Question 1

Assume you have $1,000 in a savings account at the beginning of the year and the price level is equal to 100.If the price level is equal to 92 at the end of the year,the real value of your savings is closest to

Accepted Answer

A)  $908.
B)  $920.
C)  $1,087.
D)  $1,092.

Question 2

Changes in real GDP are best used to measure

Accepted Answer

A)  Inflation.
B)  Price level changes.
C)  Business cycles.
D)  Population growth.

Question 3

What are the differences between classical theory and what Keynes believed?

Accepted Answer

Classical theory asserts that a market e...

Question 4

Based upon a Keynesian viewpoint,to stimulate the economy the government should do all of the following except

Accepted Answer

A)  Buy more output.
B)  Employ more people.
C)  Make more money available.
D)  Raise taxes.

Question 5

4 to AD5 is most likely to cause A) An increase in real output and an increase in the price level. B) An increase in real output but no change in the price level. C) An increase in price level but no change in real output. D) A decrease in price level but no change in real output." class="answers-bank-image d-inline" rel="preload" > Using Figure 8.7,a shift in aggregate demand from AD4 to AD5 is most likely to cause

Accepted Answer

A)  An increase in real output and an increase in the price level.
B)  An increase in real output but no change in the price level.
C)  An increase in price level but no change in real output.
D)  A decrease in price level but no change in real output. C

Question 6

1 to AD2 is most likely to cause A) An increase in real output and an increase in the price level. B) An increase in real output but no change in the price level. C) An increase in price level but no change in real output. D) A decrease in price level but no change in real output." class="answers-bank-image d-inline" rel="preload" > Using Figure 8.7,a shift in aggregate demand from AD1 to AD2 is most likely to cause

Accepted Answer

A)  An increase in real output and an increase in the price level.
B)  An increase in real output but no change in the price level.
C)  An increase in price level but no change in real output.
D)  A decrease in price level but no change in real output.

Question 7

Which of the following is an explanation for why the AD curve slopes downward?

Accepted Answer

A)  The interest rate effect.
B)  The cost effect.
C)  The profit effect.
D)  The laissez faire effect. A

Question 8

Supply-side theories of the business cycle focus on how improper incentives lead to the unwillingness of producers to supply more goods and services at existing prices.

Accepted Answer

A) True 
 B)False

Question 9

In the early 1900s,which of the following was not true?

Accepted Answer

A)  Falling price levels appeared to limit an increase in unemployment.
B)  Periods of high unemployment tended to be brief.
C)  Say's Law seemed to work.
D)  Government intervention was commonly used to stimulate the economy.

Question 10

If aggregate demand decreases and aggregate supply decreases,the level of real output will

Accepted Answer

A)  Decrease,and the price level will definitely decrease.
B)  Decrease,and the price level will definitely increase.
C)  Either increase or decrease,but the price level will stay the same.
D)  Decrease,but the price level is indeterminate.

Question 11

2 then A) Aggregate demand must be AD1. B) Aggregate demand could be either AD1 or AD2 depending on the level of aggregate supply. C) The equilibrium price level is P2. D) Aggregate supply must be AS1 and the equilibrium price level must be P1." class="answers-bank-image d-inline" rel="preload" > Using Figure 8.5,if the equilibrium real output is Q2 then

Accepted Answer

A)  Aggregate demand must be AD1.
B)  Aggregate demand could be either AD1 or AD2 depending on the level of aggregate supply.
C)  The equilibrium price level is P2.
D)  Aggregate supply must be AS1 and the equilibrium price level must be P1.

Question 12

In Figure 8.1,an increase in government spending,ceteris paribus,is best represented as a movement from point

Accepted Answer

A)  A to point B.
B)  C to point A.
C)  B to point C.
D)  A to point C.

Question 13

The aggregate demand curve is downward-sloping because,other things being equal,

Accepted Answer

A)  People buy fewer goods and services at lower average incomes.
B)  People buy more goods and services at lower average prices.
C)  A higher average price level will induce producers to offer more output than otherwise.
D)  People buy more goods and services at higher average prices.

Question 14

Keynesian levers include

Accepted Answer

A)  Deregulation.
B)  Fiscal policy.
C)  External shocks.
D)  Changes in the money supply.

Question 15

According to the classical view,the economy will not self-adjust to deviations from its long-term growth trend.

Accepted Answer

A) True 
 B)False

Question 16

Using Figure 8.2,a decrease in real output resulting from the profit effect would be depicted as a movement from point

Accepted Answer

A)  A to point C.
B)  B to point A.
C)  B to point C.
D)  C to point B.

Question 17

Choose the letter below that best represents the type of shift that would occur in the following situation in the United States: During the Great Depression,most other countries suffered similarly long and deep losses of output and employment,which in turn meant fewer purchases of U.S.goods and services.(See Figure 8.6. )

Accepted Answer

A)  A.
B)  B.
C)  C.
D)  D.

Question 18

A laissez faire policy approach during a recession would advocate

Accepted Answer

A)  Noninterference by the government.
B)  Increasing AS by funding programs that improve worker skills.
C)  Increasing AD by increasing government spending.
D)  Increasing both AD and AS.

Question 19

Which group of economists believes that there is a natural rate of output that is relatively immune to short-run fluctuations in aggregate demand?

Accepted Answer

A)  Supply-siders.
B)  Keynesians.
C)  Monetarists.
D)  Fiscal economists.

