Question 1

If the economy is initially at long-run equilibrium and aggregate demand declines,then in the long run the price level

Accepted Answer

A)  and output are higher than in the original long-run equilibrium.
B)  and output are lower than in the original long-run equilibrium.
C)  is lower and output is the same as the original long-run equilibrium.
D)  is the same and output is lower than in the original long-run equilibrium.E) A) and D)
F) C) and D)

Question 2

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.

-Refer to Stock Market Boom 2015.In the long run,the change in price expectations created by the stock market boom shifts

Accepted Answer

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

Question 3

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.

-Refer to Stock Market Boom 2015.How is the new long-run equilibrium different from the original one?

Accepted Answer

A)  the price level and real GDP are higher
B)  the price level and real GDP are lower.
C)  the price level is higher and real GDP is the same.
D)  the price level is the same and real GDP is higher.E) All of the above
F) None of the above

Question 4

Figure 33-8. 1 and Y1 ,then it must be the case that A) short run aggregate supply has decreased. B) short run aggregate supply has increased. C) aggregate demand has increased. D) aggregate demand has decreased." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 33-8.Suppose the economy starts at Z.If changes occur that move the economy to a new short run equilibrium of P1 and Y1 ,then it must be the case that

Accepted Answer

A)  short run aggregate supply has decreased.
B)  short run aggregate supply has increased.
C)  aggregate demand has increased.
D)  aggregate demand has decreased.E) A) and C)
F) A) and B)

Question 5

Consider the exhibit below for the following questions.
Figure 33-4 
-Refer to Figure 33-4.The economy would be moving to long-run equilibrium if it started at

Accepted Answer

A)  A and moved to B.
B)  C and moved to B.
C)  D and moved to C.
D)  None of the above is correct.E) A) and C)
F) B) and C)

Question 6

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.

-Refer to Pessimism.What happens to the expected price level and what's the result for wage bargaining?

Accepted Answer

A)  The expected price level rises.Bargains are struck for higher wages.
B)  The expected price level rises.Bargains are struck for lower wages.
C)  The expected price level falls.Bargains are struck for higher wages.
D)  The expected price level falls.Bargains are struck for lower wages.E) B) and C)
F) All of the above

Question 7

Imagine the U.S.economy is in long-run equilibrium.Then suppose the aggregate demand increases.We would expect that in the long-run the price level would

Accepted Answer

A)  ​increase.
B)  ​decrease.
C)  ​stay the same.
D)  ​decrease by the same amount as the increase in aggregate demand.E) A) and D)
F) All of the above

Question 8

If the government repeals an investment tax credit and increases income taxes,

Accepted Answer

A)  real GDP rises,and the price level could rise,fall,or stay the same.
B)  real GDP falls,and the price level could rise,fall,or stay the same.
C)  real GDP and the price level rise.
D)  real GDP and the price level fall.E) A) and B)
F) A) and C)

Question 9

Suppose the economy is in long-run equilibrium.In a short span of time,there is a sharp rise in the stock market,an increase in government purchases,an increase in the money supply and a decline in the value of the dollar.In the short run

Accepted Answer

A)  the price level and real GDP will both rise.
B)  the price level and real GDP will both fall.
C)  neither the price leave nor real GDP will change.
D)  All of the above are possible.E) All of the above
F) None of the above

Question 10

Figure 33-5. 1 to SRAS2 A) could be caused by an outbreak of war in the Middle East. B) could be caused by a decrease in the expected price level. C) causes the economy to experience an increase in the unemployment rate. D) causes the economy to experience stagflation." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 33-5.The shift of the short-run aggregate-supply curve from SRAS1 to SRAS2

Accepted Answer

A)  could be caused by an outbreak of war in the Middle East.
B)  could be caused by a decrease in the expected price level.
C)  causes the economy to experience an increase in the unemployment rate.
D)  causes the economy to experience stagflation.E) A) and B)
F) B) and C)

Question 11

Suppose a shift in aggregate demand creates an economic contraction.If policymakers can respond with sufficient speed and precision,they can offset the initial shift by shifting

Accepted Answer

A)  aggregate supply right.
B)  aggregate supply left.
C)  aggregate demand right.
D)  aggregate demand left.E) A) and C)
F) None of the above

