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Econ Quiz 33

Econ Quiz 33

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1. (Points: 1) Most economists use the aggregate demand and aggregate supply model primarily to analyze 1.

short-run fluctuations in the economy. 2. the effects of macroeconomic policy on the prices of individual goods. 3. the long-run effects of international trade policies. 4. long-run fluctuations in the economy. 5. productivity and economic growth. Save Answer 2. (Points: 1)

Which of the following is correct?

1. Short run fluctuations in economic activity happen only in developing countries. 2. During economic contractions most firms experience rising sales. 3. Recessions come at regular intervals and are easy to predict. 4. When real GDP falls, the rate of unemployment falls. 5. When real GDP falls, the rate of unemployment rises. Save Answer 3. (Points: 1)

During a recession the economy experiences

1. falling employment and income. 2. rising income and falling employment. 3. rising employment and income. 4. rising employment and falling income. 5. falling unemployment and rising income. Save Answer 4.

The price level can be measured by real GDP. The price level can be measured by the GDP deflator. 5 percent. 4 percent 2. The price level can be measured by nominal GDP. Economists would be shocked to see most of these pairs in the U. Save Answer 6. 5 percent Save Answer 5. the price level on the vertical axis. 3. Which pair of GDP growth rates and unemployment rates is realistic? 1. The price level can be measured by real GDP. The price level can be measured by the GDP deflator.(Points: 1) Below are pairs of GDP growth rates and unemployment rates. -1 percent. the price level on the vertical axis. 2. the price level on the horizontal axis. 4. . the price level on the horizontal axis. 7 percent 4. 5 percent. -2 percent. the price level on the vertical axis. S. 3 percent 3. 1 percent 5. (Points: 1) The aggregate demand and aggregate supply graph has 1. 5. 3 percent.

3. and the government want to buy. only the quantity of goods and services households. only the quantity of goods and services households want to buy. the economy moves . firms. firms. the quantity of goods households. If the economy starts at A and there is a fall in aggregate demand. 4. (Points: 1) Figure 33-1 Consider the exhibit below for the following questions. Refer to Figure 33-1. 2. the quantity of goods and services households. firms. Save Answer 7. the government. the government want to buy. and customers abroad want to buy.(Points: 1) Aggregate demand includes 1. only the quantity of goods and services households and firms want to buy. 5.

back to A in the long run. a falling price level and a rising level of unemployment. both the price level and real GDP rise. to C in the long run. a rising price level and a rising level of output. the price level falls and real GDP remains the same. (Points: 1) Refer to Stock Market Boom 2014.1. both the price level and real GDP fall. the price level rises and real GDP falls. 3. 5. In the short run what happens to the price level and real GDP? 1. in the long run the economy is likely to experience 1. to D in the long run. 2. 4. (Points: 1) Refer to Figure 33-2. 2. 3. . 3. the price level falls and real GDP rises. 5. 4. Starting from point B and assuming that aggregate demand is held constant. 2. a falling price level and a falling level of output. Save Answer 9. Save Answer 8. to B in the long run. to either A or C in the long run. Save Answer 10. a rising price level and a falling level of output. 4. a falling price level and a rising level of output. 5.

the change in price expectations created by the stock market boom shifts 1. Save Answer 11. short-run aggregate supply right. long-run aggregate supply right. 5. Which curve shifts and in which direction? 1. people become more optimistic about the future and stay this way for some time. 3. (Points: 1) Optimism Imagine that the economy is in long-run equilibrium. 2. 4. aggregate supply shifts left and aggregate demand shifts left. Save Answer 12. long-run aggregate supply left. aggregate supply shifts right. Then. Refer to Optimism.. In the long run. short-run aggregate supply right and long-run aggregate supply right. 3. 4.(Points: 1) Refer to Stock Market Boom 2014. aggregate demand shifts right. aggregate demand shifts left. aggregate supply shifts left. short-run aggregate supply left. 5. perhaps because of improved international relations and increased confidence in policy makers. . 2.

