Question 1

An increase in aggregate demand is beneficial in the short run because ________,but harmful in the long run because ________.

Accepted Answer

A)   output decreases; the unemployment rate falls
B)   the unemployment rate falls; the price level rises
C)   wages decrease; wages increase
D)   real wealth decreases; real wealth increases
E)   wages increase; the unemployment rate risesF) A) and B)
G) A) and C)

Question 2

An increase in short-run aggregate supply could be the result of a(n) :

Accepted Answer

A)   increase in the general price level.
B)   negative supply shock.
C)   increase in the price of oil.
D)   increase in consumption spending.
E)   reduction in expected future prices.F) None of the above
G) A) and B)

Question 3

Which of the following would cause a downward movement along the aggregate demand curve?

Accepted Answer

A)   A rise in the price level makes U.S.goods relatively more expensive than foreign goods.
B)   The value of real wealth rises.
C)   There is a decline in the expected price level.
D)   A fall in the price level increases savings and lowers interest rates, increasing stock market value.
E)   The value of the dollar decreases.F) A) and B)
G) A) and C)

Question 4

A decrease in aggregate demand is harmful in the short run because ________,but beneficial in the long run because ________.

Accepted Answer

A)   real wealth rises; real wealth falls
B)   wages increase; wages decrease
C)   the price level rises; output falls
D)   unemployment rises; the price level falls
E)   the price level falls; the unemployment rate risesF) B) and E)
G) C) and D)

Question 5

When actual unemployment is less than its natural rate:

Accepted Answer

A)   the economy is producing below its long-run capabilities.
B)   the economy is producing within its long-run capabilities.
C)   resources are employed at levels that are not sustainable in the long run.
D)   resources are employed at levels that are sustainable in the long run.
E)   output is less than full employment output.F) A) and B)
G) A) and C)

Question 6

The Great Recession ended in:

Accepted Answer

A)   June 2009.
B)   January 2009.
C)   March 1933.
D)   June 1938.
E)   June 2012.F) A) and D)
G) B) and D)

Question 7

Unemployment rises and real gross domestic product (GDP) growth slows during the:

Accepted Answer

A)   expansion phase of a business cycle.
B)   recession phase of a business cycle.
C)   entire business cycle.
D)   recovery phase of a business cycle.
E)   short-run phase of a business cycle.F) A) and D)
G) C) and D)

Question 8

Explain how a change in real wealth can sometimes cause a movement along the aggregate demand curve and how sometimes it can cause a shift of the aggregate demand curve.

Accepted Answer

Real wealth can change for different rea...

Question 9

During the Great Recession,the unemployment rate climbed as high as ________ and remained around 7-9% ________ months after the recession began.

Accepted Answer

A)   15%; 75
B)   25%; 8
C)   10%; 60
D)   20%; 12
E)   35%; 80F) C) and D)
G) All of the above

Question 10

Suppose a country's population is aging and the size of the workforce is declining.In the long run,output will ________ and the price level will ________.

Accepted Answer

A)   decrease; increase
B)   remain unchanged; decrease
C)   decrease; decrease
D)   decrease; remain unchanged
E)   increase; decreaseF) D) and E)
G) A) and B)

Question 11

All else being equal,as the population ages and many people leave the labor force:

Accepted Answer

A)   the unemployment rate will rise.
B)   the price level will fall.
C)   long-run aggregate supply will fall.
D)   long-run aggregate supply will be unaffected.
E)   aggregate demand must rise.F) B) and E)
G) C) and E)

Question 12

Adjustments in ________ naturally move the economy toward long-run equilibrium.

Accepted Answer

A)   aggregate demand
B)   the price level
C)   government spending
D)   the productive capacity of firms
E)   full employment outputF) A) and C)
G) D) and E)

Question 13

Suppose a hurricane destroys 20% of the capital stock in a country.In the long run,output will ________ and the price level will ________.

