ECON 110 Quiz 6 Aggregate Supply and Demand Fiscal Policy solutions complete answers

ECON 110 Quiz 6 Aggregate Supply and Demand Fiscal Policy solutions complete answers 

 

A budget deficit occurs when government spending ______ tax revenues.

 

Which of the following does not represent an example of government spending?

 

Fiscal restraint will definitely occur if the government

 

Expenditures on new plant and equipment plus changes in business inventories defines

 

If, at the prevailing price level, the aggregate quantity supplied exceeds the aggregate quantity demanded, the price level will tend to fall.

 

If an economy is experiencing a recession, the Keynesian approach to achieving full employment is to

 

If the government uses fiscal policy to reduce the budget deficit during a recession, the government will make the recession worse, ceteris paribus.

 

Ceteris paribus, a rightward shift of the aggregate supply curve will cause the equilibrium price level to _______ and equilibrium real output to _______.

 

According to the Aggregate Supply and Demand table, at which of the following price levels would a surplus occur?

 

Which of the following relies on government taxes and spending to change macro outcomes?

 

Which of the following is NOT a component of aggregate demand?

 

The cornerstone of classical theory is constant wages and prices.

 

The combination of price level and real output that is compatible with both aggregate demand and aggregate supply is known as

 

If consumers spend 75 cents out of every extra dollar received, the

 

Which of the following could cause a recession?

 

Which of the following is a measure of overall economic well-being for the United States?

 

All of the following represent government spending as a part of aggregate demand except for

 

Which of these correctly restates Say's Law?

 

A decrease in oil prices will tend to shift the aggregate _____ curve to the _____.

 

At macro equilibrium

 

Fiscal restraint may be an appropriate policy if inflation is a threat.

 

When individuals spend all of an income increase, the marginal propensity to save is zero.

 

If consumers spend 98 cents out of every extra dollar received, the

 

Supply-side theories focus on stimulating production by increasing the demand for goods and services.

 

Keynes believed that aggregate demand would likely establish a full employment equilibrium without government intervention.

 

According to Say's Law, all goods produced will be sold

 

In 2007, the decline in the demand for housing caused the ____ curve to shift to the ____.

 

The total amount of output producers are willing and able to produce at alternative price levels in a given time period is known as

 

Which of the following represents the internal market forces that affect macroeconomic outcomes?

 

Refer to the figure. At which of the following price levels would a surplus occur?

 

Which of the following is not a reason for the downward slope of the aggregate demand curve?

 

Ceteris paribus, a decrease in consumer confidence will result in

 

The inability of labor-force participants to find jobs is known as

 

Which of the following stresses the inability of the government to improve short-run market outcomes?

 

Which of the following provides fiscal stimulus to the economy?

 

Exports minus imports are referred to as

 

Which of the following is not included in the study of macroeconomics?



All of the following are used to measure a country’s economic welfare except  



According to the text, which of the following is a macroeconomic outcome?



According to the text, which of the following is a determinant of macroeconomic performance?

 

According to the text, which of the following is not a determinant of macroeconomic outcomes?



External shocks to an economy include  



Which of the following are policy levers?



The Classical view of the economy is characterized by  



Which of the following concepts is not consistent with Classical theory?



Self-adjustment of markets is assumed in  



Which theories of the economy lead to the assertion that markets “self-adjust” to deviations from their long-term growth trend?

 

Which of the following is necessary for an economy to self-adjust fairly quickly, according to classical economists?



The Classical approach dominated economic policy during  



Say’s Law implies that  



Say’s Law states that  



Say’s Law is consistent with the _______ view of the economy.



During the Great Depression, classical theorists believed that  



Unlike the Classical economists, Keynes asserted that  



According to Keynes  



Keynes and classical economists disagree about whether  



Keynesian theory became important when classical economic theory did not adequately explain a prolonged period of  



A critical macroeconomic controversy is whether a market economy is inherently  



The various quantities of output that all market participants are willing and able to buy at alternative price levels in a given time period is  



The difference between market demand and aggregate demand is that  



The value of output in constant prices is measured by  



The aggregate demand curve shows the relationship between the volume of purchases and  
The price level.