Question 20

1 and full-employment real output is Q2,an appropriate monetarist policy lever would be to increase A) AD by decreasing income taxes. B) AS by increasing the money supply. C) AD by reducing interest rates. D) AD by reducing government regulations." class="answers-bank-image d-inline" rel="preload" > In Figure 8.5,if equilibrium real output is Q1 and full-employment real output is Q2,an appropriate monetarist policy lever would be to increase

Accepted Answer

A)  AD by decreasing income taxes.
B)  AS by increasing the money supply.
C)  AD by reducing interest rates.
D)  AD by reducing government regulations. C

Exam 8: The Business Cycle

Assume you have $1,000 in a savings account at the beginning of the year and the price level is equal to 100.If the price level is equal to 92 at the end of the year,the real value of your savings is closest to

Correct Answer
verified

Changes in real GDP are best used to measure

Correct Answer
verified

What are the differences between classical theory and what Keynes believed?

Correct Answer
verified
Classical theory asserts that a market e...
View Answer

Based upon a Keynesian viewpoint,to stimulate the economy the government should do all of the following except

Correct Answer
verified

Using Figure 8.7,a shift in aggregate demand from AD₄ to AD₅ is most likely to cause

Correct Answer
verified
C

Using Figure 8.7,a shift in aggregate demand from AD₁ to AD₂ is most likely to cause

Correct Answer
verified

Which of the following is an explanation for why the AD curve slopes downward?

Correct Answer
verified
A

Supply-side theories of the business cycle focus on how improper incentives lead to the unwillingness of producers to supply more goods and services at existing prices.

Correct Answer
verified

In the early 1900s,which of the following was not true?

Correct Answer
verified

If aggregate demand decreases and aggregate supply decreases,the level of real output will

Correct Answer
verified

Using Figure 8.5,if the equilibrium real output is Q₂ then

Correct Answer
verified

In Figure 8.1,an increase in government spending,ceteris paribus,is best represented as a movement from point

Correct Answer
verified

The aggregate demand curve is downward-sloping because,other things being equal,

Correct Answer
verified

Keynesian levers include

Correct Answer
verified

According to the classical view,the economy will not self-adjust to deviations from its long-term growth trend.

Correct Answer
verified

Using Figure 8.2,a decrease in real output resulting from the profit effect would be depicted as a movement from point

Correct Answer
verified

Correct Answer
verified

A laissez faire policy approach during a recession would advocate

Correct Answer
verified

Which group of economists believes that there is a natural rate of output that is relatively immune to short-run fluctuations in aggregate demand?

Correct Answer
verified

In Figure 8.5,if equilibrium real output is Q₁ and full-employment real output is Q₂,an appropriate monetarist policy lever would be to increase

Correct Answer
verified
C

Exam 8: The Business Cycle

Assume you have $1,000 in a savings account at the beginning of the year and the price level is equal to 100.If the price level is equal to 92 at the end of the year,the real value of your savings is closest to

Correct AnswerverifiedShow Answer

Changes in real GDP are best used to measure

Correct AnswerverifiedShow Answer

What are the differences between classical theory and what Keynes believed?

Correct AnswerverifiedClassical theory asserts that a market e...View AnswerShow Answer

Based upon a Keynesian viewpoint,to stimulate the economy the government should do all of the following except

Correct AnswerverifiedShow Answer

Using Figure 8.7,a shift in aggregate demand from AD4 to AD5 is most likely to cause

Correct AnswerverifiedC

Using Figure 8.7,a shift in aggregate demand from AD1 to AD2 is most likely to cause

Correct AnswerverifiedShow Answer

Which of the following is an explanation for why the AD curve slopes downward?

Correct AnswerverifiedA

Supply-side theories of the business cycle focus on how improper incentives lead to the unwillingness of producers to supply more goods and services at existing prices.

Correct AnswerverifiedShow Answer

In the early 1900s,which of the following was not true?

Correct AnswerverifiedShow Answer

If aggregate demand decreases and aggregate supply decreases,the level of real output will

Correct AnswerverifiedShow Answer

Using Figure 8.5,if the equilibrium real output is Q2 then

Correct AnswerverifiedShow Answer

In Figure 8.1,an increase in government spending,ceteris paribus,is best represented as a movement from point

Correct AnswerverifiedShow Answer

The aggregate demand curve is downward-sloping because,other things being equal,

Correct AnswerverifiedShow Answer

Keynesian levers include

Correct AnswerverifiedShow Answer

According to the classical view,the economy will not self-adjust to deviations from its long-term growth trend.

Correct AnswerverifiedShow Answer

Using Figure 8.2,a decrease in real output resulting from the profit effect would be depicted as a movement from point

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A laissez faire policy approach during a recession would advocate

Correct AnswerverifiedShow Answer

Which group of economists believes that there is a natural rate of output that is relatively immune to short-run fluctuations in aggregate demand?

Correct AnswerverifiedShow Answer

In Figure 8.5,if equilibrium real output is Q1 and full-employment real output is Q2,an appropriate monetarist policy lever would be to increase

Correct AnswerverifiedC

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Classical theory asserts that a market e...
View Answer

Correct Answer
verified

Using Figure 8.7,a shift in aggregate demand from AD₄ to AD₅ is most likely to cause

Correct Answer
verified
C

Using Figure 8.7,a shift in aggregate demand from AD₁ to AD₂ is most likely to cause

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Using Figure 8.5,if the equilibrium real output is Q₂ then

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

In Figure 8.5,if equilibrium real output is Q₁ and full-employment real output is Q₂,an appropriate monetarist policy lever would be to increase

Correct Answer
verified
C