macroeconomics topic 9

The relationship between the level of prices and the total quantity of goods and services that firms supply in the short run is: similar in the long run and in the short run due to the existence of sticky prices. marginally decreasing. positive. negative.

positive.

Which of the following are the factors that affect the short-run aggregate supply curve? input prices the state of technology taxes and subsidies All of the above can affect the SRAS curve.

All of the above can affect the SRAS curve.

Refer to Figure 9.2. Which of the following causes the economy to move from Point A to Point E in the short run? an oil embargo that increases the price of oil sharply technological progress an influx of immigrants an increase in the price level

an oil embargo that increases the price of oil sharply

The four components of the aggregate demand curve are the same as the: components of real GDP. components of aggregate supply. components of investment. components of market demand.

components of real GDP.

When we draw the aggregate demand curve, ________ should be on the x-axis and ________ should be on the y-axis. real GDP; the price level quantity; price price; quantity real GDP; inflation

real GDP; the price level

The aggregate supply curve in the short run is different from the aggregate supply curve in the long run because of: the recurring nature of supply shocks. the crowding out effect. the wealth effect. the existence of sticky prices in the short run.

the existence of sticky prices in the short run.

The aggregate demand curve slopes downward because at a higher price level: the purchasing power of consumers' assets declines and consumption increases. producers can get more for what they produce, and they increase production. the purchasing power of consumers' wealth declines and consumption decreases. the purchasing power of consumers' wealth increases and consumption increases.

the purchasing power of consumers' wealth declines and consumption decreases.

A decrease in the money supply will cause output: to decrease in the short run; not change in the long run. to decrease in the short run; decrease in the long run. to increase in the short run; increase in the long run. to increase in the short run, decrease in the long run.

to decrease in the short run; not change in the long run.

An increase in consumption spending will cause output: to decrease in the short run; not change in the long run. to decrease in the short run; decrease in the long run. to increase in the short run; not change in the long run. to increase in the short run, decrease in the long run.

to increase in the short run; not change in the long run.

A leftward shift in the aggregate demand curve cannot be caused by: a decrease in government spending. a decrease in the money supply. an increase in taxes. a decrease in imports.

a decrease in imports.

A rightward shift in the aggregate demand curve can be caused by: an increase in government spending. a decrease in taxes. an increase in the money supply. all of the above.

all of the above.

In the long run, output is determined by: the size of the capital stock. the size of the labor force. the state of technology. all of the above.

all of the above.

The four components of the aggregate demand curve are: consumption, investment, government purchases and net exports. land, labor, capital, and technology. consumption, inventories, government purchases and net exports. consumption, inventories, government spending and exports.

consumption, investment, government purchases and net exports.

In the short run, a decrease in the price of a major input such as oil will: decrease the price level and increase the level of output. increase the price level and increase the level of output. increase the price level and decrease the level of output. decrease both the price level and the level of output.

decrease the price level and increase the level of output.

In the short run, an improvement in the technology will: decrease the price level and increase the level of output. increase the price level and increase the level of output. increase the price level and decrease the level of output. decrease both the price level and the level of output.

decrease the price level and increase the level of output.

If the economy is in equilibrium at full employment, an increase in aggregate demand will: decrease the price level and leave the level of output unchanged in the short run. increase the price level and leave the level of output unchanged in the short run. increase both the price level and the level of output in the short run. decrease both the price level and the level of output in the short run.

increase both the price level and the level of output in the short run.

The long run aggregate supply curve assumes that in the long run, the economy: has no unemployment. has no inflation. is at full employment. does not experience supply shocks.

is at full employment.

Because the long run aggregate supply curve is vertical at the full employment level of GDP, then this would imply that the long run aggregate supply curve: is independent of changes in the price level. increases as the price level increases. decreases as the price level increases. shifts to the right when the price level increases.

is independent of changes in the price level.

When the economy is in a recession, the intersection between the: short run AS and the AD occurs at an output level higher than potential output. short run AS and the AD occurs at an output level lower than potential output. long run AS and the AD occurs at an output level higher than potential output. long run AS and the AD occurs at an output level lower than potential output.

short run AS and the AD occurs at an output level lower than potential output.

The aggregate demand curve would shift to the left if: government spending was increased. taxes were increased. the money supply was increased. the cost of energy was to decrease.

taxes were increased.

Refer to Figure 9.1. A reduction in the money supply causes: the economy to move from Point A to Point B, but will not shift the aggregate demand curve. the aggregate demand curve to shift from AD1 to AD0. the aggregate demand curve to shift from AD1 to AD2. neither a shift of the aggregate demand curve nor a change in real GDP.

the aggregate demand curve to shift from AD1 to AD0.

Refer to Figure 9.1. An increase in government spending causes: the economy to move from Point A to Point B, but will not shift the aggregate demand curve. the aggregate demand curve to shift from AD1 to AD0 . the aggregate demand curve to shift from AD1 to AD2 . neither a shift of the aggregate demand curve nor a change in real GDP.

the aggregate demand curve to shift from AD1 to AD2.

Refer to Figure 9.2. The flooding in the Midwest during the summer of 1993 destroyed a large portion of the agricultural crop in the United States. This caused: the aggregate supply curve to shift from AS1 to AS2. the aggregate supply curve to shift from AS1 to AS0. the economy to move from Point B to Point A along AS1. the economy to move from Point C to Point B along AS1 .

the aggregate supply curve to shift from AS1 to AS0.

In the long run, the aggregate supply curve is: vertical at the full employment level of GDP. downward sloping. horizontal at the full employment level of GDP. upward sloping.

vertical at the full employment level of GDP.