 

The aggregate demand curve is  



Ceteris paribus, based on the aggregate demand curve, if the price level _______ the quantity of real output _______ increases.



The aggregate demand curve is downward sloping because, ceteris paribus  



According to the real balances effect, when the price level  



Ceteris paribus, if the average price level falls, then the _____ effect will result in _____ in the purchases of goods and services.



Ceteris paribus, based on the real balances effect, if the price level falls  



Which of the following is an example of the real balances effect, assuming the U.S. price level decreases?



The foreign trade effect states that, ceteris paribus  



When the U.S. price level increases relative to the price level in foreign economies, U.S. consumers tend to buy  



According to the foreign trade effect, when the U.S. price level decreases, U.S. consumers are likely to buy  



Which of the following is an example of the foreign trade effect, assuming the U.S. price level decreases?



Which of the following suggests that lower average prices stimulate more borrowing?



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



Which of the following is an example of the interest-rate effect, assuming the U.S. price level decreases?



The short-run aggregate supply curve is  



Ceteris paribus, based on the aggregate supply curve, if the price level _______ the quantity of real output _______ increases.



The aggregate supply curve is positively sloped because as the price level increases  



One explanation for why production costs tend to rise as output increases is that producers  



Which of the following is an explanation of why the aggregate supply curve slopes upward, assuming the price level increases?



The intersection of the aggregate demand and supply curves definitely establishes  



At the intersection of the aggregate supply and aggregate demand curves, the economy is experiencing  



Macro equilibrium always occurs  



Which of the following results if the aggregate quantity supplied exceeds the aggregate quantity demanded?



If the price level is  



Which of the following will occur if the aggregate quantity supplied is less than the aggregate quantity demanded?



Which of the following will occur if the price level is below the equilibrium level?



Which of the following is definitely true if the economy is in macro equilibrium?



An increase in the average level of prices of goods and services is known as  



Ceteris paribus, a leftward shift of the aggregate supply curve will cause the equilibrium price level to _______ and equilibrium real output to _______.



Which of the following is likely to cause a leftward shift in the aggregate supply curve, ceteris paribus?



Which of the following is likely to occur if a terrorist attack stops air travel in a country for some time, ceteris paribus?



Which of the following is likely to occur if OPEC increases the amount of oil it supplies and domestic energy prices fall, ceteris paribus?



Ceteris paribus, a leftward shift of the aggregate demand curve will cause the equilibrium price level to _______ and equilibrium real output to _______.



If the stock market plunged over the next week, consumers would  



Which of the following would cause the aggregate demand curve to decrease, ceteris paribus?



Which of the following is likely to occur if people reduce their spending because they are worried about an economic downturn, ceteris paribus?



The aggregate demand curve is most likely to shift to the right when  



Macro controversies focus primarily on the  



Controversies between Keynesian, monetarist, supply-side, and eclectic theories focus on  



Keynesian theory is referred to as a  



Keynes viewed the economy as inherently unstable and suggested that during a recession policy makers should  



According to Keynes, which of the following should occur because of a decrease in government expenditure, ceteris paribus? 



Which of the following is a mechanism Keynes advocated for dealing with a situation of depressed output?



Which of the following economic theories focus on aggregate demand to explain changes in unemployment and inflation?



Both Keynesian and monetarist theories believe that _______ aggregate _______ causes inflation.



Monetary theory is referred to as  



According to monetary theories, an increase in the money supply shifts the aggregate  



According to monetary theories, a decrease in the money supply shifts the aggregate  



According to supply-side theories, an increase in supply incentives shifts the aggregate  



According to supply-side theories, if producers are less willing and able to supply goods at prevailing prices, then aggregate  



According to supply-side theories, if the costs of production rise, then aggregate  



Which of the following explanations of the business cycle focuses on both aggregate supply and aggregate demand shifts?



If an economy is experiencing a recession, the classical approach to achieving full employment is to  



According to Keynesian theory, the correct fiscal policy action to stimulate the economy would be to  



Keynesian policy levers include  



A tax cut can best be characterized as  



Monetary policy can best cure a recession by  



Individual employment and training programs are levers most likely to be advocated by  



Which of the following is an example of supply-side policy?



