Question 1

Which of the following macroeconomic variables would be drawn accurately as perfectly inelastic?

Accepted Answer

A)  Aggregate demand
B)  Short-run aggregate supply
C)  Long-run aggregate supply
D)  None of these should be drawn as perfectly inelastic.E) A) and C)
F) None of the above

Question 2

If the economy is in a recession,it means that:

Accepted Answer

A)  the economy is not in long-run equilibrium.
B)  total output is less than potential output.
C)  the short-run equilibrium is to the left of the long-run aggregate supply curve.
D)  All of these are true.E) C) and D)
F) None of the above

Question 3

The long-run aggregate supply curve:

Accepted Answer

A)  is affected by the price level.
B)  never moves.
C)  shifts right when the economy experiences economic growth.
D)  shifts left when the economy experiences economic growth.E) B) and D)
F) B) and C)

Question 4

When the prices of final goods and services increase more quickly than the prices of inputs,we say that:

Accepted Answer

A)  the prices of some inputs are sticky.
B)  the prices of some final goods are sticky.
C)  the economy must be in the long run.
D)  None of these is true.E) None of the above
F) A) and C)

Question 5

In the long run,if the prices of goods and services paid by consumers increase:

Accepted Answer

A)  the long-run aggregate supply will increase.
B)  the long-run aggregate supply will decrease.
C)  the long-run aggregate supply will stay the same.
D)  the long-run aggregate demand will increase.E) B) and C)
F) All of the above

Question 6

A year-long drought that destroys most of the summer's crops would be considered:

Accepted Answer

A)  a short-run supply shock.
B)  a long-run supply shock.
C)  a short-run demand shock.
D)  a long-run demand shock.E) B) and D)
F) B) and C)

Question 7

The wealth effect:

Accepted Answer

A)  explains the downward-sloping aggregate demand curve.
B)  explains the upward-sloping aggregate demand curve.
C)  explains the downward-sloping aggregate supply curve.
D)  explains the upward-sloping aggregate supply curve.E) A) and B)
F) None of the above

Question 8

The wealth effect explains the:

Accepted Answer

A)  negative relationship that exists between consumer spending and overall price level.
B)  positive relationship that exists between consumer spending and overall price level.
C)  negative relationship that exists between consumer spending and overall asset valuation.
D)  positive relationship that exists between consumer spending and overall asset valuation.E) A) and B)
F) All of the above

Question 9

The aggregate supply and aggregate demand model is used to explain:

Accepted Answer

A)  the overall health of the economy.
B)  the overall effect of large markets within the economy.
C)  the interaction of all sellers and all buyers within a particular market.
D)  None of these is true.E) A) and D)
F) All of the above

Question 10

Some call the Great Recession:

Accepted Answer

A)  the period when the economy does not grow for four consecutive quarters.
B)  the recession that began in 2007 due to the decline in consumer spending when the housing bubble burst.
C)  the period of high inflation that took place in the early 1970s.
D)  the period of economic stagnation that took place in the early 1990s.E) None of the above
F) All of the above

Question 11

The downward-sloping aggregate demand curve is partly due to:

Accepted Answer

A)  the positive relationship between the price level and net exports.
B)  the negative relationship between the price level and net exports.
C)  the positive relationship between the price level and government spending.
D)  the negative relationship between the price level and government spending.E) B) and D)
F) B) and C)

Question 12

Economic stagnation coupled with high inflation is commonly called:

Accepted Answer

A)  stagflation.
B)  inflagnation.
C)  stagnatory growth.
D)  inflationary stagnation.E) B) and D)
F) A) and D)

Question 13

When the government considers whether it should change its spending in response to a recession,it must weigh the tradeoff between ____________ and ________________.

Accepted Answer

A)  faster recovery time;inflation
B)  more output;higher prices
C)  more output;lower prices
D)  faster recovery time;lower pricesE) B) and D)
F) A) and B)

Question 14

Falling output,in the short run,could be due to:

Accepted Answer

A)  a reduction in aggregate demand.
B)  an increase in short-run aggregate supply.
C)  an increase in long-run aggregate supply.
D)  an increase in aggregate demand.E) All of the above
F) None of the above

Question 15

One major difference between the aggregate supply curve and an individual supply curve is:

Accepted Answer

A)  the aggregate supply curve represents production in the economy as a whole rather than just one good or service.
B)  the aggregate supply curve represents production in an entire market rather than just one firm.
C)  the aggregate supply curve represents goods and services sold rather than the total actually produced by each firm.
D)  None of these is true.E) C) and D)
F) A) and D)

Question 16

Something that would cause the long-run aggregate supply curve to shift to the right would be:

Accepted Answer

A)  the unemployment rate decreasing.
B)  discovery of a new oil reserve.
C)  the inflation rate decreasing.
D)  The long-run aggregate supply curve is fixed,and does not shift.E) All of the above
F) C) and D)

Question 17

The long-run aggregate supply curve is:

Accepted Answer

A)  downward sloping.
B)  perfectly elastic.
C)  perfectly inelastic.
D)  The long-run aggregate supply curve can be any of these.E) B) and C)
F) C) and D)

Question 18

The relationship between the price level and net exports is:

Accepted Answer

A)  negative.
B)  positive.
C)  perfectly correlated.
D)  uncorrelated.E) A) and B)
F) All of the above

Question 19

Government spending:

Accepted Answer

A)  tends to increase with increases in the price level.
B)  tends to increase with decreases in the price level.
C)  remains generally unaffected by changes in the price level.
D)  is not a component of aggregate demand.E) A) and B)
F) B) and C)

Question 20

Something that would cause the long-run aggregate supply curve to shift to the right would be:

Accepted Answer

A)  technological advance.
B)  discovery of a new oil reserve.
C)  increase in the growth rate of the labor force.
D)  All of these would shift the long-run aggregate supply curve to the right.E) A) and D)
F) A) and B)

Exam 28: Aggregate Demand and Aggregate Supply

Something that would cause the long-run aggregate supply curve to shift to the right would be:

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Some call the Great Recession:

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The relationship between the price level and net exports is:

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Which of the following macroeconomic variables would be drawn accurately as perfectly inelastic?

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve:

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Falling output,in the short run,could be due to:

Correct AnswerverifiedShow Answer

In the long run,if the prices of goods and services paid by consumers increase:

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The wealth effect:

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The aggregate supply and aggregate demand model is used to explain:

Correct AnswerverifiedShow Answer

One major difference between the aggregate supply curve and an individual supply curve is:

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve is:

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Government spending:

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A year-long drought that destroys most of the summer's crops would be considered:

Correct AnswerverifiedShow Answer

Something that would cause the long-run aggregate supply curve to shift to the right would be:

Correct AnswerverifiedShow Answer

Economic stagnation coupled with high inflation is commonly called:

Correct AnswerverifiedShow Answer

If the economy is in a recession,it means that:

Correct AnswerverifiedShow Answer

When the government considers whether it should change its spending in response to a recession,it must weigh the tradeoff between ____________ and ________________.

Correct AnswerverifiedShow Answer

The wealth effect explains the:

Correct AnswerverifiedShow Answer

When the prices of final goods and services increase more quickly than the prices of inputs,we say that:

Correct AnswerverifiedShow Answer

The downward-sloping aggregate demand curve is partly due to:

Correct AnswerverifiedShow Answer

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When the government considers whether it should change its spending in response to a recession,it must weigh the tradeoff between and ____.

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