Question 12

Figure 33-8. 3 and Y3 ,then it must be the case that A) short run aggregate supply has decreased. B) short run aggregate supply has increased. C) aggregate demand has increased. D) aggregate demand has decreased." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 33-8.Suppose the economy starts at Z.If changes occur that move the economy to a new short run equilibrium of P3 and Y3 ,then it must be the case that

Accepted Answer

A)  short run aggregate supply has decreased.
B)  short run aggregate supply has increased.
C)  aggregate demand has increased.
D)  aggregate demand has decreased.E) A) and D)
F) None of the above

Question 13

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.

-Refer to Financial Crisis.What happens to the price level and real GDP in the short run?

Accepted Answer

A)  both the price level and real GDP rise
B)  the price level rises and real GDP falls
C)  the price level falls and real GDP rises
D)  both the price level and real GDP fallE) C) and D)
F) A) and B)

Question 14

Which of the following will reduce the price level and real output in the short run?

Accepted Answer

A)  an increase in government purchases.
B)  an decrease in oil prices
C)  a decrease in the money supply
D)  technical progressE) B) and D)
F) B) and C)

Question 15

During the 2008-2009 unemployment rose from about 4.4% to about

Accepted Answer

A)  6%
B)  8%
C)  10%
D)  12%E) A) and D)
F) All of the above

Question 16

Which of the following correctly describes actions of the U.S.government during the recession of 2008-2009?

Accepted Answer

A)  It refused to provide banks funding and made no significant changes in government spending.
B)  It refused to provide banks funding but made a large increase in government spending.
C)  It became part owner of some banks but made no significant change in government spending
D)  It became part owner of some banks and made a large increase in government spending.E) C) and D)
F) All of the above

Question 17

In 1986,OPEC countries increased their production of oil.This caused

Accepted Answer

A)  the price level to rise.
B)  aggregate supply to shift right.
C)  unemployment to rise.
D)  None of the above is correct.E) C) and D)
F) A) and D)

Question 18

Figure 33-5. 
-Refer to Figure 33-5.Starting from point B and assuming that aggregate demand is held constant,in the long run the economy is likely to experience

Accepted Answer

A)  a falling price level and a falling level of output,as the economy moves to point C.
B)  a falling price level and a rising level of output,as the economy moves to point A.
C)  a rising price level and a falling level of output,as the economy moves to point A.
D)  a rising price level and a rising level of output,as the economy moves to point C.E) A) and D)
F) C) and D)

Question 19

Figure 33-5. 1. C) indicates that Y1 is the natural rate of output. D) All of the above are correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 33-5.The appearance of the long-run aggregate-supply (LRAS) curve

Accepted Answer

A)  is consistent with the concept of monetary neutrality.
B)  is consistent with the idea that point A represents a long-run equilibrium and a short-run equilibrium when the relevant short-run aggregate-supply curve is SRAS1.
C)  indicates that Y1 is the natural rate of output.
D)  All of the above are correct.E) B) and D)
F) C) and D)

Question 20

When production costs rise,

Accepted Answer

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

Exam 20: Aggregate Demand and Aggregate Supply: Two Causes of Economic Fluctuations

Figure 33-5. -Refer to Figure 33-5.The shift of the short-run aggregate-supply curve from SRAS₁ to SRAS₂

Correct Answer
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Which of the following will reduce the price level and real output in the short run?

Correct Answer
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If the economy is initially at long-run equilibrium and aggregate demand declines,then in the long run the price level

Correct Answer
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Correct Answer
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When production costs rise,

Correct Answer
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Correct Answer
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Figure 33-8. -Refer to Figure 33-8.Suppose the economy starts at Z.If changes occur that move the economy to a new short run equilibrium of P₃ and Y₃ ,then it must be the case that

Correct Answer
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Which of the following correctly describes actions of the U.S.government during the recession of 2008-2009?

