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5 Written questions

5 Matching questions

  1. What are the three factors that cause the AD curve to shift?
  2. Assume that steel is the only good produced in the economy. Which of the following would explain
    why the short-run aggregate supply curve for steel would be upward sloping?
    a. Steel demand and steel prices begin to rise rapidly, and the wages of steel workers rise as the
    demand for workers increases.
    b. Steel demand and steel prices begin to rise rapidly, but the price of coal—an input into the
    production of steel—remains fixed by contract.
    c. Steel demand and steel prices begin to rise rapidly, but foreign producers increase production
    faster than domestic producers increase production.
    d. all of the above
  3. Which of the following factors will cause the long-run aggregate supply curve to shift to the right?
    a. an increase in the number of workers in the economy
    b. the accumulation of more machinery and equipment
    c. technological change
    d. all of the above
  4. What is stagflation?
  5. The international-trade effect refers to the fact that an increase in the price level will result in
    a. an increase in exports and a decrease in imports.
    b. a decrease in exports and an increase in imports.
    c. an increase in exports and an increase in imports.
    d. a decrease in exports and a decrease in imports.
  1. a a combination
    of inflation and recession, usually resulting from a supply shock
  2. b d. all of the above
  3. c b. a decrease in exports and an increase in imports
  4. d 1. changes in government policies
    2. changes in expectations of households
    3. changes in foreign variables
  5. e b. Steel demand and steel prices begin to rise rapidly, but the price of coal—an input into the
    production of steel—remains fixed by contract.

5 Multiple choice questions

  1. because a decrease in the price level increases the quantity of real GDP demanded
  2. 1. shows the relationship in the short run between the price level and the quantity of real GDP supplied by
    firms
    2. slopes upward
    because workers and firms fail to predict accurately the future price level
  3. A) High levels; a recession; accept lower
  4. c. the short-run aggregate supply curve will shift to the left
  5. b. an adverse supply shock

5 True/False questions

  1. . In the long run,
    A) LRAS and SRAS lie on the same line.
    B) GDP = potential GDP
    C) Unemployment is below its natural rate.
    D) Unemployment is above its natural rate.
    b. not change real GDP in the long-run.

          

  2. What are the three reason why the other components of GDP change as the price level changes?1. the wealth effect
    2. the interest rate effect
    3. the international effect

          

  3. Stagflation is often a result of
    A) a decrease in aggregate demand.
    B) an increase in aggregate demand.
    C) a negative supply shock.
    D) an increase in aggregate supply.
    C) a negative supply shock

          

  4. Which of the following statements is correct?
    a. If households become more optimistic about their future incomes, the aggregate demand curve
    will shift to the right.
    b. If firms become more optimistic about the future profitability of investment spending, the
    aggregate demand curve will shift to the right.
    c. Both a. and b.
    d. Neither a. nor b. Optimism or pessimism do not have anything to do with shifts in the aggregate
    demand curve
    c. Both a. and b.

          

  5. Describe fiscal policy.involves the
    actions the Federal Reserve takes to manage the money supply and interest rates to pursue
    macroeconomic policy objectives

          

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