Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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1.
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Which
of the following would cause prices to fall and output to rise in the short run? a. | Short-run
aggregate supply shifts right. | b. | Short-run aggregate supply shifts
left. | c. | Aggregate demand shifts right. | d. | Aggregate demand
shifts left. | | |
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2.
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An
economic contraction caused by a shift in aggregate demand remedies itself over time as the expected
price level a. | rises, shifting
aggregate demand right. | b. | rises, shifting aggregate demand
left. | c. | falls, shifting aggregate supply
right. | d. | falls, shifting aggregate supply
left. | | |
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Consider the exhibit below for the following questions.
Figure 33-1
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3.
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Refer to Figure 33-1. If the economy is in long-run equilibrium, then an
adverse shift in aggregate supply would move the economy from a. | A to
B. | b. | C to
D. | c. | B to
A. | d. | D to
C. | | |
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4.
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Which
of the following shifts short-run aggregate supply left? a. | an increase in
price expectations | b. | an increase in the actual price level | c. | a decrease in
the money supply | d. | a decrease in the price of oil | | |
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5.
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Real
GDP a. | moves in the
same direction as unemployment. | b. | is not adjusted for inflation. | c. | also measures
real income. | d. | All of the above are correct. | | |
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6.
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During the last half of 1980, the U.S. unemployment rate was about 7.5 percent.
Historical experience suggests that this is a. | above the natural rate, so that real GDP growth was likely
low. | b. | above the
natural rate, so that real GDP growth was likely high. | c. | below the
natural rate, so that real GDP growth was likely low. | d. | below the
natural rate, so that real GDP growth was likely high. | | |
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7.
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Other
things the same, a decrease in the price level makes the dollars people hold worth a. | more, so they
are willing to spend more. | b. | more, so they are willing to spend
less. | c. | less, so they are willing to spend
more. | d. | less, so they are willing to spend
less. | | |
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8.
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Other
things the same, the aggregate quantity of goods demanded in the U.S. increases
if a. | real wealth
falls. | b. | the interest rate rises. | c. | the dollar
depreciates. | d. | None of the above is correct. | | |
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9.
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Other
things the same, the aggregate quantity of goods demanded in the U.S. increases if a. | real wealth
rises. | b. | the interest rate rises. | c. | the dollar
appreciates. | d. | All of the above are correct. | | |
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10.
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The
change in the quantity of goods and services demanded in the U.S. is based on the logic that as the
price level rises, a. | real wealth falls, interest rates rise, and the dollar
appreciates. | b. | real wealth falls, interest rates rise, and the dollar
depreciates. | c. | real wealth rises, interest rates fall, and the dollar
appreciates. | d. | real wealth rises, interest rates fall, and the dollar
depreciates. | | |
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11.
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Suppose a stock market boom makes people feel wealthier. The increase in wealth would
cause people to desire a. | increased consumption, which shifts the aggregate demand curve
right. | b. | increased consumption, which shifts the aggregate demand curve
left. | c. | decreased consumption, which shifts the aggregate demand curve
right. | d. | decreased consumption, which shifts the aggregate demand curve
left. | | |
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12.
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If
the dollar appreciates because of speculation or government policy a. | or if other
countries experience recessions, aggregate demand shifts right in the United
States. | b. | or if other countries experience recessions, aggregate demand
shifts left in the United States. | c. | aggregate demand shifts right in the United States. If other
countries experience recessions aggregate demand shifts left in the United
States. | d. | aggregate demand shifts left in the United States. If other
countries experience recessions aggregate demand shifts right in the United
States. | | |
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13.
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The
long-run aggregate supply curve shifts right if a. | technology improves. | b. | the price level
decreases. | c. | the money supply increases. | d. | All of the above
are correct. | | |
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14.
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Of
the following theories, which is consistent with a vertical long-run aggregate supply
curve? a. | the sticky-wage
theory | b. | misperceptions theory | c. | both the
sticky-wage and misperceptions theories. | d. | neither the sticky-wage nor the misperceptions
theory. | | |
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15.
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Which
of the following shifts short-run aggregate supply left? a. | an increase in
the actual price level | b. | an increase in the expected price
level | c. | an increase in the capital stock | d. | None of the
above is correct. | | |
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