Macroeconomics

Which of the following would cause prices and real GDP to rise in the short run? a. short-run aggregate supply shifts right b. aggregate demand shifts right c. aggregate demand shifts left d. short-run aggregate supply shifts left

A

Which of the following will NOT increase potential real GDP over the long run? Improvements in technology. Increases in population. Increased legal institution. An increase in demand.

An increase in demand.

stagflation

a period of slow economic growth and high unemployment (stagnation) while prices rise (inflation)

Aggregate demand is

the total amount of goods and services demanded in an economy at a given time

Suppose the economy is in long-run equilibrium. If there is a sharp decline in government purchases combined with a significant increase in immigration of skilled workers, then in the short run, a. the price level will rise, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise and the price level will fall. b. the price level will fall, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise and the price level will fall. c. the price level will fall, and real GDP might rise, fall, or stay the same. In the long-run, real GDP and the price level will be unaffected. d. real GDP will rise and the price level might rise, fall, or stay the same. In the long-run, real GDP will rise and the price level might rise, fall, or stay the same.

B

When looking at a graph of aggregate demand, which of the following is correct? a. There are real variables on both the vertical and horizontal axes. b. The variable on the vertical axis is nominal; the variable on the horizontal axis is real c. There are nominal variables on both the vertical and the horizontal axes. d. The variable on the vertical axis is real; the variable on the horizontal axis is nominal

B

In the basic aggregate demand and aggregate supply model, which of the following could cause a recession? An increase in: A. government purchases. B. personal income taxes C. the expectations of households of their future income. D. the expectations of firms of the future profitability of their current investment spending.

C

Policymakers who control monetary and fiscal policy and want to offset the effects on output of an economic contraction caused by a shift in aggregate supply could use policy to shift a. aggregate supply to the left. b. aggregate supply to the right. c. aggregate demand to the right. d. aggregate demand to the left.

C

The price level rises in the short run if a. aggregate demand or aggregate supply shifts right. b. aggregate demand or aggregate supply shifts right. c. aggregate demand shifts right or aggregate supply shifts left. d. aggregate demand shifts left or aggregate supply shifts right.

C

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected... a. production is more profitable and employment rises. b. production is less profitable and employment falls. c. production is more profitable and employment falls. d. production is less profitable and employment rises.

a. production is more profitable and employment rises.

In the mid-1970s the price of oil rose dramatically. This a. shifted aggregate supply left, the price level rose, and real GDP fell. b. caused U.S. prices to fall, and real GDP rose. c. caused an increase in U.S. prices and real GDP. d. caused a decrease in U.S. prices and real GDP.

a. shifted aggregate supply left, the price level rose, and real GDP fell

When looking at a graph of aggregate demand, which of the following is correct? a. There are real variables on both the vertical and horizontal axes. b. The variable on the vertical axis is nominal; the variable on the horizontal axis is real c. There are nominal variables on both the vertical and the horizontal axes. d. The variable on the vertical axis is real; the variable on the horizontal axis is nominal

b. The variable on the vertical axis is nominal; the variable on the horizontal axis is real

The price level rises in the short run if' a. aggregate demand or aggregate supply shifts right. b. aggregate demand or aggregate supply shifts right. c. aggregate demand shifts right or aggregate supply shifts left. d. aggregate demand shifts left or aggregate supply shifts right.

c. aggregate demand shifts right or aggregate supply shifts left.

Suppose government spending is cut. Other things being equal, the aggregate demand for national production will... rise, fall, remain constant, all of the above?

fall