Question 1

The long-run aggregate supply curve would shift to the right if:

Accepted Answer

A)   technology became more advanced.
B)   faster 5G mobile technology was widely adopted.
C)   the growth rate of the labor force increased.
D)   All of these would shift the long-run aggregate supply curve to the right.E) B) and D)
F) None of the above

Question 2

If the government does not react to a recession:

Accepted Answer

A)   the economy will fail to return to its long-run equilibrium.
B)   the economy will recover, but much more slowly.
C)   voters and consumers are likely to be happy with less government interference.
D)   the downturn will spread to other countries.E) A) and B)
F) A) and C)

Question 3

Consumption spending is _______ the overall price level.

Accepted Answer

A)   negatively related to
B)   positively related to
C)   equal to
D)   not correlated withE) All of the above
F) A) and B)

Question 4

Widespread adoption of mobile phones over the last 20 years has caused the _______ aggregate supply curve to _______.

Accepted Answer

A)   long-run; shift to the right
B)   long-run; shift to the left
C)   short-run; shift to the left
D)   long-run; remain fixedE) A) and C)
F) A) and D) A

Question 5

A decrease in a nation's level of capital would cause the _______ aggregate supply curve to shift to the _______.

Accepted Answer

A)   long-run; right
B)   long-run; left
C)   short-run; right
D)   None of these shifts would occur.E) A) and B)
F) C) and D)

Question 6

Which of the following statements is true about the aggregate demand curve?

Accepted Answer

A)   It shows the relationship between the overall price level and the level of total demand.
B)   It maps to the price level on the horizontal axis and output on the vertical axis.
C)   It is upward-sloping, unlike the individual demand curve.
D)   It shows the relationship between the price of goods and services and the level of total demand.E) None of the above
F) All of the above

Question 7

The long-run aggregate supply curve represents:

Accepted Answer

A)   potential output in the economy.
B)   the level of output possible if the economy is operating at full capacity.
C)   a production function for the entire economy.
D)   All of these are true.E) A) and B)
F) All of the above D

Question 8

Sticky wages occur because:

Accepted Answer

A)   the government intervenes in the labor market.
B)   the market for labor is competitive.
C)   some wages can only be changed at the end of contracts, as opposed to final good prices, which can change anytime.
D)   All of these are true.E) A) and D)
F) A) and C)

Question 9

The wealth effect explains the _______ relationship that exists between consumer spending and overall _______.

Accepted Answer

A)   negative; price level
B)   positive; price level
C)   negative; asset valuation
D)   positive; asset valuationE) A) and C)
F) B) and C)

Question 10

The U.S. government cut the top corporate income tax rate from 35 percent to 21 percent through the 2017 Tax Cuts and Jobs Act. This legislation:

Accepted Answer

A)   prompted a downward movement along the aggregate demand curve.
B)   shifted the aggregate demand curve to the right.
C)   shifted the aggregate demand curve to the left.
D)   prompted an upward movement along the aggregate demand curve.E) C) and D)
F) B) and C)

Question 11

Stagflation is difficult to recover from because:

Accepted Answer

A)   wages are sticky downward.
B)   input prices increase with output prices.
C)   fewer workers will want to join the labor force.
D)   prices tend to fall more quickly than they rise.E) B) and D)
F) None of the above

Question 12

In the long run, aggregate supply:

Accepted Answer

A)   is dictated by the fixed costs of inputs.
B)   is fixed.
C)   is determined by the prices of final goods and services.
D)   steadily increases.E) A) and B)
F) A) and C) B

Question 13

Which of the following would likely cause the aggregate demand curve to shift to the right?

