Question 1

Use the figure below to answer the following question(s) . Figure 10-17
 With the passage of time, which of the following will tend to direct this economy in Figure 10-17 toward its long-run sustainable rate of output?

Accepted Answer

A)   lower interest rates that will stimulate AD and lower resource prices that will increase SRAS
B)   higher interest rates that will reduce aggregate demand and higher resource prices that will reduce SRAS
C)   lower interest rates and higher resource prices, both of which will stimulate aggregate demand
D)   higher interest rates that will reduce SRAS and lower resource prices that will stimulate aggregate demandE) A) and B)
F) None of the above

Question 2

If European economies experience strong economic growth, U.S. net exports will

Accepted Answer

A)   increase and AD will shift rightward.
B)   increase and AD will shift leftward.
C)   decrease and AD will shift leftward.
D)   decrease and AD will shift rightward.E) A) and B)
F) All of the above

Question 3

Use the figure below to answer the following question(s) . Figure 10-15
 The economy's short-run (SRAS )  and long-run (LRAS)  aggregate supply curves are shown in Figure 10-15, along with three alternative aggregate demand curves and the accompanying equilibrium points. At which point will resource prices naturally tend to increase?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) A) and D)
F) A) and C)

Question 4

Other things constant, an increase in resource prices will

Accepted Answer

A)   increase aggregate demand.
B)   decrease aggregate demand.
C)   decrease short-run aggregate supply.
D)   increase short-run aggregate supply.E) C) and D)
F) A) and C)

Question 5

Which of the following would be most likely to cause a reduction in current aggregate demand in the United States?

Accepted Answer

A)   increased fear of a recession
B)   an increase in the expected rate of inflation
C)   a sharp increase in the value of stocks owned by Americans
D)   a rapid increase in the growth of income in Canada, Mexico, and Western EuropeE) None of the above
F) A) and C)

Question 6

Use the figure below to answer the following question(s) . Figure 10-16
1 associated with AD1 and SRAS1, shown in Figure 10-16. Initially, the output of this economy is A)  above its potential, and the rate of unemployment is greater than the natural rate. B)  below its potential, and the rate of unemployment is greater than the natural rate. C)  above its potential, and the rate of unemployment is less than the natural rate. D)  below its potential, and the rate of unemployment is less than the natural rate." class="answers-bank-image d-inline" rel="preload" > Suppose an economy is currently operating at output Y1 associated with AD1 and SRAS1, shown in Figure 10-16. Initially, the output of this economy is

Accepted Answer

A)   above its potential, and the rate of unemployment is greater than the natural rate.
B)   below its potential, and the rate of unemployment is greater than the natural rate.
C)   above its potential, and the rate of unemployment is less than the natural rate.
D)   below its potential, and the rate of unemployment is less than the natural rate.E) B) and C)
F) C) and D)

Question 7

Use the figure below to answer the following question(s) . Figure 10-4
 Starting from long-run equilibrium at point F in Figure 10-4, at which of the following points would short-run equilibrium occur following a drought in the Midwestern states?

Accepted Answer

A)   I
B)   F
C)   G
D)   HE) None of the above
F) A) and D)

Question 8

If business decision makers expect that the inflation rate will increase in the near future,

Accepted Answer

A)   long-run aggregate supply will increase.
B)   long-run aggregate supply will decrease.
C)   short-run aggregate supply will increase.
D)   short-run aggregate supply will decrease.E) None of the above
F) All of the above

Question 9

Suppose there is an unexpected increase in real interest rates. Using the AD/AS model, describe the effects of this policy in the long run and the short run, assuming everything else equal.

Accepted Answer

In the short run, aggregate demand would...

Question 10

An abnormally large grain crop due to highly favorable weather conditions in the Midwest is an example of

Accepted Answer

A)   a technological improvement that will increase long-run aggregate supply.
B)   a supply shock that will increase short-run aggregate supply.
C)   an unexpected development that will reduce the natural rate of unemployment.
D)   an unexpected development that will lead to excess supply and widespread unemployment.E) B) and C)
F) C) and D)

Question 11

Use the figure below to answer the following question(s) . Figure 10-14
0)  and aggregate supply (SRAS0 and LRAS)  curves are illustrated in Figure 10-14. Which of the following is true? A)  The profits of business firms are higher at I than J. B)  H is a point of long-run equilibrium. C)  Downward pressure on prices occurs at point G. D)  Point F is consistent with long-run equilibrium." class="answers-bank-image d-inline" rel="preload" > The economy's initial aggregate demand (AD0)  and aggregate supply (SRAS0 and LRAS)  curves are illustrated in Figure 10-14. Which of the following is true?

