Lower personal income taxes
A. increase aggregate demand.
B. increase transfer payments.
C. decrease disposable income.
D. decrease aggregate demand
A. increase aggregate demand.
Ceteris paribus?, a decrease in productivity would be represented by a movement from
A. SRAS1 to SRAS2.
B. SRAS2 to SRAS1.
C. point A to point B.
D. point B to point A.
B. SRAS2 to SRAS1.
Stagflation occurs when aggregate supply and aggregate demand both increase.
True
False
False
Interest rates in the economy have fallen. How will this affect aggregate demand and equilibrium in the short? run?
A. Aggregate demand will? rise, the equilibrium price level will? rise, and the equilibrium level of GDP will rise.
B. Aggregate demand wil
A. Aggregate demand will? rise, the equilibrium price level will? rise, and the equilibrium level of GDP will rise.
In the dynamic aggregated demand and aggregate supply? model, inflation occurs if
A. AD shifts slower than SRAS.
B. SRAS shifts faster than AD.
C. AD shifts faster than SRAS.
D. LRAS shifts faster than AD.
C. AD shifts faster than SRAS.
Stagflation usually results from
A. an increase in aggregate supply.
B. a decrease in aggregate demand.
C. an increase in aggregate demand.
D. a supply shock.
D. a supply shock.
Refer to the diagram to the right. Given the economy is at point A in year? 1, what is the inflation rate between year 1 and year? 2?
A.?1.8%
B. ?3.0%
C. 0.9%
D. ?2.7%
A.?1.8%
Higher personal income taxes
A. increase aggregate demand.
B. increase disposable income.
C. decrease aggregate demand.
D. both B and C.
C. decrease aggregate demand.
If? full-employment GDP is equal to? $4.2 trillion, what does the? long-run aggregate supply curve look? like?
A. It is a horizontal line at? $4.2 trillion of GDP.
B. It is a vertical line at a level of GDP above? $4.2 trillion.
C. It is a vertical line a
C. It is a vertical line at? $4.2 trillion of GDP.
When the price of oil rises? unexpectedly, the equilibrium price level? ________ and the unemployment rate? ________ in the short run.
A. ?falls; falls
B. ?rises; rises
C. ?falls; rises
D. ?rises; falls
B. ?rises; rises
Potential GDP is also referred to as
A. full?employment GDP.
B. realized GDP.
C. balanced?budget GDP.
D. politico?economic GDP.
A. full?employment GDP.
Which of the following would not be considered a positive addition to household? wealth?
A. ?1,000 shares of Microsoft stock
B. a credit card balance
C. the balance in your checking account
D. the equity in? one's home
B. a credit card balance
A decrease in the price level will
A. shift the short?run aggregate supply curve to the left.
B. move the economy down along a stationary short?run aggregate supply curve.
C. shift the short?run aggregate supply curve to the right.
D. move the economy up
B. move the economy down along a stationary short?run aggregate supply curve.
Refer to the figure to the right. Ceteris? paribus, an increase in interest rates would be represented by a movement from
A. AD1 to AD2.
B. AD2 to AD1.
C. point A to point B.
D. point B to point A.
B. AD2 to AD1.
All of the following would be considered a positive addition to household wealth except
A. the equity in? one's home.
B. the balance in your savings account.
C. a credit card balance.
D. 500 shares of Google stock.
C. a credit card balance.
The? long-run aggregate supply curve will shift to the right if the economy
A. net exports decrease.
B. experiences technological change.
C. has a decrease in population.
D. experiences high levels of inflation.
B. experiences technological change.
An increase in the price level shifts aggregate demand to the left.
True
False
False
A decrease in investment causes the price level to? ________ in the short run and? ________ in the long run.
A. ?decrease; increase
B. ?increase; decrease
C. ?increase; increase further
D. ?decrease; decrease further
D. ?decrease; decrease further
Why does the short?run aggregate supply curve shift to the left in the long? run, following an increase in aggregate? demand?