Which of the following causes the aggregate supply curve to shift to the left, ceteris paribus?



A News Wire article in the textbook is titled “Hurricane Damage to Gulf Ports Delays Deliveries, Raises Costs.” Increased costs are likely to cause  



A News Wire article in the text is titled “Consumer Index Sinks to an All-Time Low.” Which of the following is most likely to happen as a result of decreased consumer spending?



Macroeconomics is the study of individual businesses and government agencies.

Policy levers and external shocks are determinants of macroeconomic performance.

 

Output, jobs, and the price level are considered to be determinants of macroeconomic performance.

 

The Classical policy approach to the business cycle was to allow the market to correct itself.

 

According to the Classical economists, if people are out of work they will accept jobs for lower wages and ultimately full employment will occur.

 

According to Keynes, the economy is basically stable and government intervention is not required.

 

Keynes believed that small disturbances in the economy would be made even greater by the market mechanism and thus government intervention was required.

 

According to the real balances effect, if the price level rises then the real value of savings increases and individuals will buy more output.

 

According to the foreign trade effect, if the U.S. price level rises then U.S. exports are more expensive for foreigners to buy so the level of real GDP decreases.

 

According to the interest-rate effect, if the price level falls then people will need to borrow fewer dollars, which will cause the interest rate to decrease and loan financed sales will increase.

 

One reason why the quantity of real output supplied rises with the price level, ceteris paribus, is because profits are higher.

 

One explanation for why the AS curve slopes upward is that when the output level rises, producers experience increased costs such as higher wages.

 

For macro equilibrium to occur, aggregate demand must equal aggregate supply at a fairly low price level.

 

Inflation and unemployment are macroeconomic failures.

 

Macro equilibrium always occurs at an optimal level of output.

 

Business cycles are the result of changes in real GDP caused by shifts in aggregate demand and aggregate supply.

 

Keynesian economists advocate active government policy during periods of high unemployment and low output.

 

Monetarists advocate changing the tax rate to shift the aggregate demand curve and achieve full employment.

 

Most modern economists believe the economy performs best without government intervention in the form of policy levers.

 

Fiscal policy is the use of the government’s tax and spending powers to shift the aggregate demand curve.

 

Monetary policy emphasizes the role of money and interest rates in shifting the aggregate supply curve.

 

The cornerstone of classical economics is which of the following  



When prices fall and the cash balances that you hold in your wallet are worth more allowing you to purchase more with your money, then this explains why the aggregate demand curve is downward sloping. The effect that describes this phenomena is the  



Supply side levers were utilized during which Presidential administration?



During the period of the 1930s,



According to the Keynesian view of the macroeconomy, the economy is  



The equilibrium level of output associated with the intersection of the aggregate demand and aggregate supply curves



Which of the following is an example of a determinant of macro performance?



A decrease (leftward shift) of the aggregate supply curve will ______ the level of output and ______ the price level.



An increase in the price level will ______ the quantity of real output supplied, ceteris paribus, but ______ the quantity of real output demanded, ceteris paribus.

 

In the early 1930s, President Hoover told Americans that prosperity was just “around the corner.” He was expressing the views of ______ economic theory. 



Keynesian economics is known as a _____ theory. 



The policy levers used by President Obama in 2009 can be described as  



During the Great Depression, Keynes advocated the use of _____ policy to increase the _____ goods and services.



What fiscal policy tools are used to shift the aggregate demand curve?



Fiscal policy includes  



The total quantity of output demanded at alternative price levels refers to  



Inflation occurs when  



The four components of aggregate demand are  



Which of the following is the largest component of aggregate demand for the U.S. economy?



Expenditure by households on final goods and services is referred to as  



An improvement in consumer confidence will cause  



Ceteris paribus, an increase in _______ will cause an increase in _______.



Ceteris paribus, _______ in consumer confidence will cause _______ in aggregate demand.



Which of the following is not an example of investment spending?



In a graph of the aggregate demand curve, an increase in investment by businesses is represented by a   



In a graph of the aggregate demand curve, a decrease in investment by businesses is represented by a  



When calculating aggregate demand, government expenditure  



Net exports for the United States are  



Net exports in the United States are  



Ceteris paribus, which of the following changes in the aggregate demand curve best characterizes a cutback in exports?



