Question 1

Most economists use the aggregate demand and aggregate supply model primarily to analyze
A)short-run fluctuations in the economy.
B)the effects of macroeconomic policy on the prices of individual goods.
C)the long-run effects of international trade policies.
D)productivity and economic growth.

Accepted Answer

The aggregate demand and aggregate supply model is primarily used to analyze short-run economic fluctuations, such as changes in output and employment, rather than long-term growth or individual prices.

Question 2

​Many macroeconomic variables
A)​fluctuate together and by different amounts.
B)​fluctuate together by the same amounts.
C)​never fluctuate together.
D)​fluctuate together about half of the time and by the same amount.

Accepted Answer

Macro-economic variables tend to fluctuate together due to interdependence, but the magnitude and direction of fluctuations may differ due to varying factors influencing each variable. Hence, option A is the most appropriate choice.

Question 3

The best example of recessions being close to each other in the United States can be found in the ​
A)​1980s.
B)​1970s.
C)​1990s.
D)​2000s.

Accepted Answer

The answer of The best example of recessions being close...

Question 4

Which of the following explains why production rises in most years?
A)increases in the labor force
B)increases in the capital stock
C)advances in technological knowledge
D)All of the above are correct.

Accepted Answer

Production rises in most years due to increases in the labor force, increases in the capital stock, and advances in technological knowledge. All of these factors contribute to increases in productivity and output.

Question 5

During recessions
A)workers are laid off.
B)factories are idle.
C)firms may find they are unable to sell all they produce.
D)All of the above are correct.

Accepted Answer

During recessions, all of the above are correct. Workers are often laid off as firms try to cut costs. Factories may be idle because there is a decrease in demand for the products they produce. Firms may find that they are unable to sell all they produce because consumers are spending less due to economic hardship.

Question 6

A relatively mild period of falling incomes and rising unemployment is called a(n)
A)depression.
B)recession.
C)expansion.
D)business cycle.

Accepted Answer

A recession is a mild period of economic downturn characterized by falling incomes and rising unemployment. A depression is a more severe and prolonged period of economic decline. An expansion refers to a period of economic growth, and the business cycle refers to the natural pattern of economic expansion and contraction over time.

Question 7

On average, over the last 50 years, real GDP has grown by about ​
A)​3 percent per year.
B)​2 percent per year.
C)​1 percent per year.
D)​4 percent per year.

Accepted Answer

The answer of On average, over the last 50 years,...

Question 8

Investment averages about ____ of GDP.​
A)​1/6
B)​1/8
C)​1/4
D)​1/2

Accepted Answer

Investment averages about 1/6 of GDP.

Question 9

Which of the following is not correct?
A)The model of aggregate demand and aggregate supply is used by most economists to analyze short-run fluctuations.
B)During a recession firms cut back production and workers are laid off.
C)A recession is a period of declining real incomes and declining unemployment.
D)A depression is a severe recession.

Accepted Answer

A recession is characterized by declining real incomes and increasing unemployment, not declining unemployment.

Question 10

During a recession, unemployment ​
A)​increases.
B)​decreases.
C)​is equal to the natural rate of unemployment.
D)​is frictional unemployment minus structural unemployment.

Accepted Answer

During a recession, economic activity slows down, leading to a decrease in demand for goods and services, which often results in businesses laying off workers, thereby increasing unemployment.

Question 11

During a recession the economy experiences
A)rising employment and income.
B)rising employment and falling income.
C)rising income and falling employment.
D)falling employment and income.

Accepted Answer

During a recession, there is a decrease in demand for goods and services, which leads to a decrease in production. As a result, businesses may have to lay off workers, leading to a decrease in employment. With fewer people employed, there is less income generated in the economy, leading to a decrease in income. Therefore, the correct choice is D - falling employment and income.

Question 12

In October 2009, the official unemployment rate rose to ​
A)​10%.
B)​8%.
C)​6%
D)​4%.

Accepted Answer

According to the information given, the official unemployment rate rose in October 2009. The only option that matches this is A, which states that the unemployment rate was 10%.

Quiz 33: Aggregate Demand and Aggregate Supply

Most economists use the aggregate demand and aggregate supply model primarily to analyze

​Many macroeconomic variables

The best example of recessions being close to each other in the United States can be found in the ​

Which of the following explains why production rises in most years?

During recessions

A relatively mild period of falling incomes and rising unemployment is called a(n)

On average, over the last 50 years, real GDP has grown by about ​

Investment averages about ____ of GDP.​

Which of the following is not correct?

During a recession, unemployment ​

During a recession the economy experiences

In October 2009, the official unemployment rate rose to ​

Many macroeconomic variables

The best example of recessions being close to each other in the United States can be found in the

On average, over the last 50 years, real GDP has grown by about

Investment averages about ____ of GDP.

During a recession, unemployment

In October 2009, the official unemployment rate rose to