A. Workers and firms adjust their expectations of wages and prices downward and they push for higher wages and prices.
B. Workers
C. Workers and firms adjust their expectations of wages and prices upward and they push for higher wages and prices.
Which of the following best describes the? "interest rate? effect"?
A. An increase in the price level raises the interest rate and chokes off government spending.
B. An increase in the price level lowers the interest rate and chokes off government spendin
C. An increase in the price level raises the interest rate and chokes off investment and consumption spending.
Which of the following will shift the aggregate demand curve to the? right, ceteris paribus??
A. an increase in net exports
B. a decrease in expected profits for firms
C. an increase in interest rates
D. a decrease in disposable income
A. an increase in net exports
The short run aggregate supply curve has? a(n) ________ slope because as prices of? ________ rise, prices of? ________ rise more slowly.
A. ?positive; final goods and? services; inputs
B. ?infinite; final goods and? services; inputs
C. positive; inputs; f
A. ?positive; final goods and? services; inputs
The automatic mechanism? ________ the price level in the case of? ________ and? ________ the price level in the case of? ________.
A. ?raises; recession;? lowers; expansion
B. ?lowers; recession;? raises; expansion
C. ?lowers; expansion;? lowers; recessio
B. ?lowers; recession;? raises; expansion
When potential GDP? increases, long run aggregate supply also increases.
True
False
True
Potential GDP refers to the level of
A. nominal GDP in the short run.
B. real GDP in the long run.
C. nominal GDP in the long run.
D. real GDP in the short run.
B. real GDP in the long run.
Stagflation occurs when
A. inflation falls and GDP falls.
B. inflation falls and GDP rises.
C. inflation rises and GDP falls.
D. inflation rises and GDP rises.
C. inflation rises and GDP falls.
A rapid increase in the price of oil will tend to
A. shift aggregate demand to the right.
B. shift long?run aggregate supply to the left.
C. shift short?run aggregate supply to the left.
D. shift long?run aggregate supply to the right.
C. shift short?run aggregate supply to the left.
Refer to the figure to the right. Ceteris? paribus, a decrease in? firms' expectations of the future profitability of investment spending would be represented by a movement from
A. AD1 to AD2.
B. AD2 to AD1.
C. point A to point B.
D. point B to point A.
B. AD2 to AD1.
Refer to the figure to the right. Ceteris paribus?, an increase in the price level would be represented by a movement from
A. SRAS1 to SRAS2.
B. SRAS2 to SRAS1.
C. point A to point B.
D. point B to point A.
C. point A to point B.
Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007??2009?
A. falling oil prices
B. increases in housing prices
C. the financial crisis
D. a decline in government spending
C. the financial crisis
During? 2008, oil price increases
A. did not shift the short?run aggregate supply curve as far to the left as similar increases had 30 years earlier.
B. shifted the short?run aggregate supply curve farther to the left than similar increases had 30 years e
A. did not shift the short?run aggregate supply curve as far to the left as similar increases had 30 years earlier.
The? ________ curve is vertical.
A. long?run aggregate supply
B. short?run aggregate supply
C. short?run aggregate demand
D. long?run aggregate demand
A. long?run aggregate supply
Suppose the economy is at full employment and firms become more optimistic about the future profitability of new investment. Which of the following will happen in the short? run?
A. Unemployment will decline.
B. Output will decline.
C. Prices will decline
A. Unemployment will decline.
According to the? "wealth effect," when the? ________ falls, the? ________ rises.
A. price? level; the nominal value of household wealth
B. unemployment? rate; average level of household income
C. price? level; the real value of household wealth
D. inflat
C. price? level; the real value of household wealth
A negative supply shock in the short run causes
A. unemployment falls.
B. the price level falls.
C. equilibrium real GDP rises.
D. aggregate supply shifts to the left.
D. aggregate supply shifts to the left.
The invention of the integrated circuit by Jack Kilby of Texas Instruments gave rise to the information age. What did this technological change do the short?run supply? curve?
