Question 1

Figure 33-7 
-Refer to Figure 33-7. If the economy starts at point O, a short-run fall in output would be consistent with a movement to point
A)O.
B)P.
C)Q.
D)R.

Accepted Answer

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

Question 2

Figure 33-6 -Refer to Figure 33-6. Suppose the economy starts at A. If changes occur that move the economy to a new short-run equilibrium of P₁ and Y₁ , then it must be the case that A)short-run aggregate supply has decreased. B)short-run aggregate supply has increased. C)aggregate demand has increased. D)aggregate demand has decreased.

Accepted Answer

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

Question 3

Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in taxes, then in the short run, real GDP will
A)rise and the price level might rise, fall, or stay the same.In the long run, the price level might rise, fall, or stay the same but real GDP will be unaffected.
B)fall and the price level might rise, fall, or stay the same.In the long run, the price level might rise, fall, or stay the same but real GDP will be unaffected.
C)rise and the price level might rise, fall, or stay the same.In the long run, the price level might rise, fall, or stay the same but real GDP will be lower.
D)fall and the price level might rise, fall, or stay the same.In the long run, the price level might rise, fall, or stay the same but real GDP will be lower.

Accepted Answer

The answer of Suppose the economy is in long-run equilibrium....

Question 4

Which of the following would cause stagflation?
A)Aggregate demand shifts right.
B)Aggregate demand shifts left.
C)Aggregate supply shifts right.
D)Aggregate supply shifts left.

Accepted Answer

Stagflation is characterized by slow economic growth and high unemployment (stagnation) along with rising prices (inflation). This scenario is typically caused by a leftward shift in the aggregate supply curve, which indicates a decrease in the overall production capacity of the economy. This decrease in supply can lead to higher prices for goods and services, even in the face of stagnant or declining demand, thus causing stagflation.

Question 5

The economic boom of the early 1940s resulted mostly from
A)increased government expenditures.
B)falling prices of oil and other natural resources.
C)an increase in the growth rate of the money supply.
D)rapid developments in transportation, electronics, and communication.

Accepted Answer

The economic boom of the early 1940s was primarily driven by increased government expenditures related to World War II, including military spending and investments in war-related industries.

Question 6

Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to
A)rise.This rise in price expectations shifts the short-run aggregate supply curve to the right.
B)rise.This rise in price expectations shifts the short-run aggregate supply curve to the left.
C)fall.This fall in price expectations shifts the short-run aggregate supply curve to the right.
D)fall.This fall in price expectations shifts the short-run aggregate supply curve to the left.

Accepted Answer

When the government increases its expenditures, it leads to an increase in aggregate demand. As demand increases, prices tend to rise. Over time, as people expect higher prices in the future, this expectation can lead to adjustments in wages and costs, which in turn can shift the short-run aggregate supply (SRAS) curve to the left, as it becomes more costly for firms to produce at any given price level.

Question 7

In the short-run an increase in the costs of production makes
A)both output and prices rise.
B)output rise and prices fall.
C)output fall and prices rise.
D)both output and prices fall.

Accepted Answer

In the short run, an increase in the costs of production typically leads to a decrease in supply because it becomes more expensive for firms to produce goods. As a result, the quantity of output falls, and the prices of goods rise due to the reduced supply.

Question 8

Figure 33-6 -Refer to Figure 33-6. Suppose the economy starts at A. Stagflation would be consistent with the move to A)P₁ and Y₁. B)P₁ and Y₃. C)P₃ and Y₁. D)P₃ and Y₃.

Accepted Answer

Stagflation is characterized by increasing inflation and unemployment, which corresponds to a move where the price level increases (indicating inflation) and output decreases (indicating a rise in unemployment), as described in option C.

Question 9

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 right.
B)aggregate supply to the left.
C)aggregate demand to the right.
D)aggregate demand to the left.

Accepted Answer

To offset an economic contraction caused by a shift in aggregate supply, policymakers can use expansionary fiscal or monetary policy to increase aggregate demand, shifting it to the right, to boost output and counteract the contraction.

Quiz 33: Aggregate Demand and Aggregate Supply

Figure 33-7 -Refer to Figure 33-7. If the economy starts at point O, a short-run fall in output would be consistent with a movement to point

Figure 33-6 ​ -Refer to Figure 33-6. Suppose the economy starts at A. If changes occur that move the economy to a new short-run equilibrium of P1 and Y1 , then it must be the case that

Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in taxes, then in the short run, real GDP will

Which of the following would cause stagflation?

The economic boom of the early 1940s resulted mostly from

Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to

In the short-run an increase in the costs of production makes

Figure 33-6 ​ -Refer to Figure 33-6. Suppose the economy starts at A. Stagflation would be consistent with the move to

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

Figure 33-6 -Refer to Figure 33-6. Suppose the economy starts at A. If changes occur that move the economy to a new short-run equilibrium of P₁ and Y₁ , then it must be the case that

Figure 33-6 -Refer to Figure 33-6. Suppose the economy starts at A. Stagflation would be consistent with the move to