Accepted Answer

A)   The profits of business firms are higher at I than J.
B)   H is a point of long-run equilibrium.
C)   Downward pressure on prices occurs at point G.
D)   Point F is consistent with long-run equilibrium.E) A) and C)
F) All of the above

Question 12

A rise in the price of oil would be most likely to cause which of the following in the United States?

Accepted Answer

A)   an economic boom
B)   an economic slowdown or recession
C)   a decrease in the general level of prices
D)   an increase in aggregate demandE) All of the above
F) B) and D)

Question 13

When an economy is in a recession,

Accepted Answer

A)   strong demand for investment funds will push interest rates upward.
B)   strong demand for resources will push the prices of resources upward.
C)   the real interest rate will tend to rise.
D)   the unemployment rate will rise above its natural rate.E) B) and D)
F) None of the above

Question 14

Use the figure below to answer the following question(s) . Figure 10-5
 Figure 10-5 indicates that the output of the economy is

Accepted Answer

A)   greater than the economy's long-run capacity.
B)   equal to the economy's long-run capacity.
C)   less than the economy's long-run capacity.
D)   consistent with long-run equilibrium.E) B) and D)
F) None of the above

Question 15

An improvement in technology would shift which of the following curve(s) ?

Accepted Answer

A)   aggregate demand and short-run aggregate supply
B)   only the short-run aggregate supply
C)   only the aggregate demand
D)   short-run and long-run aggregate supplyE) B) and C)
F) A) and B)

Question 16

Figure 10-18 1 to AD2 in Figure 10-18, the real GDP and price level (CPI)  in long-run equilibrium will be A)  $10 billion and 200. B)  $4 billion and 150. C)  $10 billion and 150. D)  $10 billion and 100." class="answers-bank-image d-inline" rel="preload" > Given the shift of the aggregate demand curve from AD1 to AD2 in Figure 10-18, the real GDP and price level (CPI)  in long-run equilibrium will be

Accepted Answer

A)   $10 billion and 200.
B)   $4 billion and 150.
C)   $10 billion and 150.
D)   $10 billion and 100.E) All of the above
F) A) and B)

Question 17

For the following changes in the economy, indicate whether short-run aggregate supply or long-run aggregate supply will be affected. Indicate the direction of the change.
a.an improvement in manufacturing technology
b.an increase in the world price of antimony (a chemical that the U.S. imports)
c.a bumper potato crop in the southern "potato belt"

Accepted Answer

a.Both long-run and short-run ...

Question 18

A large grain crop resulting from favorable weather conditions would shift which of the following curves?

Accepted Answer

A)   only aggregate demand
B)   aggregate demand and short-run aggregate supply
C)   only short-run aggregate supply
D)   only long-run aggregate supplyE) None of the above
F) B) and D)

Question 19

When an economy is experiencing an economic boom and operating beyond its long-run capacity,

Accepted Answer

A)   strong demand for investment funds will push interest rates upward.
B)   weak demand for resources will push the prices of resources downward.
C)   weak demand for investment funds will cause the real interest rate to decline.
D)   the unemployment rate will be greater than its natural rate.E) B) and C)
F) None of the above

Question 20

Which of the following will most likely occur as the result of an unanticipated increase in aggregate demand that pushes output beyond long-run capacity?

Accepted Answer

A)   an increase in the natural rate of unemployment
B)   an increase in the real interest rate
C)   a decrease in the real interest rate
D)   a decrease in the general level of pricesE) B) and D)
F) B) and C)

Exam 10: Dynamic Change, Economic Fluctuations, and the Ad--As Model

Correct Answer
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a.Both long-run and short-run ...
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Correct Answer
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Use the figure below to answer the following question(s) . Figure 10-14 The economy's initial aggregate demand (AD₀) and aggregate supply (SRAS₀ and LRAS) curves are illustrated in Figure 10-14. Which of the following is true?

Correct Answer
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Other things constant, an increase in resource prices will

Correct Answer
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Use the figure below to answer the following question(s) . Figure 10-4 Starting from long-run equilibrium at point F in Figure 10-4, at which of the following points would short-run equilibrium occur following a drought in the Midwestern states?

Correct Answer
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Which of the following would be most likely to cause a reduction in current aggregate demand in the United States?

Correct Answer
verified

Suppose there is an unexpected increase in real interest rates. Using the AD/AS model, describe the effects of this policy in the long run and the short run, assuming everything else equal.

Correct Answer
verified
In the short run, aggregate demand would...
View Answer

A rise in the price of oil would be most likely to cause which of the following in the United States?

Correct Answer
verified

Use the figure below to answer the following question(s) . Figure 10-17 With the passage of time, which of the following will tend to direct this economy in Figure 10-17 toward its long-run sustainable rate of output?

Correct Answer
verified

An improvement in technology would shift which of the following curve(s) ?

Correct Answer
verified

Which of the following will most likely occur as the result of an unanticipated increase in aggregate demand that pushes output beyond long-run capacity?

