level of real GDP produced in the economy at different possible price levels during a period of time.
b. is horizontal in the Keynesian range.
c. is vertical in the classical range.
d. all of the above.
The aggregate supply curve:
ANSWER
d. all of the above.
Suppose an increase in government spending stimulates real GDP without affecting the price level. What is the relevant range of the aggregate supply curve in this case?
a. The classical range.
b. The intermediate range.
c. The Keynesian range.
d. The monetarist range.
Suppose an increase in government spending stimulates real GDP without affecting the price level. What is the relevant range of the aggregate supply curve in this case?
ANSWER
c. The Keynesian range.
To illustrate the classical argument that "supply creates its own demand," the aggregate supply curve should be drawn:
a. downward-sloping.
b. upward-sloping.
c. horizontal.
d. vertical.
To illustrate the classical argument that "supply creates its own demand," the aggregate supply curve should be drawn:
ANSWER
d. vertical.
In the intermediate range of the aggregate supply curve, higher aggregate demand will increase:
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 reduce real GDP.
In the intermediate range of the aggregate supply curve, higher aggregate demand will increase:
a. both the price level and real GDP.
Which of the following would cause a rightward shift in the aggregate supply curve?
a. Larger-than-expected wage increases.
b. Lower oil prices.
c. Increased investment spending.
d. Greater government regulation.
Which of the following would cause a rightward shift in the aggregate supply curve?
ANSWER
b. Lower oil prices.
The pre Keynesian or classical economic theory predicted that in the long run the economy would experience:
a. long periods of high unemployment.
b. rising rates of inflation.
c. only temporary periods of high unemployment.
d. idle factors of production.
The pre Keynesian or classical economic theory predicted that in the long run the economy would experience:
ANSWER
c. only temporary periods of high unemployment.
The pre Keynesian or classical economic theory viewed the long run aggregate supply curve for the economy to be:
a. horizontal at the full employment level of real GDP.
b. positively sloped at the full employment level of real GDP.
c. vertical at the full employment level of real GDP.
d. backward bending at the full employment level of real GDP.
The pre Keynesian or classical economic theory viewed the long run aggregate supply curve for the economy to be:
ANSWER
c. vertical at the full employment level of real GDP.
According to classical theory, if the aggregate demand curve decreased and the economy experienced unemployment, then:
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.
According to classical theory, if the aggregate demand curve decreased and the economy experienced unemployment, then:
ANSWER
c. prices and wages would fall quickly to restore full employment.
Which of the following characterizes the classical view of the economy?
a. The economy is inherently unstable.
b. Prices and wages are not flexible.
c. The economy will "self adjust" to full employment.
d. None of the above.
Which of the following characterizes the classical view of the economy?
ANSWER
c. The economy will "self adjust" to full employment.
Which of the following are inherent in classical theory?
a. Flexible prices.
b. Flexible wages.
c. Long run full employment.
d. All of the above.
Which of the following are inherent in classical theory?
ANSWER
d. All of the above.
Which of the following are beliefs of classical theory?
a. Long run full employment.
b. Inflexible wages.
c. Inflexible prices.
d. All of the above.
Which of the following are beliefs of classical theory?
ANSWER
a. Long run full employment.
Assuming prices and wages are fully flexible, the aggregate supply curve will be:
a. upward sloping, but not vertical.
b. vertical.
c. horizontal.
d. downward sloping.
Assuming prices and wages are fully flexible, the aggregate supply curve will be:
ANSWER
b. vertical.
Which of the following is a range on the eclectic or general view of the aggregate supply curve?
a. Keynesian range.
b. Intermediate range.
c. Classical range.
d. All of the above.
Which of the following is a range on the eclectic or general view of the aggregate supply curve?
ANSWER
d. All of the above.
Gradual adjustment of prices and wages to an increase in the aggregate demand curve implies that the aggregate supply curve is:
a. horizontal.
b. vertical.
c. upward sloping but not vertical.
d. downward sloping.
Gradual adjustment of prices and wages to an increase in the aggregate demand curve implies that the aggregate supply curve is:
ANSWER
c. upward sloping but not vertical.
The horizontal segment of the aggregate supply curve:
a. shows that real GDP can increase only by affecting the economy’s price level.
b. shows that real GDP can increase without affecting the economy’s price level.
c. depicts a positive relationship between real GDP and the price level.
d. depicts a negative relationship between real GDP and the price level.
e. marks the full-employment level of real GDP.