Accepted Answer

A)   decrease; decrease
B)   decrease; increase
C)   decrease; remain unchanged
D)   remain unchanged; remain unchanged
E)   remain unchanged; increaseF) B) and E)
G) A) and B)

Question 14

If short-run equilibrium output is above full employment output,then in the long run input prices will:

Accepted Answer

A)   decrease and output will increase.
B)   increase and output will be unaffected.
C)   increase and short-run aggregate supply will increase.
D)   increase and output will fall.
E)   decrease and output will fall.F) None of the above
G) A) and B)

Question 15

During the Great Depression,aggregate demand in the U.S.economy decreased.As a result,the unemployment rate ________ and real gross domestic product (GDP) ________.

Accepted Answer

A)   increased; decreased
B)   decreased; remained unchanged
C)   increased; increased
D)   decreased; decreased
E)   remained unchanged; increasedF) B) and E)
G) A) and C)

Question 16

Suppose advances in computer technology lead to a surge in worker productivity.In the long run,output will ________ and the price level will ________.

Accepted Answer

A)   increase; increase
B)   increase; decrease
C)   increase; remain unchanged
D)   decrease; decrease
E)   remain unchanged; remain unchangedF) D) and E)
G) A) and C)

Question 17

Refer to the following figure to answer the questions that follow.
 
-Based on the figure,which points represent short-run equilibrium?

Accepted Answer

A)   A and B
B)   A and C
C)   A and D
D)   B and D
E)   A, B, C, and DF) A) and B)
G) C) and D)

Question 18

If the price level rises by 10%,then all else being equal,the long-run quantity of aggregate supply will:

Accepted Answer

A)   increase by 10%.
B)   decrease by 10%.
C)   remain unchanged.
D)   increase by more than 10%.
E)   increase by less than 10%.F) B) and C)
G) All of the above

Question 19

A fall in the price level that causes a change in net exports results in:

Accepted Answer

A)   a downward movement along the aggregate demand curve.
B)   an upward movement along the aggregate demand curve.
C)   a rightward shift of the demand curve.
D)   a leftward shift of the demand curve.
E)   no change in the quantity of aggregate demand.F) A) and B)
G) None of the above

Question 20

Starting from long-run equilibrium,draw an aggregate demand-aggregate supply graph to illustrate the difference between a long-run and a short-run equilibrium due to an increase in aggregate demand.Once the economy is in the short-run equilibrium,explain-but it is not necessary to illustrate-how long-run equilibrium will be restored.

Accepted Answer

In long-run equilibrium,the economy is p...

Exam 12: Aggregate Demand and Aggregate Supply

During the Great Depression,aggregate demand in the U.S.economy decreased.As a result,the unemployment rate and real gross domestic product (GDP) .

Correct Answer
verified

An increase in short-run aggregate supply could be the result of a(n) :

Correct Answer
verified

Suppose advances in computer technology lead to a surge in worker productivity.In the long run,output will and the price level will .

Correct Answer
verified

An increase in aggregate demand is beneficial in the short run because ,but harmful in the long run because .

Correct Answer
verified

A fall in the price level that causes a change in net exports results in:

Correct Answer
verified

Which of the following would cause a downward movement along the aggregate demand curve?

Correct Answer
verified

Adjustments in ________ naturally move the economy toward long-run equilibrium.

Correct Answer
verified

During the Great Recession,the unemployment rate climbed as high as and remained around 7-9% months after the recession began.

Correct Answer
verified

Unemployment rises and real gross domestic product (GDP) growth slows during the:

Correct Answer
verified

All else being equal,as the population ages and many people leave the labor force:

Correct Answer
verified

Suppose a hurricane destroys 20% of the capital stock in a country.In the long run,output will and the price level will .

Correct Answer
verified

A decrease in aggregate demand is harmful in the short run because ,but beneficial in the long run because .

Correct Answer
verified

Explain how a change in real wealth can sometimes cause a movement along the aggregate demand curve and how sometimes it can cause a shift of the aggregate demand curve.

Correct Answer
verified
Real wealth can change for different rea...
View Answer

Suppose a country's population is aging and the size of the workforce is declining.In the long run,output will and the price level will .

