Chapter 13 Macro

During the recession of 2007minus−2009 in the United​ States, ________ relative to potential GDP. A. net export spending rose and consumption spending declined B. consumption spending rose and residential construction spending declined C. federal government purchases rose and changes in business inventories declined D. business fixed investment spending rose and net export spending declined

A

Monetarism is a school of thought put forth by​ ________, who argued that the economy would ordinarily be at potential GDP. A. Milton Friedman B. Finn Kydland and Edward Prescott C. Karl Marx D. Robert Lucas and Thomas Sargent

A

Spending on the war in Afghanistan is essentially categorized as government purchases. How do increases in spending on the war in Afghanistan affect the aggregate demand​ curve? A. They will shift the aggregate demand curve to the left. B. They will move the economy up along a stationary aggregate demand curve. C. They will shift the aggregate demand curve to the right. D. They will move the economy down along a stationary aggregate demand curve

C

Interest rates in the economy have risen. How will this affect aggregate demand and equilibrium in the short​ run? A. Aggregate demand will​ rise, the equilibrium price level will​ fall, and the equilibrium level of GDP will rise. B. Aggregate demand will​ fall, the equilibrium price level will​ rise, and the equilibrium level of GDP will fall. C. Aggregate demand will​ rise, the equilibrium price level will​ rise, and the equilibrium level of GDP will rise. D. Aggregate demand will​ fall, the equilibrium price level will​ fall, and the equilibrium level of GDP will fall.

D

Suppose the U.S. GDP growth rate is slower relative to other​ countries' GDP growth rates. This will A. move the economy up along a stationary aggregate demand curve. B. move the economy down along a stationary aggregate demand curve. C. shift the aggregate demand curve to the left. D. shift the aggregate demand curve to the right.

D

According to​ ________, entrepreneurship does not contribute anything of value to production. A. Robert Lucas and Thomas Sargent B. Karl Marx. C. John Maynard Keynes D. Milton Friedman

B

Changes in​ ________ do not affect the level of aggregate supply in the long run. A. the amount of accumulated capital equipment B. the price level C. the number of workers in the economy D. technology

B

The automatic mechanism​ _________ the price level in the case of​ ________ and​ ________ the price level in the case of​ ________. A. ​raises; expansion​ raises; recession B. ​lowers; recession;​ raises; expansion C. ​raises; recession;​ lowers; expansion D. ​lowers; expansion;​ lowers; recession

B

Which of the following is an assumption made by the dynamic model of aggregate demand and aggregate​ supply? A. Potential real GDP increases continuously during economic expansions and decreases continuously during economic recessions. B. The short−run aggregate supply curve shifts to the right except during periods when workers and firms expect higher wages. C. Aggregate demand and potential real GDP decrease continuously. D. The aggregate demand curve shifts to the right except during periods when workers and firms expect higher wages.

B

For the recession of 2007minus−​2009, it took​ ________ for real GDP to return to its cyclical peak. A. about 18 months B. about 2 year C. about 3.5 years D. almost 5 years

C

The aggregate demand curve shows the relationship between the​ ________ and​ ________. A. real interest​ rate: quantity of real GDP supplied B. nominal interest​ rate; quantity of real GDP demanded C. price​ level; quantity of real GDP demanded D. inflation​ rate; quantity of real GDP demanded

c

Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy. As a​ result, A. the long run aggregate supply curve will shift to the right. B. the long run aggregate supply curve will shift to the left. C. the economy will move up along the long run aggregate supply curve. D. the economy will move down along the long run aggregate supply curve

A

The invention of the cotton gin ushered in the Industrial Revolution and began a long period of technological innovation. What did this technological change do the short run supply​ curve? A. It shifted the short run aggregate supply curve to the right B. It moved the economy up along a stationary short run aggregate supply curve. C. It shifted the short run aggregate supply curve to the left. D. It moved the economy down along a stationary short run aggregate supply curve.

A

Which of the following is considered a negative supply​ shock? A. an unexpected decrease in the refining capacity for oil B. increasing immigration in the economy causes the labor supply to rise C. an improvement in technology D. an increase in unemployment

A

When people became less concerned with the underlying value of their houses and instead focused on the expectations of the prices of their houses​ increasing, ​ ________ occurred. A. a supply shock B. an automatic destabilizer C. stagflation D. a housing bubble

D

When the economy enters a​ recession, your employer is​ ___________ to reduce your wages because​ _______. A. ​likely; output prices always fall during recession B. ​unlikely; output and input prices generally fall during recession C. ​likely; aggregate demand is vertical in the long run D. ​unlikely; lower wages reduce productivity and morale

D

Which of the following is considered a negative supply​ shock? A. a decline in wages B. an improvement in technology C. increasing investment in the economy causes the capital stock to rise D. an unexpected increase in the price of natural gas

D

Which of the following is one explanation as to why the aggregate demand curve slopes​ downward? A. Increases in the price level raise real wealth and lowers consumption spending. B. Increases in the price level lower the interest rate and decrease investment spending. C. Increases in the price level lower the interest rate and decrease consumption spending. D. Increases in the U.S. price level relative to the price level in other countries lowers net exports.

D

When potential GDP​ increases, short−run aggregate supply also​ increases, but long−run aggregate supply does not change... True or False

False

The invention of the integrated circuit by Jack Kilby of Texas Instruments gave rise to the information age. What did this technological change do the short−run supply​ curve? A. It moved the economy up along a stationary short−run aggregate supply curve. B. It moved the economy down along a stationary short−run aggregate supply curve. C. It shifted the short−run aggregate supply curve to the right. D. It shifted the short−run aggregate supply curve to the left.

c