Multiple Choice Questions

Which of the following is a major difference between the​ AD-AS model and the dynamic​ AD-AS model?The dynamic​ AD-AS model assumes A. AD only includes​ consumption, investment, and government​ purchases, while the​ AD-AS model assumes AD includes​ consumption, investment, government purchases and net exports.B. the SRAS is stable and will not​ shift, while the​ AD-AS model assumes the SRAS can only change with an exogenous event such as oil price changes.C. the economy does not experience​ long-run growth, while the​ AD-AS model assumes there is constant inflation in the economy.D. potential GDP increases​ continually, while the​ AD-AS model assumes the LRAS does not change.
  • D. All of the above.
  • Dynamic AD-AS Model
  • A. and D.
  • D.
A curve that shows the relationship in the long run between the price level and the quantity of real GDP supplied.
  • Aggregate Demand (AD) Curve
  • Aggregate Demand and Aggregate Supply Model
  • Short-Run Aggregate Supply (SRAS)
  • Long-Run Aggregate Supply (LRAS)
The following graph shows aggregate demand and​ short-run aggregate supply. The point that properly shows the new equilibrium price level and real GDP is __________.
K1pQ8p3zuaP8oFdbva.ibw_m.png
  • Menu Costs
  • SRAS1
  • Point B
  • C. point C.
According to the dynamic​ AD-AS model, what is the most common cause of​ inflation?A. AD increases by more than LRAS.B. Total spending increases faster than total production.C. The U.S. Mint prints too much currency.D. All of the above.E. A and B only.
xbzeAKXw0vicaJGqOJtk2w_m.png
  • B. Point B.
  • D. All of the above.
  • E. A and B only.
  • A. AD0 to AD1
The effect of the price level on investment and consumption is known as the __________, and it is a second reason the aggregate demand curve is downward sloping.
  • International-Trade Effect
  • Vertical and Right
  • Aggregate Demand (AD) Curve
  • Interest-Rate Effect
Consider the​ downward-sloping aggregate demand​ (AD) curve to the right. Which of the following results in a movement from point A to point B​ (a movement up along the AD​ curve) or from point A to point C​ (a movement down along the AD​ curve)? ​(Mark all that​ apply.)A. Wealth effectB. Inflation effectC. Multiplier effectD. Interest rate effect
LJfbQaNKzb8IIgt1DjDj5Q_m.png
  • C. point C.
  • B. Point B.
  • D. All of the above.
  • A. and D.
Profits rise when the prices of final goods and services firms sell rise more rapidly than the prices they pay for __________ which rise more slowly. This situation increases the willingness of firms to supply more goods and services.
  • Point B
  • Inputs
  • C. point C.
  • Inflation
A combination of inflation and recession, usually resulting from a supply shock.
  • Menu Costs
  • A. shift in
  • Stagflation
  • Inflation
Changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives.
  • Supply Shock
  • Wealth Effect
  • Monetary Policy
  • Fiscal Policy
The effect of the price level on net exports is known as the __________, and it is a third reason the aggregate demand curve is downward sloping.
  • Shift In and Point B to C
  • Aggregate Demand (AD) Curve
  • Wealth Effect
  • International-Trade Effect
The costs to firms of changing prices. They make some prices sticky. This is a third reason the SRAS curve is upward sloping.
  • A. AD0 to AD1
  • Menu Costs
  • Point B
  • Contracts
Suppose that​ the economy is in long-run macroeconomic equilibrium at point B. ​Long-run adjustment will shift the SRAS curve from __________ as workers adjust to​ lower-than-expected prices.A. SRAS0 to SRAS1B. SRAS1 to SRAS0
bLenQ8YYDL8SlATZCl.jLw_m.png
  • A. SRAS0 to SRAS4
  • A. SRAS0 to SRAS2
  • A. SRAS0 to SRAS1
  • A. SRAS1 to SRAS1
In the diagram to the​ right, moving from point A to point B is called a __________ the AD curve.A. shift inB. movement along
BU.LxaXtyxy2w1QapoK8ww_m.png
  • Monetary Policy
  • Supply Shock
  • Movement Along and Point A to B
  • B. movement along
A curve that shows the relationship between the price level and the quantity of real GDP demanded by households, firms, and the government.
  • Aggregate Demand and Aggregate Supply Model
  • Long-Run Aggregate Supply (LRAS)
  • Short-Run Aggregate Supply (SRAS)
  • Aggregate Demand (AD) Curve
A change in any factor other than price causes a __________ the SRAS curve. In the​ figure, this is shown by moving from __________.
G.6h2Q3m0nST5EHj4x4anA_m.png
  • Slow to Adjust
  • Aggregate Demand (AD) Curve
  • Shift In and Point B to C
  • Short-Run Aggregate Supply (SRAS)
As illustrated in the dynamic AD-AS model, __________ usually occurs• if total spending in the economy grows faster than total production.• if the AD curve shifts to the right by more than the the LRAS curve.
  • Inputs
  • A. AD0 to AD1
  • C. point C.
  • Inflation
A curve that shows the relationship in the short run between the price level and the quantity of real GDP supplied by firms.
  • Shift In and Point B to C
  • Aggregate Demand (AD) Curve
  • Aggregate Demand and Aggregate Supply Model
  • Short-Run Aggregate Supply (SRAS)
Suppose that​ initially, the economy is in​ long-run macroeconomic equilibrium at point A. If there is increased pessimism about the future of the​ economy, the AD curve will shift fromA. AD0 to AD1.B. AD1 to AD0.
bLenQ8YYDL8SlATZCl.jLw_m.png
  • A. AD0 to AD99
  • A. AD0 to AD1
  • A. AD-1 to AD1
  • A. AD0 to AD2
Some firms __________ in the price level. Most economist believe that this is the explanation why some firms adjust prices more slowly than others and why the prices of other inputs change more slowly than the prices of final goods and services.
  • Fail to Accurately Predict Changes
  • Slow to Adjust
  • A. SRAS0 to SRAS1
  • Vertical and Right
Suppose that​ the economy is in​ long-run macroeconomic equilibrium at point B. If the SRAS curve shifts from SRAS0 to SRAS1, The new​ long-run macroeconomic equilibrium occurs atA. point A.B. point B.C. point C.
bLenQ8YYDL8SlATZCl.jLw_m.png
  • A. SRAS0 to SRAS1
  • A. and D.
  • C. point C.
  • A. AD0 to AD1
The actions the Federal Reserve takes to manage the money supply and interest rates to achieve macroeconomic policy objectives.
  • Fiscal Policy
  • Wealth Effect
  • Monetary Policy
  • Menu Costs
As the price level rises, some firms are __________ their prices. A firm in this situation may find its sales increasing and, therefore, will increase production.
  • A. AD0 to AD1
  • Wealth Effect
  • Slow to Adjust
  • Vertical and Right
Moving from point A to point C is referred to as a __________ the AD curve.A. shift inB. movement along
i41akQpTBuajn5hvW3.qWA_m.jpg
  • A. shift in
  • C. point C.
  • Stagflation
  • B. Point B.
0 h : 0 m : 1 s

Multiple Choice Questions
Answered Not Answered Not Visited Correct : 0 Incorrect : 0