The horizontal segment of the aggregate supply curve:
ANSWER
b. shows that real GDP can increase without affecting the economy’s price level.
The aggregate supply curve relating the price level to real GDP has three distinguishing segments. Which one of the following indicates the segments?
a. The horizontal segment reflects the increasing pressure on the price level as firms bid for
resources. The upward-sloping segment reflects the availability of unused resources. The
vertical segment reflects the full employment of all resources.
b. The horizontal segment reflects the availability of unused resources. The upward-sloping segment reflects the full employment of all resources. The vertical segment reflects the increasing pressure on the price level as firms bid for resources.
c. The horizontal segment reflects the full employment of all resources. The upward-sloping segment reflects the increasing pressure on the price level as firms bid for resources. The vertical segment reflects the availability of unused resources.
d. The horizontal segment reflects the availability of unused resources. The downward-sloping segment reflects decreasing pressure on the price level as firms bid for resources. The vertical segment reflects the full employment of all resources.
e. The horizontal segment reflects the availability of unused resources. The upward-sloping segment reflects increasing pressure on the price level as firms bid for resources. The vertical segment reflects the full employment of all resources.
The aggregate supply curve relating the price level to real GDP has three distinguishing segments. Which one of the following indicates the segments?
ANSWER
e. The horizontal segment reflects the availability of unused resources. The upward-sloping segment reflects increasing pressure on the price level as firms bid for resources. The vertical segment reflects the full employment of all resources.
In the upward-sloping segment of the aggregate supply curve,
a. increases in output are linked to decreases in the price level.
b. increasing prices drag down resource costs.
c. producers can hire more workers without having to raise the wage rate.
d. the economy can increase aggregate supply without prices going up.
e. firms are willing to pay higher wages to get more labor.
In the upward-sloping segment of the aggregate supply curve,
ANSWER
e. firms are willing to pay higher wages to get more labor.
In the vertical segment of the aggregate supply curve,
a. different levels of GDP correspond with high unemployment.
b. competition among producers for already-employed resources can succeed only in lowering the economy’s price level.
c. full employment is achieved.
d. producers are able to hire more workers at lower wages.
e. increases in GDP are due solely to production gains.
In the vertical segment of the aggregate supply curve,
ANSWER
c. full employment is achieved.
In the horizontal segment of the aggregate supply curve, when GDP:
a. increases, the price level rises.
b. decreases, the price level falls.
c. increases, the price level does not change.
d. increases, the price level falls.
e. increases, the price level first rises and then falls.
In the horizontal segment of the aggregate supply curve, when GDP:
ANSWER
c. increases, the price level does not change.
In the upward-sloping segment of the aggregate supply curve,
a. when GDP increases, the price level rises.
b. when GDP increases, the price level does not change.
c. when GDP decreases, the price level rises.
d. when GDP increases, the price level falls.
e. there is no relationship between changes in GDP and changes in the price level.
In the upward-sloping segment of the aggregate supply curve,
ANSWER
a. when GDP increases, the price level rises.
During the Great Depression of the 1930s, the aggregate demand curve intersected the aggregate supply curve in:
a. the horizontal portion of the aggregate supply curve.
b. the upward-sloping part of the aggregate supply curve.
c. the vertical portion of the aggregate supply curve.
d. in the early years the horizontal portion, but in the later years the vertical portion.
e. in the early years the vertical portion, but in the later years in the horizontal portion.
During the Great Depression of the 1930s, the aggregate demand curve intersected the aggregate supply curve in:
ANSWER
a. the horizontal portion of the aggregate supply curve.
At low levels of employment, the Keynesian aggregate supply curve:
a. tilts downward to the right.
b. tilts upward to the right.
c. is vertical.
d. shows a constant price level.
e. shows a rising price level.
At low levels of employment, the Keynesian aggregate supply curve:
ANSWER
d. shows a constant price level.
The aggregate supply curve will be vertical when:
a. output can be increased without an increase in the price level.
b. the economy is operating at full-employment capacity.
c. output and price level rise together.
d. the aggregate demand curve is shifting to the left.
e. aggregate demand is absent.
The aggregate supply curve will be vertical when:
ANSWER
b. the economy is operating at full-employment capacity.