Bargains are struck for higher wages. The expected price level falls. 2. 2. How is the new long-run equilibrium different from the original one? 1. Save Answer 14. 3. 4. 5. The expected price level rises. Bargains are struck for lower prices. 5.(Points: 1) Refer to Optimism. The expected price level falls. . (Points: 1) Refer to Optimism. The expected price level rises. the price level is higher and real GDP is lower. Bargains are struck for higher wages. both price and real GDP are higher 3. Bargains are struck for lower wages. What happens to the expected price level and what’s the result for wage bargaining? 1. the price level is the same and GDP is higher. both price and real GDP are lower. Bargains are struck for lower wages. The expected price level falls. 4. Save Answer 13. the price level is higher and real GDP is the same.

The price level rises and real GDP falls. 2. Then because of corporate scandal. people become pessimistic regarding the future and retain that level of pessimism for some time. short-run aggregate supply left and long-run aggregate supply left. 4. In the long run. and loss of confidence in policymakers. long-run aggregate supply left. people become pessimistic regarding the future and retain that level of pessimism for some time. Save Answer 16. Save Answer 15. short-run aggregate supply left. The price level falls and real GDP rises. 5. Then because of corporate scandal. 2. 3. Refer to Pessimism. international tensions. international tensions. 3. long-run aggregate supply right. Both the price level and real GDP fall. Both the price level and real GDP rise. The price level rises and real GDP remains the same. In the short run what happens to the price level and real GDP? 1. the change in price expectations created by pessimism shifts 1. . and loss of confidence in policymakers. 4. (Points: 1) Pessimism Suppose the economy is in long-run equilibrium. 5. Refer to Pessimism.(Points: 1) Pessimism Suppose the economy is in long-run equilibrium. short-run aggregate supply right.

(Points: 1) When production costs rise. 4. declining government expenditures. Save Answer 19.. the aggregate demand curve shifts to the left. 4. raise both real output and the price level. 5. 3. the short-run aggregate supply curve shifts to the right. floods. the short-run aggregate supply curve shifts to the left. lower the price level and raise real output. and droughts. raise the price level and leave real output unchanged. Save Answer 18.(Points: 1) to The long-run effect of an increase in government spending is 1. 3. Save Answer 17. 5. 5. 4. tax rebates. 2. 2. the long-run aggregate supply curve shifts to the right. 1. . tax increases. 2. natural disasters such as hurricanes. 3. raise real output and leave the price level unchanged. raise real output and lower the price level. (Points: 1) result from An increase in the price level and a reduction in output would 1. the aggregate demand curve shifts to the right. a fall in stock prices.

aggregate demand shifts left 2. fall. long-run aggregate supply shifts right Save Answer 20. real GDP will rise and the price level might rise. then in the short run 1. (Points: 1) Suppose that the economy is at long-run equilibrium. and real GDP might rise. aggregate demand shifts right 5. or stay the same. fall. 4. or stay the same. If there is a sharp decline in the stock market combined with a significant increase in immigration of skilled workers. and real GDP might rise. 5. short-run aggregate supply shifts right 4. 2.(Points: 1) Which of the following would cause stagflation? 1. real GDP will fall and the price level might rise. the price level will fall. and real GDP will fall. or stay the same. Save Answer 21. . the price level will fall. the price level will rise. fall. short-run aggregate supply shifts left 3. 3. fall. or stay the same.

fall. In the short-run 1. long-run aggregate supply shifted right. reduce government expenditures. increase aggregate demand. the value of the dollar falls. short-run aggregate supply shifted left 3. aggregate demand shifted right 4. 2. the price level will rise. and real GDP might rise. Concerns about pollution cause the government to significantly restrict the production of electricity. Save Answer 22. short-run aggregate supply shifted right 2. 4. real GDP will rise and the price level might rise. the price level will fall. or stay the same. At the same time. or stay the same. fall. reduce the money supply. or stay the same. . and real GDP might rise. increase aggregate supply. fall. 3. 4. fall. and real GDP will fall. or stay the same. 2. Save Answer 23. aggregate demand shifted left 5. 5.(Points: 1) Suppose the economy is in long-run equilibrium. real GDP will fall and the price level might rise. (Points: 1) Keynes believed that economies experiencing high unemployment should adopt policies to 1. 3. the price level will fall. (Points: 1) Which of the following alone can explain the change in the price level and output during World War II? 1. Save Answer 24.

