Chapter 13 questions

Consider the world oil market diagrams presented in the figure. Which panel correctly depicts what happened in the market for oil during the 1973 OPEC oil crisis?

Panel B

The long-run growth potential of an economy does not depend on the level of inflation

True

Which of the following causes a shift of the AD curve to the right?

an increase in consumer confidence

the aggregate demand curve is

downward sloping

In 1931, the Federal Reserve

failed to respond to the banking crisis

If spending in an economy increase by 3% and real GDP increases 1% , the result will be

inflation

In the equation M + v = P + YR, what does P stand for?

inflation

The term "business fluctuations" refers to

movement in real GDP around its long term trend

a positive real shock causes the aggregate demand curve to:

not shift at all

The economy's potential or "Solow: growth rate fluncates over time because of

real shocks

Holding everything else constant, an increase in the growth rate of the money supply will cause the aggregate demand curve to:

shift outward

Decreased import growth represents a positive AD shock

True

During the great Depression, the U.S. aggregate demand curve?

shifted inward

An increase in the growth rate of velocity shifts the aggregate demand curve to the right

true