The aggregate supply curve reflects the relationship between the price:
a. of a particular good and the quantity supplied by all firms producing that good.
b. of a particular good and the quantity supplied by the aggregate economy.
c. level and the quantity supplied of all goods in the economy.
d. level and the quantity of all goods purchased in the economy.
The aggregate supply curve reflects the relationship between the price:
ANSWER
c. level and the quantity supplied of all goods in the economy.
In the aggregate demand and aggregate supply model,
a. the factors that cause the demand curves in both models to slope downward are the same.
b. the factors that cause the supply curves in both models to slope upward are the same.
c. the upward-sloping aggregate demand curve intersects the downward-sloping aggregate supply curve to determine the economy’s price level and GDP.
d. the upward-sloping aggregate supply curve intersects the downward-sloping aggregate demand curve to determine the economy’s price level and GDP.
e. the price level never changes even with shifts in aggregate demand and aggregate supply.
In the aggregate demand and aggregate supply model,
ANSWER
d. the upward-sloping aggregate supply curve intersects the downward-sloping aggregate demand curve to determine the economy’s price level and GDP.
In the aggregate demand and supply model, the:
a. vertical axis measures the average price level.
b. horizontal axis measures real GDP.
c. aggregate supply curve is vertical at full employment real GDP.
d. All of the above.
In the aggregate demand and supply model, the:
ANSWER
d. All of the above.
The full employment level of real GDP can be represented on an aggregate supply and demand diagram as a (an):
a. vertical line.
b. upward sloping line.
c. horizontal line.
d. downward sloping line.
The full employment level of real GDP can be represented on an aggregate supply and demand diagram as a (an):
ANSWER
a. vertical line.
Suppose the economy is on the intermediate range of the aggregate supply curve. Which of the following would reduce both real GDP and the price level?
a. A decrease in aggregate supply.
b. An increase in aggregate supply.
c. A decrease in aggregate demand.
d. An increase in aggregate demand.
Suppose the economy is on the intermediate range of the aggregate supply curve. Which of the following would reduce both real GDP and the price level?
ANSWER
c. A decrease in aggregate demand.
In the aggregate demand and supply model, the:
a. aggregate supply curve is horizontal at full employment real GDP.
b. vertical axis measures real GDP.
c. vertical axis measures the average price level.
d. All of the above.
e. None of the above.
In the aggregate demand and supply model, the:
ANSWER
c. vertical axis measures the average price level.
Along the intermediate range of the aggregate supply curve, an increase in the aggregate demand curve will increase:
a. both the price level and real GDP.
b. only real GDP.
c. only the price level.
d. real GDP and reduce the price level.
Along the intermediate range of the aggregate supply curve, an increase in the aggregate demand curve will increase:
a. both the price level and real GDP.
Along the Keynesian range of the aggregate supply curve, an increase in the aggregate demand curve will increase:
a. both the price level and real GDP.
b. only real GDP.
c. only the price level.
d. real GDP and reduce the price level.
Along the Keynesian range of the aggregate supply curve, an increase in the aggregate demand curve will increase:
ANSWER
b. only real GDP.
Along the classical or vertical range of the aggregate supply curve, an increase in the aggregate demand curve will increase:
a. both the price level and real GDP.
b. only real GDP.
c. only the price level.
d. real GDP and reduce the price level.
Along the classical or vertical range of the aggregate supply curve, an increase in the aggregate demand curve will increase:
ANSWER
c. only the price level.
If aggregate demand increases in the intermediate range of the aggregate supply curve then the:
a. price level rises and real GDP falls.
b. price level rises and real GDP rises.
c. price level falls and real GDP falls.
d. price level falls and real GDP rises.
If aggregate demand increases in the intermediate range of the aggregate supply curve then the:
ANSWER
b. price level rises and real GDP rises.
Given aggregate demand, a decrease in aggregate supply creates:
a. a higher price level and a higher GDP level.
b. a lower price level and a higher GDP level.
c. cost-push inflation.
d. demand-pull inflation.
Given aggregate demand, a decrease in aggregate supply creates:
ANSWER
c. cost-push inflation.
When the economy is operating well below capacity, an increase in spending tends to be reflected primarily in a(n):
a. lower level of employment.
b. increase in price.
c. lower level of output.
d. higher level of output and employment.
e. increase in business failures.
When the economy is operating well below capacity, an increase in spending tends to be reflected primarily in a(n):
ANSWER
d. higher level of output and employment.