Accepted Answer

A)   Increased income taxes
B)   Decreased corporate income taxes
C)   Decreased consumer confidence
D)   Decreased government spendingE) B) and D)
F) A) and C)

Question 14

Higher interest rates:

Accepted Answer

A)   make it more expensive to borrow.
B)   make it less expensive to borrow.
C)   make it easier to get a loan.
D)   do not change the cost of getting a loan.E) A) and C)
F) None of the above

Question 15

The government can boost the economy out of a recession by:

Accepted Answer

A)   increasing government spending.
B)   announcing that the public should save their money.
C)   setting price ceilings on most goods to help people afford them.
D)   None of these actions can boost an economy out of a recession.E) A) and D)
F) B) and C)

Question 16

Government spending tends to:

Accepted Answer

A)   increase when the price level rises.
B)   increase when the price level falls.
C)   be unaffected by changes in the price level.
D)   decrease when the price level falls.E) A) and D)
F) B) and D)

Question 17

Which of the following is a decision a firm would make in the short run?

Accepted Answer

A)   How much to pay in rent
B)   How many employees to hire
C)   How much to pay employees
D)   How much to produceE) A) and D)
F) A) and B)

Question 18

Net exports is measured as:

Accepted Answer

A)   exports minus imports.
B)   imports minus exports.
C)   imports divided by exports.
D)   imports plus exports.E) A) and B)
F) C) and D)

Question 19

A rise in the overall price level means that:

Accepted Answer

A)   a given number of dollars will buy fewer real goods and services.
B)   output has decreased.
C)   the cost of living has gone down.
D)   None of these are true.E) A) and C)
F) A) and B)

Question 20

Suppose the BLS announces that price levels throughout the economy have increased. What response would we expect to see in the AD/AS model?

Accepted Answer

A)   The long-run aggregate supply curve would shift to the left.
B)   The aggregate demand curve would shift to the left.
C)   The short-run aggregate supply curve would shift to the left.
D)   None of these are true.E) A) and D)
F) A) and C)

Exam 12: Aggregatedemand and Aggregate Supply

The long-run aggregate supply curve would shift to the right if:

Correct AnswerverifiedShow Answer

If the government does not react to a recession:

Correct AnswerverifiedShow Answer

Consumption spending is _______ the overall price level.

Correct AnswerverifiedShow Answer

Widespread adoption of mobile phones over the last 20 years has caused the _______ aggregate supply curve to _______.

Correct AnswerverifiedA

A decrease in a nation's level of capital would cause the _______ aggregate supply curve to shift to the _______.

Correct AnswerverifiedShow Answer

Which of the following statements is true about the aggregate demand curve?

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve represents:

Correct AnswerverifiedD

Sticky wages occur because:

Correct AnswerverifiedShow Answer

The wealth effect explains the _______ relationship that exists between consumer spending and overall _______.

Correct AnswerverifiedShow Answer

The U.S. government cut the top corporate income tax rate from 35 percent to 21 percent through the 2017 Tax Cuts and Jobs Act. This legislation:

Correct AnswerverifiedShow Answer

Stagflation is difficult to recover from because:

Correct AnswerverifiedShow Answer

In the long run, aggregate supply:

Correct AnswerverifiedB

Which of the following would likely cause the aggregate demand curve to shift to the right?

Correct AnswerverifiedShow Answer

Higher interest rates:

Correct AnswerverifiedShow Answer

The government can boost the economy out of a recession by:

Correct AnswerverifiedShow Answer

Government spending tends to:

Correct AnswerverifiedShow Answer

Which of the following is a decision a firm would make in the short run?

Correct AnswerverifiedShow Answer

Net exports is measured as:

Correct AnswerverifiedShow Answer

A rise in the overall price level means that:

Correct AnswerverifiedShow Answer

Suppose the BLS announces that price levels throughout the economy have increased. What response would we expect to see in the AD/AS model?

Correct AnswerverifiedShow Answer

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Widespread adoption of mobile phones over the last 20 years has caused the _ aggregate supply curve to _.

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A

A decrease in a nation's level of capital would cause the _ aggregate supply curve to shift to the _.

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D

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The wealth effect explains the _ relationship that exists between consumer spending and overall _.

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B

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