Correct Answer
verified

If the price level rises by 10%,then all else being equal,the long-run quantity of aggregate supply will:

Correct Answer
verified

If short-run equilibrium output is above full employment output,then in the long run input prices will:

Correct Answer
verified

When actual unemployment is less than its natural rate:

Correct Answer
verified

Refer to the following figure to answer the questions that follow. -Based on the figure,which points represent short-run equilibrium?

Correct Answer
verified

The Great Recession ended in:

Correct Answer
verified

Correct Answer
verified
In long-run equilibrium,the economy is p...
View Answer

Exam 12: Aggregate Demand and Aggregate Supply

During the Great Depression,aggregate demand in the U.S.economy decreased.As a result,the unemployment rate ________ and real gross domestic product (GDP) ________.

Correct AnswerverifiedShow Answer

An increase in short-run aggregate supply could be the result of a(n) :

Correct AnswerverifiedShow Answer

Suppose advances in computer technology lead to a surge in worker productivity.In the long run,output will ________ and the price level will ________.

Correct AnswerverifiedShow Answer

An increase in aggregate demand is beneficial in the short run because ________,but harmful in the long run because ________.

Correct AnswerverifiedShow Answer

A fall in the price level that causes a change in net exports results in:

Correct AnswerverifiedShow Answer

Which of the following would cause a downward movement along the aggregate demand curve?

Correct AnswerverifiedShow Answer

Adjustments in ________ naturally move the economy toward long-run equilibrium.

Correct AnswerverifiedShow Answer

During the Great Recession,the unemployment rate climbed as high as ________ and remained around 7-9% ________ months after the recession began.

Correct AnswerverifiedShow Answer

Unemployment rises and real gross domestic product (GDP) growth slows during the:

Correct AnswerverifiedShow Answer

All else being equal,as the population ages and many people leave the labor force:

Correct AnswerverifiedShow Answer

Suppose a hurricane destroys 20% of the capital stock in a country.In the long run,output will ________ and the price level will ________.

Correct AnswerverifiedShow Answer

A decrease in aggregate demand is harmful in the short run because ________,but beneficial in the long run because ________.

Correct AnswerverifiedShow Answer

Explain how a change in real wealth can sometimes cause a movement along the aggregate demand curve and how sometimes it can cause a shift of the aggregate demand curve.

Correct AnswerverifiedReal wealth can change for different rea...View AnswerShow Answer

Suppose a country's population is aging and the size of the workforce is declining.In the long run,output will ________ and the price level will ________.

Correct AnswerverifiedShow Answer

If the price level rises by 10%,then all else being equal,the long-run quantity of aggregate supply will:

Correct AnswerverifiedShow Answer

If short-run equilibrium output is above full employment output,then in the long run input prices will:

Correct AnswerverifiedShow Answer

When actual unemployment is less than its natural rate:

Correct AnswerverifiedShow Answer

Refer to the following figure to answer the questions that follow. -Based on the figure,which points represent short-run equilibrium?

Correct AnswerverifiedShow Answer

The Great Recession ended in:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIn long-run equilibrium,the economy is p...View AnswerShow Answer

During the Great Depression,aggregate demand in the U.S.economy decreased.As a result,the unemployment rate and real gross domestic product (GDP) .

Correct Answer
verified

Correct Answer
verified

Suppose advances in computer technology lead to a surge in worker productivity.In the long run,output will and the price level will .

Correct Answer
verified

An increase in aggregate demand is beneficial in the short run because ,but harmful in the long run because .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

During the Great Recession,the unemployment rate climbed as high as and remained around 7-9% months after the recession began.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Suppose a hurricane destroys 20% of the capital stock in a country.In the long run,output will and the price level will .

Correct Answer
verified

A decrease in aggregate demand is harmful in the short run because ,but beneficial in the long run because .

Correct Answer
verified

Correct Answer
verified
Real wealth can change for different rea...
View Answer

Suppose a country's population is aging and the size of the workforce is declining.In the long run,output will and the price level will .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
In long-run equilibrium,the economy is p...
View Answer