Question 1

Figure 33-7. 
-Refer to Figure 33-7. If the economy starts at Y, then a recession occurs at
A)V.
B)W.
C)X.
D)Z.

Accepted Answer

The answer of Figure 33-7. 
-Refer to Figure 33-7. If...

Question 2

Figure 33-5. 
-Refer to Figure 33-5. Starting from point B and assuming that aggregate demand is held constant, in the long run the economy is likely to experience
A)a falling price level and a falling level of output, as the economy moves to point C.
B)a falling price level and a rising level of output, as the economy moves to point A.
C)a rising price level and a falling level of output, as the economy moves to point A.
D)a rising price level and a rising level of output, as the economy moves to point C.

Accepted Answer

The answer of Figure 33-5. 
-Refer to Figure 33-5. Starting...

Question 3

Refer to Stock Market Boom 2015. In the long run, the change in price expectations created by the stock market boom shifts
A)long-run aggregate supply right.
B)long-run aggregate supply left.
C)short-run aggregate supply right.
D)short-run aggregate supply left.

Accepted Answer

The answer of Refer to Stock Market Boom 2015. In...

Question 4

Refer to Stock Market Boom 2015. How is the new long-run equilibrium different from the original one?
A)the price level and real GDP are higher
B)the price level and real GDP are lower.
C)the price level is higher and real GDP is the same.
D)the price level is the same and real GDP is higher.

Accepted Answer

The answer of Refer to Stock Market Boom 2015. How...

Question 5

Consider the exhibit below for the following questions.
Figure 33-4 
-Refer to Figure 33-4. In the short run, a favorable shift in aggregate supply would move the economy from
A)A to B.
B)B to C.
C)C to D.
D)D to A.

Accepted Answer

The answer of Consider the exhibit below for the following...

Question 6

Figure 33-6. -Refer to Figure 33-6. Which of the long-run aggregate-supply curves is consistent with a short-run economic expansion? A)LRAS₁ B)LRAS₂ C)LRAS₃ D)Both LRAS₁ and LRAS₃

Accepted Answer

The answer of Figure 33-6. 
-Refer to Figure 33-6. Which...

Question 7

Figure 33-6. -Refer to Figure 33-6. Which of the long-run aggregate-supply curves is consistent with a recession? A)LRAS₁ B)LRAS₂ C)LRAS₃ D)Both LRAS₁ and LRAS₃

Accepted Answer

LRAS₃ is the only curve that shifts to the left, indicating a decrease in potential output, which is consistent with a recession.

Question 8

Figure 33-7. 
-Refer to Figure 33-7. Suppose the economy starts at Y. If there is a fall in aggregate demand, then the economy moves to
A)V in the long run.
B)W in the long run.
C)X in the long run.
D)Z in the long run.

Accepted Answer

The answer of Figure 33-7. 
-Refer to Figure 33-7. Suppose...

Question 9

Consider the exhibit below for the following questions.
Figure 33-4 
-Refer to Figure 33-4. The economy would be moving to long-run equilibrium if it started at
A)A and moved to B.
B)C and moved to B.
C)D and moved to C.
D)None of the above is correct.

Accepted Answer

The answer of Consider the exhibit below for the following...

Question 10

Figure 33-5. -Refer to Figure 33-5. The shift of the short-run aggregate-supply curve from SRAS₁ to SRAS₂ A)could be caused by an outbreak of war in the Middle East. B)could be caused by a decrease in the expected price level. C)causes the economy to experience an increase in the unemployment rate. D)causes the economy to experience stagflation.

Accepted Answer

A shift from SRAS₁ to SRAS₂ indicates an increase in the quantity of goods and services supplied at any given price level. This shift could be caused by a decrease in expected prices, which would make production more profitable and increase the incentive to supply goods and services. A shift in the short-run aggregate supply curve due to war in the Middle East would likely shift the curve to the left, indicating a decrease in the quantity of goods and services supplied at any given price level, leading to a decrease in output and increased unemployment. Similarly, a shift in the short-run aggregate supply curve that causes stagflation (a combination of high inflation and high unemployment) would shift the curve to the left, indicating a decrease in the quantity of goods and services supplied at any given price level.

Question 11

Consider the exhibit below for the following questions.
Figure 33-4 
-Refer to Figure 33-4. If the economy starts at A and there is a fall in aggregate demand, the economy moves
A)back to A in the long run.
B)to B in the long run.
C)to C in the long run.
D)to D in the long run.

Accepted Answer

The answer of Consider the exhibit below for the following...

Question 12

Figure 33-5. 
-Refer to Figure 33-5. In Figure 33-5,
A)Point B represents a short-run equilibrium and a long-run equilibrium.
B)Point B represents a short-run equilibrium, and Point A represents a long-run equilibrium.
C)Point B represents a long-run equilibrium, and Point A represents a short-run equilibrium.
D)Point B represents a long-run equilibrium, and Point C represents a short-run equilibrium.

Accepted Answer

Point B represents a short-run equilibrium where the aggregate demand and short-run aggregate supply intersect, determining the current level of real GDP and price level. However, Point B is not a long-run equilibrium as the economy is experiencing inflationary pressure due to the high price level. Point A represents a long-run equilibrium where the aggregate demand intersects with the long-run aggregate supply, determining the potential output level of real GDP in the long run. Therefore, Point B represents a short-run equilibrium, and Point A represents a long-run equilibrium.

Question 13

Refer to Stock Market Boom 2015. Which curve shifts and in which direction?
A)aggregate demand shifts right
B)aggregate demand shifts left
C)aggregate supply shifts right
D)aggregate supply shifts left.