Correct Answer
verified

An abnormally large grain crop due to highly favorable weather conditions in the Midwest is an example of

Correct Answer
verified

A large grain crop resulting from favorable weather conditions would shift which of the following curves?

Correct Answer
verified

Use the figure below to answer the following question(s) . Figure 10-5 Figure 10-5 indicates that the output of the economy is

Correct Answer
verified

If business decision makers expect that the inflation rate will increase in the near future,

Correct Answer
verified

When an economy is experiencing an economic boom and operating beyond its long-run capacity,

Correct Answer
verified

Figure 10-18 Given the shift of the aggregate demand curve from AD₁ to AD₂ in Figure 10-18, the real GDP and price level (CPI) in long-run equilibrium will be

Correct Answer
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If European economies experience strong economic growth, U.S. net exports will

Correct Answer
verified

When an economy is in a recession,

Correct Answer
verified

Use the figure below to answer the following question(s) . Figure 10-16 Suppose an economy is currently operating at output Y₁ associated with AD₁ and SRAS₁, shown in Figure 10-16. Initially, the output of this economy is

Correct Answer
verified

Exam 10: Dynamic Change, Economic Fluctuations, and the Ad--As Model

Correct Answerverifieda.Both long-run and short-run ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Use the figure below to answer the following question(s) . Figure 10-14 The economy's initial aggregate demand (AD0) and aggregate supply (SRAS0 and LRAS) curves are illustrated in Figure 10-14. Which of the following is true?

Correct AnswerverifiedShow Answer

Other things constant, an increase in resource prices will

Correct AnswerverifiedShow Answer

Use the figure below to answer the following question(s) . Figure 10-4 Starting from long-run equilibrium at point F in Figure 10-4, at which of the following points would short-run equilibrium occur following a drought in the Midwestern states?

Correct AnswerverifiedShow Answer

Which of the following would be most likely to cause a reduction in current aggregate demand in the United States?

Correct AnswerverifiedShow Answer

Suppose there is an unexpected increase in real interest rates. Using the AD/AS model, describe the effects of this policy in the long run and the short run, assuming everything else equal.

Correct AnswerverifiedIn the short run, aggregate demand would...View AnswerShow Answer

A rise in the price of oil would be most likely to cause which of the following in the United States?

Correct AnswerverifiedShow Answer

Use the figure below to answer the following question(s) . Figure 10-17 With the passage of time, which of the following will tend to direct this economy in Figure 10-17 toward its long-run sustainable rate of output?

Correct AnswerverifiedShow Answer

An improvement in technology would shift which of the following curve(s) ?

Correct AnswerverifiedShow Answer

Which of the following will most likely occur as the result of an unanticipated increase in aggregate demand that pushes output beyond long-run capacity?

Correct AnswerverifiedShow Answer

An abnormally large grain crop due to highly favorable weather conditions in the Midwest is an example of

Correct AnswerverifiedShow Answer

A large grain crop resulting from favorable weather conditions would shift which of the following curves?

Correct AnswerverifiedShow Answer

Use the figure below to answer the following question(s) . Figure 10-5 Figure 10-5 indicates that the output of the economy is

Correct AnswerverifiedShow Answer

If business decision makers expect that the inflation rate will increase in the near future,

Correct AnswerverifiedShow Answer

When an economy is experiencing an economic boom and operating beyond its long-run capacity,

Correct AnswerverifiedShow Answer

Figure 10-18 Given the shift of the aggregate demand curve from AD1 to AD2 in Figure 10-18, the real GDP and price level (CPI) in long-run equilibrium will be

Correct AnswerverifiedShow Answer

If European economies experience strong economic growth, U.S. net exports will

Correct AnswerverifiedShow Answer

When an economy is in a recession,

Correct AnswerverifiedShow Answer

Use the figure below to answer the following question(s) . Figure 10-16 Suppose an economy is currently operating at output Y1 associated with AD1 and SRAS1, shown in Figure 10-16. Initially, the output of this economy is

Correct AnswerverifiedShow Answer

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a.Both long-run and short-run ...
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Use the figure below to answer the following question(s) . Figure 10-14 The economy's initial aggregate demand (AD₀) and aggregate supply (SRAS₀ and LRAS) curves are illustrated in Figure 10-14. Which of the following is true?

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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In the short run, aggregate demand would...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Figure 10-18 Given the shift of the aggregate demand curve from AD₁ to AD₂ in Figure 10-18, the real GDP and price level (CPI) in long-run equilibrium will be

Correct Answer
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Correct Answer
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Correct Answer
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Use the figure below to answer the following question(s) . Figure 10-16 Suppose an economy is currently operating at output Y₁ associated with AD₁ and SRAS₁, shown in Figure 10-16. Initially, the output of this economy is

Correct Answer
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