To be consistent with what happened to the price level and output. 4. 2. 4. what would have had to happen to aggregate demand? 1. indicates that Y1 + Y2 is the natural rate of output. It would have to shifted left by less than aggregate supply. 3. is inconsistent with the concept of monetary neutrality. indicates that Y2 is the natural rate of output. It would have to shifted left by more than aggregate supply. Save Answer 25. is consistent with the idea that point A represents a long-run equilibrium but not a short-run equilibrium when the relevant short-run aggregate-supply curve is AS1.(Points: 1) Suppose that during the Great Depression long-run aggregate supply shifted left. 3. . It would have to shifted right by more than aggregate supply. The appearance of the long-run aggregate-supply (LRAS) curve 1. It would have to shifted right by an amount equal to the aggregate supply shift. indicates that Y1 is the natural rate of output. It would have to shifted right by less than aggregate supply. (Points: 1) Refer to Figure 33-2. 5. 2. 5.

declining government expenditures. tax increases. 4. a fall in stock prices. the aggregate demand curve shifts to the right. and droughts.. 4. 2. (Points: 1) Which of the following would cause stagflation? 1. Save Answer 18. 3. Save Answer 19. 5. tax rebates. floods. 5. aggregate demand shifts left . the short-run aggregate supply curve shifts to the left. the short-run aggregate supply curve shifts to the right. 2. the aggregate demand curve shifts to the left. the long-run aggregate supply curve shifts to the right.1. (Points: 1) result from An increase in the price level and a reduction in output would 1. 3. natural disasters such as hurricanes.

aggregate demand shifts right 5. (Points: 1) Suppose that the economy is at long-run equilibrium. real GDP will fall and the price level might rise. real GDP will rise and the price level might rise. fall. the price level will fall. 2. 4. then in the short run 1. short-run aggregate supply shifts right 4. 3. long-run aggregate supply shifts right Save Answer 20. fall. the price level will rise. the price level will fall. and real GDP might rise. and real GDP will fall. or stay the same. fall.2. or stay the same. or stay the same. short-run aggregate supply shifts left 3. or stay the same. Save Answer . fall. and real GDP might rise. 5. If there is a sharp decline in the stock market combined with a significant increase in immigration of skilled workers.

or stay the same. the value of the dollar falls. 2. and real GDP might rise. the price level will fall. or stay the same. . the price level will fall. real GDP will rise and the price level might rise. Concerns about pollution cause the government to significantly restrict the production of electricity. real GDP will fall and the price level might rise. In the short-run 1. 5. fall. 4. fall. and real GDP might rise. or stay the same. (Points: 1) Keynes believed that economies experiencing high unemployment should adopt policies to 1. Save Answer 22.21. the price level will rise. fall. or stay the same. At the same time. fall. (Points: 1) Suppose the economy is in long-run equilibrium. increase aggregate supply. 3. and real GDP will fall.

. 3. long-run aggregate supply shifted right. Save Answer 24. (Points: 1) Which of the following alone can explain the change in the price level and output during World War II? 1. short-run aggregate supply shifted left 3. aggregate demand shifted left 5. reduce government expenditures. It would have to shifted right by an amount equal to the aggregate supply shift. 4. reduce the money supply. what would have had to happen to aggregate demand? 1. Save Answer 23. aggregate demand shifted right 4. increase aggregate demand. (Points: 1) Suppose that during the Great Depression long-run aggregate supply shifted left. 2. To be consistent with what happened to the price level and output. It would have to shifted right by less than aggregate supply. It would have to shifted left by less than aggregate supply. short-run aggregate supply shifted right 2. 3.2.

indicates that Y1 + Y2 is the natural rate of output. (Points: 1) Refer to Figure 33-2. 5. is consistent with the idea that point A represents a long-run equilibrium but not a short-run equilibrium when the relevant short-run aggregate-supply curve is AS1. indicates that Y2 is the natural rate of output. It would have to shifted left by more than aggregate supply. is inconsistent with the concept of monetary neutrality. indicates that Y1 is the natural rate of output.4. It would have to shifted right by more than aggregate supply. 4. 3. The appearance of the long-run aggregate-supply (LRAS) curve 1. 5. 2. Save Answer 25. .

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