Accepted Answer

The answer of Refer to Stock Market Boom 2015. Which...

Question 14

Refer to Stock Market Boom 2015. In the short run what happens to the price level and real GDP?
A)both the price level and real GDP rise.
B)both the price level and real GDP fall.
C)the price level rises and real GDP falls.
D)the price level falls and real GDP rises.

Accepted Answer

In a stock market boom, there is an increase in investment, which ultimately leads to an increase in aggregate demand. This increase in aggregate demand leads to an increase in both price level and real GDP in the short run.

Question 15

Figure 33-5. -Refer to Figure 33-5. The appearance of the long-run aggregate-supply (LRAS) curve A)is consistent with the concept of monetary neutrality. B)is consistent with the idea that point A represents a long-run equilibrium and a short-run equilibrium when the relevant short-run aggregate-supply curve is SRAS₁. C)indicates that Y₁ is the natural rate of output. D)All of the above are correct.

Accepted Answer

The LRAS curve in Figure 33-5 is consistent with the concept of monetary neutrality as it is a vertical line indicating that changes in the money supply do not affect the long-run rate of output. It is also consistent with the idea that point A represents a long-run equilibrium and a short-run equilibrium when the relevant short-run aggregate-supply curve is SRAS₁. Finally, the position of the LRAS curve indicates that Y₁ is the natural rate of output, which is the level of output when the economy is at full employment and potential output. Therefore, all of the given options are correct.

Question 16

Refer to Stock Market Boom 2015. What happens to the expected price level and what impact does this have on wage bargaining?
A)The expected price level falls. Bargains are struck for higher wages.
B)The expected price level falls. Bargains are struck for lower wages.
C)The expected price level rises. Bargains are struck for higher wages.
D)The expected price level rises. Bargains are struck for lower wages.

Accepted Answer

The answer of Refer to Stock Market Boom 2015. What...

Question 17

Figure 33-7. -Refer to Figure 33-7. Suppose the economy starts at Y. If aggregate demand increases from AD₂ to AD₃, then the economy moves to A)V. B)W. C)X. D)Z.

Accepted Answer

The answer of Figure 33-7. 
-Refer to Figure 33-7. Suppose...

Question 18

Consider the exhibit below for the following questions.
Figure 33-4 
-Refer to Figure 33-4. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from
A)A to B.
B)C to D.
C)B to A.
D)D to C.

Accepted Answer

The answer of Consider the exhibit below for the following...

Question 19

Consider the exhibit below for the following questions.
Figure 33-4 
-Refer to Figure 33-4. If the economy is at A and there is a fall in aggregate demand, in the short run the economy
A)stays at A.
B)moves to B.
C)moves to C.
D)moves to D.

Accepted Answer

The answer of Consider the exhibit below for the following...

Question 20

Consider the exhibit below for the following questions.
Figure 33-4 
-Refer to Figure 33-4. If the economy starts at A and moves to D in the short run, the economy
A)moves to A in the long run.
B)moves to B in the long run.
C)moves to C in the long run.
D)stays at D in the long run.

Accepted Answer

According to the exhibit, point D represents short-run equilibrium, which is to the right of the long-run aggregate supply curve (LRAS). This suggests that prices and wages are higher than their natural level in the short run, resulting in firms producing more and increasing output. In the long run, however, prices and wages adjust to their natural level, indicated by the intersection of LRAS and AD at point C. Therefore, the economy moves to point C in the long run.

Quiz 33: Aggregate Demand and Aggregate Supply

Figure 33-7. -Refer to Figure 33-7. If the economy starts at Y, then a recession occurs at

Figure 33-5. -Refer to Figure 33-5. Starting from point B and assuming that aggregate demand is held constant, in the long run the economy is likely to experience

Refer to Stock Market Boom 2015. In the long run, the change in price expectations created by the stock market boom shifts

Refer to Stock Market Boom 2015. How is the new long-run equilibrium different from the original one?

Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4. In the short run, a favorable shift in aggregate supply would move the economy from

Figure 33-6. -Refer to Figure 33-6. Which of the long-run aggregate-supply curves is consistent with a short-run economic expansion?

Figure 33-6. -Refer to Figure 33-6. Which of the long-run aggregate-supply curves is consistent with a recession?

Figure 33-7. -Refer to Figure 33-7. Suppose the economy starts at Y. If there is a fall in aggregate demand, then the economy moves to

Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4. The economy would be moving to long-run equilibrium if it started at

Figure 33-5. -Refer to Figure 33-5. The shift of the short-run aggregate-supply curve from SRAS1 to SRAS2

Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4. If the economy starts at A and there is a fall in aggregate demand, the economy moves

Figure 33-5. -Refer to Figure 33-5. In Figure 33-5,

Refer to Stock Market Boom 2015. Which curve shifts and in which direction?

Refer to Stock Market Boom 2015. In the short run what happens to the price level and real GDP?

Figure 33-5. -Refer to Figure 33-5. The appearance of the long-run aggregate-supply (LRAS) curve

Refer to Stock Market Boom 2015. What happens to the expected price level and what impact does this have on wage bargaining?

Figure 33-7. -Refer to Figure 33-7. Suppose the economy starts at Y. If aggregate demand increases from AD2 to AD3, then the economy moves to

Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from

Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4. If the economy is at A and there is a fall in aggregate demand, in the short run the economy

Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4. If the economy starts at A and moves to D in the short run, the economy

Figure 33-5. -Refer to Figure 33-5. The shift of the short-run aggregate-supply curve from SRAS₁ to SRAS₂

Figure 33-7. -Refer to Figure 33-7. Suppose the economy starts at Y. If aggregate demand increases from AD₂ to AD₃, then the economy moves to