All economists agree that in the short run  



Which of the following will occur if aggregate demand is below full-employment GDP?. 

 

Which of the following will occur if aggregate demand is above full-employment GDP?



According to Keynes, which of the following is always true at macro equilibrium?



Which of the following is true about Keynes?



According to Keynes, which of the following is possible at the intersection of aggregate supply and aggregate demand?



Which of the following is consistent with what Keynes believed?



Between 1921 and 1927, the stock market’s value more than doubled, adding billions of dollars to the wealth of U.S. households and businesses. Which of the following indicates the appropriate change in the U.S. economy?



On October 24, 1929, the stock market crashed. By the end of the year, over $40 billion of wealth had vanished. Which of the following indicates the appropriate change in the U.S. economy?



Most of the countries in the world suffered long and deep losses of output and employment between 1930 and 1935, which in turn meant fewer purchases of U.S. goods and services. Which of the following indicates the appropriate change in the U.S. economy?



When the economy overheats, the government sometimes cools it down with higher taxes, spending reductions, and less money. Which of the following indicates the appropriate change in the U.S. economy after government intervention?



If the value of the dollar plummets in international currency markets, initially this causes foreigners to buy more American goods. Which of the following indicates the appropriate change in the U.S. economy?



The Tax Equity and Fiscal Responsibility Act of 1982 increased taxes in an effort to reduce inflationary pressure. Which of the following indicates the appropriate change in the U.S. economy?



The terrorist attacks in September 2001 reduced consumer confidence. Which of the following indicates the resulting change in the U.S. economy?



A tax cut or government spending increase intended to shift aggregate demand to the right is known as  



The purpose of fiscal stimulus is to shift aggregate  



Fiscal stimulus includes all of the following except  



Which of the following is an example of fiscal stimulus?



If an economy has a GDP gap, such that equilibrium output is less than full-employment output, which of the following is a correct fiscal-policy action?



Which of the following will definitely result in fiscal stimulus? 



Which of the following is a fiscal policy prescription for ending a recession?



Which of the following does not meet the economic definition of saving?



The fraction of each additional dollar of disposable income not spent on consumption is referred to as  



The marginal propensity to consume is  



Which of the following is the correct formula for the marginal propensity to consume?



If consumers spend 79 cents out of every extra dollar received, the  



If consumers spend 85 cents out of every extra dollar received, the  



Ceteris paribus, if the government transfers income from individuals with a high MPC to those with a low MPC, in the short run, spending and output will  



The marginal propensity to save is equal to  



The marginal propensity to save is  



If consumers save 8 cents out of every dollar received, the  



If consumers save 15 cents out of every dollar received, the  



If consumers save 21 cents out of every dollar received, the  



Ceteris paribus, based on the circular flow model, a spending injection results in  



Which of the following helps explain the multiplier effect?



If government spending increases, which causes producers to hire more workers, and as a result households have more income to spend, which causes aggregate demand to increase even more, this is known as the  



What is the total impact on aggregate demand because of a fiscal stimulus?
The initial injection plus all subsequent increases in consumer spending triggered by the 

 

If the current level of spending falls short of full employment, the government can close the GDP gap by  



The multiplier is equal to  



If consumers spend 80 cents out of every extra dollar received, the  



Which of the following economies has the largest multiplier?



Which of the following economies has the largest multiplier?



If the marginal propensity to save is 0.1 and government spending is raised by $5 billion, then total aggregate spending will rise by  



Assume an MPC of 0.6. The change in total spending for the economy as a result of a $10 billion new government spending injection would be  



Assume an MPC of 0.75. The change in total spending for the economy as a result of a $20 billion new government spending injection would be   



Disposable income is  



The after-tax income of consumers is defined as  



With respect to the aggregate demand curve, a tax cut will  



A tax cut is likely to cause  



A tax cut of $8 billion with an MPC of 0.90 will cause a cumulative change in spending equal to  



If aggregate supply is upward sloping, an increase in aggregate demand will result in  



If aggregate supply is upward sloping, fiscal stimulus causes _______ in aggregate demand and _______ in prices. 



