murgo final part 1

6. Which of the following partly explains why the aggregate demand curve is negatively sloped? A) When the price of cars manufactured in the United States increases, people buy more cars manufactured abroad. B) When the price of cars manufactured abroad increases, people buy fewer cars manufactured in the United States. C) When the interest rate increases, people borrow more money. D) When the interest rate decreases, people borrow less money

A) When the price of cars manufactured in the United States increases, people buy more

14. A(n) _______ in oil prices and a(n) _______ in taxes will shift short-run aggregate supply to the left. A) increase; increase B) increase; reduction C) reduction; increase D) reduction; reduction

A) increase; increase

22. Suppose consumers spend more than usual. In the short run, output will ____; in the long run, output will _____ from its starting point. A) increase; remain unchanged B) increase; increase C) remain unchanged; decrease D) remain unchanged; increase

A) increase; remain unchanged

9. In the long run, attempts to expand beyond an economy's natural rate of unemployment tend to result in: A) increased inflation. B) increased output. C) both increased output and increased inflation. D) neither increased output nor increased inflation

A) increased inflation.

2. A falling aggregate price level ____ demand for a country's exports and therefore _____ output demanded. A) increases; increases B) increases; reduces C) reduces; increases D) reduces; reduces

A) increases; increases

10. In the short run, the aggregate supply curve is ____ because input prices are _____. A) positively sloped; not completely flexible B) positively sloped; completely flexible C) vertical; not completely flexible D) vertical; completely flexible

A) positively sloped; not completely flexible

25. (Figure: Determining SRAS Shifts) Which statement is NOT correct? A) Equilibrium output is $3,000 worth of goods and services. B) An increase in aggregate demand would lead to deflation. C) Full employment occurs when the economy produces $3,000 worth of goods and services. D) In the short-run equilibrium, output can be greater than or less than $3,000.

B) An increase in aggregate demand would lead to deflation.

23. (Figure: Determining SRAS Shifts) If there is a decrease in input prices, the short-run aggregate supply curve will shift from SRAS0 to _____ and the price level will become _____. A) SRAS1; P0 B) SRAS1; P1 C) SRAS2; P1 D) SRAS2; P2

B) SRAS1; P1

24. (Figure: Determining SRAS Shifts) If there are advances in technology, the short-run aggregate supply curve will shift from SRAS0 to _____ and the price level will become _____. A) SRAS1; P0 B) SRAS1; P1 C) SRAS2; P1 D) SRAS2; P2

B) SRAS1; P1

5. Which of the following would NOT cause a shift in the aggregate demand curve? A) a change in consumption spending B) a change in the price level C) a change in investment D) a change in net exports

B) a change in the price level

12. If oil prices decrease, the short-run aggregate supply curve shifts _____ and output supplied will be _____. A) left; increased B) left; reduced C) right; increased D) right; reduced

B) left; reduced

13. If the amount of regulation in an economy increases, the aggregate supply curve shifts _____ and output supplied will be _____. A) left; increased B) left; reduced C) right; increased D) right; reduced

B) left; reduced

16. The short-run aggregate supply curve is positively sloped because: A) a short-run increase in GDP usually is accompanied by an increased rise in the price level. B) many input prices are slow to change in the short run. C) all variables are fixed in the short run. D) a short-run increase in GDP usually is accompanied by a slower rise in the price level.

B) many input prices are slow to change in the short run.

19. A breakthrough in solar energy research that halves the cost of electricity will: A) have no effect on the aggregate supply curve. B) shift the aggregate supply curve to the right. C) shift the aggregate supply curve to the left. D) cause the aggregate supply curve to become vertical.

B) shift the aggregate supply curve to the right.

20. If a pill is discovered that allows people to work twice as fast as they would ordinarily work, then the aggregate supply curve will: A) shift to the left. B) shift to the right. C) not change. D) become vertical.

B) shift to the right.

3. Which of the following events causes a decrease in aggregate demand? A) consumer confidence improves B) taxes increase C) interest rates fall D) government spending increases

B) taxes increase

4. Which of the following best illustrates the wealth effect? A) Jacob saved $25,000, which he put in the stock market. The market suddenly did very well, and though Jacob is not yet aware of it, his stock portfolio value rose to $36,000. B) Simon felt he needed at least $800,000 to retire comfortably. He increased his saving to build up his wealth. C) The Jones family has $50,000 in a bank. Price at the stores rose dramatically, so the purchasing power represented by that $50,000 diminished. D) Margaret had her savings in Treasury bonds. She thought that stocks might offer her a better opportunity to increase her wealth, so she sold her bonds to buy stocks.

C) The Jones family has $50,000 in a bank. Price at the stores rose dramatically, so the

7. Which of the following events will shift the aggregate demand curve to the right? A) a catastrophic hurricane hitting the northeastern United States B) an increase in household debt C) decreased taxes D) decrease in military spending

C) decreased taxes

15. A(n) _______ in productivity and a(n) ______ in taxes will shift short-run aggregate supply to the right. A) decrease; decrease B) decrease; increase C) increase; decrease D) increase; increase

C) increase; decrease

21. Which of the following will shift the aggregate supply curve to the right? A) the development of a cartel in the production of soybeans B) an increase in corporate taxes C) increased investment in human capital D) an increase in the price of garbage collection

C) increased investment in human capital

11. In the short run, the aggregate supply curve is: A) horizontal. B) negatively sloped. C) positively sloped. D) vertical

C) positively sloped.

17. Aggregate supply increases when: A) input prices rise. B) subsidies are reduced. C) there is a decrease in firms' market power. D) business expectations tend toward the negative.

C) there is a decrease in firms' market power.

(Figure: Determining SRAS Shifts) If the government raises taxes or increases regulations, the short-run aggregate supply curve will shift from SRAS0 to _____ and the price level will be at _____. A) SRAS1; P0 B) SRAS1; P1 C) SRAS2; P1 D) SRAS2; P2

D) SRAS2; P2

8. Which of the following factors will cause the aggregate demand curve to shift to the left? A) rise in consumer confidence B) fall in excess capacity at businesses C) increase in foreign income D) appreciation of the dollar

D) appreciation of the dollar

1. In the Keynesian model, the price level is ___________; in the aggregate demand and supply model, the price level is _______________. A) fixed; fixed B) flexible; flexible C) flexible; fixed D) fixed; flexible

D) fixed; flexible