AS/AD and Philips Curve
6 months ago
epeets_07971
Save
Edit
Host a game
Live GameLive
Homework
Solo Practice
Practice
23 QuestionsShow answers
  • Question 1
    120 seconds
    Q.

    A negative aggregate supply shock will result in which of the following in the short run?

    answer choices

    An increase in the price level and a decrease in the unemployment rate

    A decrease in the price level and an increase in the unemployment rate

    A decrease in both the price level and real output

    An increase in both the price level and real output

    An increase in both the price level and the unemployment rate

  • Question 2
    120 seconds
    Q.

    An increase in the purchases of newly constructed houses will result in which of the following?

    answer choices

    Aggregate demand will decrease as a result of a decrease in the price level.

    Aggregate demand will increase as a result of an increase in investment spending.

    Aggregate demand will increase as a result of an increase in exports.

    Aggregate demand will not change, since consumer spending has not changed.

    Aggregate demand will not change, since investment spending has not changed.

  • Question 3
    120 seconds
    Q.

    In the short run, a reduction in the money supply will cause

    answer choices

    a rightward shift in the aggregate demand curve

    a leftward shift in the aggregate demand curve

    a rightward shift in the aggregate supply curve

    a leftward shift in the aggregate supply curve

    a movement along the aggregate demand curve

  • Question 4
    120 seconds
    Q.

    A country’s economy is currently in equilibrium at point R. Which of the following policy actions could the country’s government take to achieve potential output (YP) ?

    answer choices

    Decreasing the money supply

    Decreasing investment tax credits

    Increasing interest rates

    Increasing government expenditures

    Increasing the minimum wage

  • Question 5
    120 seconds
    Q.

    Which of the following is LEAST likely to affect the long-run growth of an economy?

    answer choices

    Investment in physical capital

    Research and development

    Education and training

    A specific tax on luxury goods

    Stable and efficient institutions

  • Question 6
    120 seconds
    Q.

    An economy experiences a sharp increase in energy prices, and policy makers adopt a stabilization policy to increase aggregate demand. Compared with the initial short-run equilibrium, which of the following will definitely occur?

    answer choices

    Lower level of output

    Higher level of output

    Lower price level

    Higher price level

    Higher aggregate supply

  • Question 7
    120 seconds
    Q.

    Assume that the marginal propensity to consume is 0.8. If the government increases its purchases of goods and services by $200 and exports decline by $50, at most the equilibrium level of income will

    answer choices

    decrease by $250

    decrease by $1,000

    increase by $150

    increase by $750

    increase by $1,250

  • Question 8
    120 seconds
    Q.

    If the short-run aggregate supply curve is upward sloping, which of the following will cause inflation?

    answer choices

    An increase in long-run aggregate supply

    An increase in short-run aggregate supply

    An increase in aggregate demand

    A decrease in aggregate demand

    A decrease in aggregate demand and an increase in aggregate supply

  • Question 9
    120 seconds
    Q.

    The economy is currently in long-run equilibrium. If the central bank increases the money supply, in the long run the price level will

    answer choices

    increase, and output will remain at the full-employment level

    increase, and output will be above the full-employment level

    increase, and output will be below the full-employment level

    remain unchanged, and output will remain at the full-employment level

    remain unchanged, and output will be above the full-employment level

  • Question 10
    120 seconds
    Q.

    Which of the following will occur in the money market when the aggregate price level increases?

    answer choices

    The money supply will increase and nominal interest rates will decrease.

    The demand for money will increase and nominal interest rates will decrease.

    The demand for money will increase and nominal interest rates will increase.

    The demand for money will decrease and nominal interest rates will decrease.

    The opportunity cost of holding money will decrease.

  • Question 11
    120 seconds
    Q.

    Increases in government subsidies to encourage investment in research and development will affect aggregate demand (AD) and long-run aggregate supply (LRAS) in which of the following ways?

    answer choices

    AD:Increase LRAS:Increase

    AD:Increase LRAS:Decrease

    AD:Increase LRAS:No change

    AD:Decrease LRAS:Increase

    AD:Decrease LRAS:No change

  • Question 12
    120 seconds
    Q.