Fiscal stimulus is most effective in changing the level of real output without causing inflation when the aggregate supply curve is  



During an inflationary period it is appropriate for the government to pursue policies that  



The aggregate demand curve shifts to the left when  



When aggregate demand exceeds the full-employment level of output, the result is  



If excessive aggregate demand causes prices to rise, which of the following would be a correct fiscal-policy action?



If the economy is experiencing inflation, which of the following is most likely to decrease aggregate demand?



If the multiplier is 5 and defense expenditures decrease by $40 million, aggregate demand decreases by a total of  



If the multiplier is 2.5 and defense expenditures decrease by $10 million, aggregate demand
decreases by a total of  



Which of the following would be a Keynesian solution for inflation?



Which of the following is the appropriate fiscal policy during a recession?



A budget deficit is incurred whenever  



A budget deficit occurs if government spending  



Which of the following will definitely reduce a budget deficit and provide fiscal restraint?



A budget surplus occurs if government spending  



If the federal government uses its budget to shift aggregate demand in an attempt to manage the macroeconomy, it is likely that the budget will  



According to Keynes  



One News Wire article in the text says, “After years of living happily beyond their means, Americans are finally facing financial reality.” Ceteris paribus, a decrease in consumer spending will result in  



One News Wire article in the text says, “After years of living happily beyond their means, Americans are finally facing financial reality.” Ceteris paribus, a decrease in consumer confidence will result in  



During the Great Depression, the primary reason why unemployment was so high was because unemployed workers were unskilled.

 

Fiscal policy is unnecessary since aggregate demand is always compatible with economic stability.

 

The four components of aggregate demand are consumption, investment, government expenditures, and net exports.

 

Aggregate demand is a constant level and does not change as the price level changes.

 

To an economist, investment refers to the purchase of new plant and equipment by businesses.

 

Government spending on goods and services plus income transfers are counted as part of aggregate demand.

 

Full-employment GDP is the most desired level of GDP for an economy.

 

If aggregate demand is inadequate, equilibrium real output is less than the full-employment output level.

 

The use of government spending and taxes to change the level of aggregate demand is fiscal policy.

 

Fiscal policy is rarely used since aggregate demand is typically at the appropriate level for the economy to achieve full employment and price stability.

 

The GDP gap represents the value of goods and services that could have been produced by the economy but were not produced because people are lazy.

 

For consumers, every dollar of income is either consumed or saved.

 

The marginal propensity to consume is equal to the change in consumption divided by the change in disposable income.

 

If consumers save $0.09 out of each additional dollar of disposable income, the marginal propensity to consume is 0.91.

 

If consumers save $0.13 out of each additional dollar of disposable income, the marginal propensity to consume is 1.3.

 

A tax cut causes a decrease in disposable income.

 

The greater the upward slope of the aggregate supply curve, the greater the increase in the price level when aggregate demand increases.

 

If the aggregate supply curve is upward sloping, an increase in aggregate demand will cause an increase in output and no change in prices.

 

A tax hike causes a decrease in disposable income.

 

A tax hike will increase the level of aggregate demand since the government will have more money to spend.

 

The best government policy during a period of inflation, ceteris paribus, is to balance the federal budget.

 

If macro equilibrium occurs at higher levels of unemployment resulting in a GDP gap, what would be the appropriate fiscal policy to close that gap and reduce unemployment?

 

If the economy is experiencing high inflation due to excessive aggregate demand, then appropriate fiscal policy could include raising taxes.

 

If the economy needs to grow by 400 billion dollars to achieve full employment, then the government must increase spending by 400 billion dollars in order to achieve that goal.

 

Fiscal stimulus will never result in inflation.

 

The primary components of aggregate demand are  



Which of the following does not represent an example of government spending?



If the economy is operating at a level of total spending that is $100 billion short of that consistent with full employment, the government would have to increase spending by   

 

At the end of 2009, the 40 percent increase in inventories by businesses represented  



When you receive this week’s paycheck, you can either spend it or save it. The fraction of each additional dollar of disposable income that you ____ is known as your _____.



Which of these statements about fiscal policy is correct?