Suppose workers become pessimistic about their future employment, which causes them to save more and spend less. If the economy is on the intermediate range of the aggregate supply curve, then:
a. both real GDP and the price level will fall.
b. real GDP will fall and the price level will rise.
c. real GDP will rise and the price level will fall.
d. real GDP and the price level will rise.
Suppose workers become pessimistic about their future employment, which causes them to save more and spend less. If the economy is on the intermediate range of the aggregate supply curve, then:
ANSWER
a. both real GDP and the price level will fall.
Other factors held constant, a decrease in resource prices will shift the aggregate:
a. demand curve leftward.
b. demand curve rightward.
c. supply curve leftward.
d. supply curve rightward.
Other factors held constant, a decrease in resource prices will shift the aggregate:
ANSWER
d. supply curve rightward.
An increase in oil prices will shift the aggregate:
a. demand curve leftward.
b. demand curve rightward.
c. supply curve leftward.
d. supply curve rightward.
An increase in oil prices will shift the aggregate:
ANSWER
c. supply curve leftward.
Lower taxes on businesses will shift the aggregate:
a. demand curve rightward.
b. demand curve leftward.
c. supply curve rightward.
d. supply curve leftward.
Lower taxes on businesses will shift the aggregate:
ANSWER
c. supply curve rightward.
A reduction in regulation will shift the aggregate:
a. supply curve leftward.
b. supply curve rightward.
c. demand curve leftward.
d. demand curve rightward.
A reduction in regulation will shift the aggregate:
ANSWER
b. supply curve rightward.
Advances in technology will shift the aggregate:
a. demand curve rightward.
b. supply curve rightward.
c. demand curve leftward.
d. supply curve leftward.
Advances in technology will shift the aggregate:
ANSWER
b. supply curve rightward.
Greater entrepreneurship in the economy will shift the aggregate:
a. supply curve rightward
b. supply curve leftward.
c. demand curve rightward.
d. demand curve leftward.
Greater entrepreneurship in the economy will shift the aggregate:
ANSWER
a. supply curve rightward
An increase in regulation will shift the aggregate:
a. demand curve leftward.
b. supply curve rightward.
c. supply curve leftward.
d. demand curve rightward.
An increase in regulation will shift the aggregate:
ANSWER
c. supply curve leftward.
Aggregate supply increases when:
a. wage rates or interest rates decrease while the economy’s price level remains unchanged.
b. resource availability is reduced.
c. there are fewer workers.
d. there is less capital and the price level remains unchanged.
e. there are increased inflationary expectations of labor.
Aggregate supply increases when:
ANSWER
a. wage rates or interest rates decrease while the economy’s price level remains unchanged.
If a new method for obtaining oil from dry oil fields is found, then we will see:
a. the AS curve shift to the left.
b. a movement to the left along the AD curve.
c. the AD curve shift to the left.
d. the AD curve shift to the right.
e. the AS curve shift to the right.
If a new method for obtaining oil from dry oil fields is found, then we will see:
ANSWER
e. the AS curve shift to the right.
A decrease in aggregate supply will tend to cause the price level to:
a. rise and GDP to fall.
b. rise and GDP to rise.
c. rise and the unemployment rate to fall.
d. fall and GDP to rise.
e. fall and the unemployment rate to rise.
A decrease in aggregate supply will tend to cause the price level to:
ANSWER
a. rise and GDP to fall.
An increase in aggregate supply will tend to cause the price level to:
a. rise and GDP to rise
b. rise and GDP to fall.
c. rise and the unemployment rate to fall.
d. fall and GDP to rise.
e. fall and the unemployment rate to rise.
An increase in aggregate supply will tend to cause the price level to:
ANSWER
d. fall and GDP to rise.
The aggregate supply curve will shift to the right when the:
a. amount of labor in the society decreases.
b. capital stock of the society shrinks.
c. amount of natural resources in the society gets smaller.
d. amount of labor in the society increases.
e. price level in the economy rises.
The aggregate supply curve will shift to the right when the:
ANSWER
d. amount of labor in the society increases.
Stagflation occurs when the economy experiences:
a. low unemployment and low inflation.
b. high unemployment and rapid inflation.
c. low unemployment and rapid inflation.
d. high unemployment and low inflation.
Stagflation occurs when the economy experiences:
ANSWER
b. high unemployment and rapid inflation.