Correct Answer
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Figure 33-5. -Refer to Figure 33-5.The appearance of the long-run aggregate-supply (LRAS) curve

Correct Answer
verified

Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4.The economy would be moving to long-run equilibrium if it started at

Correct Answer
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If the government repeals an investment tax credit and increases income taxes,

Correct Answer
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Correct Answer
verified

During the 2008-2009 unemployment rose from about 4.4% to about

Correct Answer
verified

Suppose a shift in aggregate demand creates an economic contraction.If policymakers can respond with sufficient speed and precision,they can offset the initial shift by shifting

Correct Answer
verified

In 1986,OPEC countries increased their production of oil.This caused

Correct Answer
verified

Correct Answer
verified

Imagine the U.S.economy is in long-run equilibrium.Then suppose the aggregate demand increases.We would expect that in the long-run the price level would

Correct Answer
verified

Figure 33-5. -Refer to Figure 33-5.Starting from point B and assuming that aggregate demand is held constant,in the long run the economy is likely to experience

Correct Answer
verified

Figure 33-8. -Refer to Figure 33-8.Suppose the economy starts at Z.If changes occur that move the economy to a new short run equilibrium of P₁ and Y₁ ,then it must be the case that

Correct Answer
verified

Suppose the economy is in long-run equilibrium.In a short span of time,there is a sharp rise in the stock market,an increase in government purchases,an increase in the money supply and a decline in the value of the dollar.In the short run

Correct Answer
verified

Exam 20: Aggregate Demand and Aggregate Supply: Two Causes of Economic Fluctuations

Figure 33-5. -Refer to Figure 33-5.The shift of the short-run aggregate-supply curve from SRAS1 to SRAS2

Correct AnswerverifiedShow Answer

Which of the following will reduce the price level and real output in the short run?

Correct AnswerverifiedShow Answer

If the economy is initially at long-run equilibrium and aggregate demand declines,then in the long run the price level

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When production costs rise,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 33-8. -Refer to Figure 33-8.Suppose the economy starts at Z.If changes occur that move the economy to a new short run equilibrium of P3 and Y3 ,then it must be the case that

Correct AnswerverifiedShow Answer

Which of the following correctly describes actions of the U.S.government during the recession of 2008-2009?

Correct AnswerverifiedShow Answer

Figure 33-5. -Refer to Figure 33-5.The appearance of the long-run aggregate-supply (LRAS) curve

Correct AnswerverifiedShow Answer

Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4.The economy would be moving to long-run equilibrium if it started at

Correct AnswerverifiedShow Answer

If the government repeals an investment tax credit and increases income taxes,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

During the 2008-2009 unemployment rose from about 4.4% to about

Correct AnswerverifiedShow Answer

Suppose a shift in aggregate demand creates an economic contraction.If policymakers can respond with sufficient speed and precision,they can offset the initial shift by shifting

Correct AnswerverifiedShow Answer

In 1986,OPEC countries increased their production of oil.This caused

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Imagine the U.S.economy is in long-run equilibrium.Then suppose the aggregate demand increases.We would expect that in the long-run the price level would

Correct AnswerverifiedShow Answer

Figure 33-5. -Refer to Figure 33-5.Starting from point B and assuming that aggregate demand is held constant,in the long run the economy is likely to experience

Correct AnswerverifiedShow Answer

Figure 33-8. -Refer to Figure 33-8.Suppose the economy starts at Z.If changes occur that move the economy to a new short run equilibrium of P1 and Y1 ,then it must be the case that

Correct AnswerverifiedShow Answer

Suppose the economy is in long-run equilibrium.In a short span of time,there is a sharp rise in the stock market,an increase in government purchases,an increase in the money supply and a decline in the value of the dollar.In the short run

Correct AnswerverifiedShow Answer

Figure 33-5. -Refer to Figure 33-5.The shift of the short-run aggregate-supply curve from SRAS₁ to SRAS₂

Correct Answer
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Figure 33-8. -Refer to Figure 33-8.Suppose the economy starts at Z.If changes occur that move the economy to a new short run equilibrium of P₃ and Y₃ ,then it must be the case that

Correct Answer
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Figure 33-8. -Refer to Figure 33-8.Suppose the economy starts at Z.If changes occur that move the economy to a new short run equilibrium of P₁ and Y₁ ,then it must be the case that

Correct Answer
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Correct Answer
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