A. It moved the economy down along a stationary short?run aggregate supply curv
C. It shifted the short?run aggregate supply curve to the right.
Suppose the U.S. GDP growth rate is slower relative to other? countries' GDP growth rates. This will
A. shift the aggregate demand curve to the right.
B. shift the aggregate demand curve to the left.
C. move the economy down along a stationary aggregate d
A. shift the aggregate demand curve to the right.
Refer to the figure to the right. Ceteris paribus?, an increase in the price level would be represented by a movement from
A. AD1 to AD2.
B. AD2 to AD1.
C. point A to point B.
D. point B to point A.
D. point B to point A.
The international trade effect states that? a(n) ________ in the price level will? ________ net exports.
A. ?increase; increase
B. ?decrease; not affect
C. increase; decrease
D. ?decrease; decrease
C. increase; decrease
The short?run aggregate supply curve has a
A. slope equal to infinity.
B. positive slope.
C. negative slope.
D. slope equal to zero.
B. positive slope.
A decrease in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long? run?
A. The price level will? fall, and the level of GDP will fall.
B. The price level will? rise, and the level of GDP will fall.
C. The price l
D. The price level will? fall, and the level of GDP will be unaffected.
While sticking with a new strategy of letting market forces determine prices while producing more to keep? customers, OPEC has stated that oil prices will not be increasing for the remainder of 2015 due to increased supplies and falling demand in China. O
C. ?increases; increases
An increase in government spending will result in an increase in the price level and an increase in real GDP in the long run.
True
False
False
Ceteris paribus?, a decrease in the price level would be represented by a movement from
A. SRAS1 to SRAS2.
B. SRAS2 to SRAS1.
C. point A to point B.
D. point B to point A.
D. point B to point A.
The? long-run aggregate supply curve is vertical.
True
False
True
How do lower taxes affect aggregate? demand?
A. They increase corporate investment and aggregate demand.
B. They increase aggregate supply and thus increase aggregate demand as well.
C. They reduce disposable? income, consumption, and aggregate demand.
D.
D. They increase disposable? income, consumption, and aggregate demand.
A decrease in aggregate demand results in? a(n) ________ in the? ________.
A. ?expansion; long run
B. ?recession; short run
C. ?expansion; short run
D. ?recession; long run
B. ?recession; short run
Changes in the price level
A. decrease the level of aggregate supply in the long run.
B. increase the level of aggregate supply in the long run only at very high levels of output.
C. do not affect the level of aggregate supply in the long run.
D. increase
C. do not affect the level of aggregate supply in the long run.
In the dynamic aggregated demand and aggregate supply? model, if AD shifts faster than AS
A. inflation occurs.
B. disinflation occurs.
C. stagflation occurs.
D. deflation occurs.
A. inflation occurs.
The level of long?run aggregate supply is affected by all of the following except
A. changes in the technology.
B. changes in the price level.
C. changes in the number of workers.
D. changes in the capital stock.
B. changes in the price level.
Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP. Which of the following will occur because of the automatic mechanism adjusting the economy back to potential? GDP?
A. Short?run aggregate supply will shift to the left.
B
A. Short?run aggregate supply will shift to the left.
The? "interest rate? effect" can be described as an increase in the price level that raises the interest rate and chokes off
A. investment and consumption spending.
B. government spending.
C. net exports.
D. government spending and unplanned investment.
A. investment and consumption spending.
An increase in the price level will
A. shift the short run aggregate supply curve to the right.
B. move the economy up along a stationary short run aggregate supply curve.
C. move the economy down along a stationary short run aggregate supply curve.
D. sh
B. move the economy up along a stationary short run aggregate supply curve.
Suppose the economy is at point A. If government spending increases in the? economy, where will the eventual longminus?run equilibrium? be?
A. A
B. B
C. C
D. D
C. C