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5 Written questions

5 Matching questions

  1. Describe monetary policy.
  2. What are the three factors that cause the AD curve to shift?
  3. Describe aggregate supply
  4. 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
  5. What is stagflation?
  1. a 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.
  2. b involves the
    actions the Federal Reserve takes to manage the money supply and interest rates to pursue
    macroeconomic policy objectives
  3. c a combination
    of inflation and recession, usually resulting from a supply shock
  4. d shows the relationship between
    the price level and the quantity of real GDP that firms are willing to produce
  5. e 1. changes in government policies
    2. changes in expectations of households
    3. changes in foreign variables

5 Multiple choice questions

  1. d. the labor force increases
  2. shows the relationship between the price level and the quantity of real GDP
    demanded by households, firms, and the government
  3. government purchases
  4. b. monetary policy
  5. c. Both a. and b.

5 True/False questions

  1. How can government policies shift the aggregate demand curve to the right?
    a. by increasing personal income taxes
    b. by increasing business taxes
    c. by increasing government purchases
    d. all of the above
    c. by increasing government purchases

          

  2. . Why does the short run aggregate supply curve shift to the right in the long run, following a decrease in
    aggregate demand?
    A) Workers and firms adjust their expectations of wages and prices downward and they accept lower wages
    and prices.
    B) Workers and firms adjust their expectations of wages and prices downward and they push for higher
    wages and prices.
    C) Workers and firms adjust their expectations of wages and prices upward and they accept lower wages and
    prices.
    D) Workers and firms adjust their expectations of wages and prices upward and they push for higher wages
    and prices
    C) GDP will be below potential GDP

          

  3. Describe the international effect.involves changes in federal taxes and purchases that are intended to achieve macroeconomic policy
    objectives

          

  4. What are menu costs?
    a. the costs of searching for profitable opportunities
    b. the costs associated with guarding against the effects of inflation
    c. the costs to firms of changing prices
    d. the costs of a fixed list of inputs
    c. the costs to firms of changing prices

          

  5. . 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.
    c. a technological change