Which of the following events is the most likely to create stagflation?
a. An increase in the money supply.
b. A reduction in the amount spent on national defense.
c. A doubling of oil prices.
d. A decrease in investment spending.
Which of the following events is the most likely to create stagflation?
ANSWER
c. A doubling of oil prices.
The concurrent problems of inflation and unemployment are termed:
a. depression.
b. downturn.
c. deflation.
d. demand-pull inflation.
e. stagflation.
The concurrent problems of inflation and unemployment are termed:
ANSWER
e. stagflation.
Stagflation is a period of time when the economy is experiencing:
a. inflation and low unemployment.
b. high unemployment and low levels of inflation at the same time.
c. high inflation and high unemployment at the same time.
d. low inflation and low unemployment at the same time.
Stagflation is a period of time when the economy is experiencing:
ANSWER
c. high inflation and high unemployment at the same time.
When the economy is experiencing high inflation and high unemployment at the same time, then it is experiencing:
a. stagnation.
b. deflation.
c. reflation.
d. stagflation.
e. innation.
When the economy is experiencing high inflation and high unemployment at the same time, then it is experiencing:
ANSWER
d. stagflation.
A decrease in aggregate supply can lead to:
a. unemployment.
b. demand-pull inflation.
c. prosperity.
d. cost-push inflation.
e. a recession.
A decrease in aggregate supply can lead to:
ANSWER
d. cost-push inflation.
When OPEC caused the price of oil to rise in the early 1970s, the:
a. aggregate supply curve shifted to the right.
b. aggregate supply curve shifted to the left.
c. the aggregate demand curve shifted to the right.
d. aggregate demand curve shifted to the left.
e. price level in the economy fell.
When OPEC caused the price of oil to rise in the early 1970s, the:
ANSWER
b. aggregate supply curve shifted to the left.
Cost push inflation occurs when the:
a. aggregate demand curve shifts leftward while the aggregate supply curve is fixed.
b. aggregate supply curve shifts leftward while aggregate demand curve is fixed.
c. aggregate demand curve shifts rightward while the aggregate supply curve is fixed.
d. aggregate supply curve shifts rightward.
Cost push inflation occurs when the:
ANSWER
b. aggregate supply curve shifts leftward while aggregate demand curve is fixed.
An increase in the price level caused by a rightward shift of the aggregate demand curve is called:
a. cost push inflation.
b. supply shock inflation.
c. demand shock inflation.
d. demand pull inflation.
An increase in the price level caused by a rightward shift of the aggregate demand curve is called:
ANSWER
d. demand pull inflation.
In the United States during the 1960s, government spending dramatically increased to fight the Vietnam War, which resulted in:
a. demand-pull inflation.
b. cost-push inflation.
c. a disinflationary recession.
d. stagflation.
In the United States during the 1960s, government spending dramatically increased to fight the Vietnam War, which resulted in:
ANSWER
a. demand-pull inflation.
Demand-pull inflation is caused by:
a. an increase in aggregate demand.
b. an decrease in aggregate demand.
c. an increase in aggregate supply.
d. an decrease in aggregate supply.
Demand-pull inflation is caused by:
ANSWER
a. an increase in aggregate demand.
When the aggregate demand curve shifts to the right, intersecting the aggregate supply curve on its upward-sloping or vertical segment,
a. demand-pull inflation occurs.
b. cost-push inflation occurs.
c. stagflation occurs.
d. deflation occurs.
e. the shift pulls the price level down.
When the aggregate demand curve shifts to the right, intersecting the aggregate supply curve on its upward-sloping or vertical segment,
ANSWER
a. demand-pull inflation occurs.
Demand-pull inflation is associated with a(n):
a. decrease in the aggregate supply curve.
b. increase in the aggregate supply curve.
c. increase in the aggregate demand curve.
d. decrease in the aggregate demand curve.
e. decline in the availability of a productive resource
Demand-pull inflation is associated with a(n):
ANSWER:
c. increase in the aggregate demand curve.
A shift in the aggregate supply curve in Exhibit 2 from AS1 to AS2 would be caused by a (an):
a. decrease in input prices.
b. increase in input prices.
c. increase in real GDP.
d. decrease in real output.
A shift in the aggregate supply curve in Exhibit 2 from AS1 to AS2 would be caused by a (an):
ANSWER:
b. increase in input prices.