    An increase in the expected inflation rate will cause the

    answer choices

    short-run Phillips curve to shift to the left

    short-run Phillips curve to shift to the right

    long-run Phillips curve to shift to the left

    long-run Phillips curve to shift to the right

    actual inflation rate to fall below the expected inflation rate

  • Question 13
    120 seconds
    Q.

    Which of the following is true about the Phillips curve?

    answer choices

    A change in aggregate demand does not shift the long-run Phillips curve (LRPC).

    A change in aggregate demand does not cause a movement along the short-run Phillips curve (SRPC).

    The LRPC shows the trade-off between unemployment and inflation but the SRPC does not.

    Changes in expected inflation affect the LRPC only

    Negative supply shocks affect the LRPC only.

  • Question 14
    120 seconds
    Q.

    The long-run Phillips curve indicates that there are no trade-offs between

    answer choices

    aggregate demand and aggregate supply

    imports and exports

    consumption and investment

    consumption and saving

    inflation and unemployment

  • Question 15
    120 seconds
    Q.

    Which of the following would cause a movement from point S to point R on the short-run Phillips curve above?

    answer choices

    An unanticipated increase in government spending

    An unanticipated adverse supply shock

    A decrease in net investment

    An increase in real interest rates

    An increase in the labor-force participation rate

  • Question 16
    120 seconds
    Q.

    Based on the graph above, demand-pull inflation is caused by a movement from

    answer choices

    SRAS1 to SRAS2

    SRAS2 to SRAS1

    AD1 to AD2

    AD2 to AD1

    Yf to Y1

  • Question 17
    120 seconds
    Q.

    Assume that the marginal propensity to consume is 0.75, net exports decline by $10 billion, and government spending increases by $20 billion. Given that there is no crowding out, the equilibrium gross domestic product can increase by a maximum of

    answer choices

    $7.5 billion

    $15 billion

    $40 billion

    $80 billion

    $120 billion

  • Question 18
    120 seconds
    Q.

    Which of the following will most likely result in an increase in aggregate demand?

    answer choices

    An increase in the interest rates charged on credit card balances

    A disruption in global oil supply

    An open-market purchase of government bonds by the central bank

    A reduction of pay and benefits for government employees

    A decrease in the wealth of households

  • Question 19
    120 seconds
    Q.

    Assume a country’s economy is currently in long-run equilibrium. What is the long-run effect of an increase in aggregate demand?

    answer choices

    A decrease in the unemployment rate

    A decrease in the inflation rate

    A decrease in the long-run aggregate supply

    An increase in the price level

    An increase in the money supply

  • Question 20
    120 seconds
    Q.

    In a closed economy with lump sum taxes, if the marginal propensity to consume increased from 0.5 to 0.75, the simple multiplier and the marginal propensity to save (MPS) would change in which of the following ways?

    answer choices

    Multiplier: Increase MPS: Increase

    Multiplier: Increase MPS: Decrease

    Multiplier: No Change MPS: Decrease

    Multiplier: Decrease MPS: Increase

    Multiplier: Decrease MPS: Decrease

  • Question 21
    120 seconds
    Q.

    In an economy the MPC is 0.90, and the GDP is $100 Billion. If gross private domestic investment declines by $2 Billion, then GDP will

    answer choices

    decrease by a maximum of $1.8 Billion

    decrease by a maximum of $2 Billion

    decrease by a maximum of $20 Billion

    increase by a maximum of $1.8 Billion

    increase by a maximum of $20 Billion

  • Question 22
    120 seconds
    Q.

    According to the income and consumption schedules shown above, the marginal propensity to consume is

    answer choices

    1.33

    0.90

    0.80

    0.75

    decreasing as real disposable income increases

  • Question 23
    120 seconds
    Q.

    Suppose that the economy is in the midst of a recession and government policy makers want to increase aggregate demand by $600 billion. If the economy's MPC is 0.75 and there is no crowding out, the government should do which of the following?

    answer choices

    Increase spending by $2,400 Billion

    Increase spending by $600 Billion

    Increase spending by $150 Billion

    Decrease taxes by $150 Billion

    Decrease taxes by $600 Billion

Report Quiz
Join a game