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5 Written questions

5 Matching questions

  1. Why does the short-run aggregate supply curve slope upward?
    a. because profits rise when the prices of the goods and services firms sell rise more rapidly than the
    prices they pay for inputs
    b. because an increase in market price results in an increase in quantity supplied, as stated by the
    law of supply
    c. because, as the number of workers, machinery, equipment, and technological changes increase,
    quantity supplied increases
    d. all of the above
  2. Which of the following factors does not cause the aggregate demand curve to shift?
    a. a change in the price level
    b. a change in government policies
    c. a change in the expectations of households and firms
    d. a change in foreign variables
  3. Which of the following will cause the short-run aggregate supply curve to shift to the right?
    a. a higher expected future price level
    b. an increase in the actual (or current) price level
    c. a technological change
    d. all of the above
  4. . 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) Prices will decline.
    B) Aggregate demand will shift to the left.
    C) Unemployment will decline.
    D) Output will decline.
  5. 7. Higher personal income taxes
    A) increase aggregate demand.
    B) increase disposable income.
    C) decrease aggregate demand.
    D) both b and c.
  1. a C) Unemployment will decline
  2. b a. a change in the price level
  3. c c. a technological change
  4. d C) decrease aggregate demand.
  5. e a. because profits rise when the prices of the goods and services firms sell rise more rapidly than the
    prices they pay for inputs

5 Multiple choice questions

  1. b. not change real GDP in the long-run.
  2. involves the
    actions the Federal Reserve takes to manage the money supply and interest rates to pursue
    macroeconomic policy objectives
  3. b. higher interest rates and lower investment.
  4. B) decreases; decreases
  5. c. In the long run, changes in the price level do not affect the level of real GDP

5 True/False questions

  1. If the price level increases, then
    a. the economy will move up and to the left along a stationary aggregate demand curve.
    b. the aggregate demand curve will shift to the right.
    c. the aggregate demand curve will shift to the left.
    d. none of the above
    c. the short-run aggregate supply curve will shift to the left.

          

  2. . 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.

          

  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.
    consumption
    (C), investment (I), government purchases (G), and net exports (NX)

          

  4. If the exchange rate between the dollar and foreign currencies rises (the dollar rises in value versus
    foreign currencies), the price in foreign currency of U.S. products will _________ and the U.S.
    aggregate demand curve will shift to the _________.
    a. rise; right
    b. rise; left
    c. fall; right
    d. fall; left
    a. when the price level falls, the real value of household wealth rises, and so will consumption.

          

  5. If oil prices rise unexpectedly,
    a. there will be a movement up and to the right along a stationary aggregate supply curve.
    b. there will be a movement down and to the left along a stationary aggregate supply curve.
    c. the short-run aggregate supply curve will shift to the left.
    d. the short-run aggregate supply curve will shift to the right
    a. the economy will move up and to the left along a stationary aggregate demand curve.

          

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