Disposable income consists of all income  



In 2009, the American Recovery and Reinvestment Act (ARRA) was an example of  



Which of the following is the largest component of AD?



Fiscal policy works mainly by shifting the ______ curve.



Which of the following combinations represents a fiscal stimulus?



Fiscal restraint involves ______ government spending and ______ taxes.

 

A budget deficit occurs when government spending ______ tax revenues.



What determines the size of a shift in aggregate demand that results from a personal income tax cut?



For most of recent U.S. history, the federal budget has been in  



Which of the following is NOT a basic measure of macroeconomic performance?

 

The production possibilities will definitely shift outward if

 

Which of the following is true during the expansionary phase of the business cycle?

 

As the economy falls from the peak to the trough of the business cycle

 

Nominal GDP is defined as the

 

Which of the following is likely if an economy is headed for a recession?

 

All persons over age 16 who are either working for pay or actively seeking paid employment refers to

 

The unemployment rate is calculated by dividing

 

Who among the following would be counted as unemployed?

 

If the population of a country is 1,000,000 people, its labor force consists of 600,000, and 60,000 people are unemployed, the unemployment rate is

 

Suppose that in a population of 100 million people, 50 million are in the labor force and 47 million are employed. The unemployment rate is

 

According to the Population and Labor Force Data table, what is the unemployment rate in Year 1?

 

According to the Population and Labor Force Data table, what is the number of unemployed in Year 10?

 

Which of the following types of unemployment would best characterize a swimming instructor's unemployment during the winter months?

 

After quitting one job, some people with marketable skills find that it takes several months to find a new job that best matches their skill set. This is an example of which type of unemployment?

 

Frictional unemployment goes up when

 

An office worker who loses her job because she does not have the necessary computer skills is likely

 

Structural unemployment can occur

 

Automobile workers in Detroit are unemployed because robots are now being used on assembly lines but, at the same time, job vacancies exist for computer programmers. In this case, the automobile workers are an example of

 

A stock person who is laid off by a department store because retail sales across the country have decreased is _______ unemployed.

 

Which of the following government policies or programs is most likely to reduce cyclical unemployment?

 

According to macroeconomists, a goal for the economy is

 

One reason our full employment goal is not zero percent is because

 

When the unemployment rate falls to the full-employment level

 

Deflation occurs when the

 

Which of the following is an essential part of the market mechanism?

 

During a period of inflation

 

Inflation acts like a tax because

 

If the number of dollars you receive every year is the same, but prices are rising, then your nominal income

 

Suppose a recent college graduate has an annual nominal income of $42,000 for the first year she works. If the annual inflation rate is 5 percent, what salary would she need in the second year to maintain the same real income?

 

Patricia's nominal annual income in 2009 was $60,000. If the rate of inflation is constant at 10 percent, in order to keep Patricia's real income constant, her nominal income in the year 2010 should be

 

Suppose that at the start of this year you got a salary increase of 10 percent from your employer. The prices of the goods and services you typically purchase increase 10 percent during the year. At the end of the year, you have experienced

 

Which of the following is an example of the wealth effect during a period of inflation?

 

The value of an original painting, held as an asset, increased in value by 100 percent from 1970 to 2012. Suppose that during the same period, average prices in the economy rose by 150 percent. The owner of the painting, relative to those who do not own paintings, experienced a

 

If the Consumer Price Index (CPI) had a value of 128 in the year 2015, this means that during the period between the base year and 2015

 

If the CPI is 137 in the year 2005, then it costs _______ in 2005 to buy the same market basket that cost _______ in the base period.

 

If a market basket of goods cost $100 in the base year and $143 in a later year, then average prices have increased by

 

The CPI tends to overestimate the rate of inflation because

 

Joseph is unemployed. He was working at a thrift shop in Indiana but decided to go back to school full time to become an engineer. He would be classified as

 

GDP is defined as

 

All of the following are used to measure a country's economic welfare except

 

Which of the following concepts is NOT consistent with classical theory?

 

Which theories of the economy lead to the assertion that markets quickly "self-adjust" to deviations from their long-term growth trend?

 

Which of the following is necessary for an economy to self-adjust fairly quickly, according to classical economists?

 

Say's Law implies that

 

Unlike the classical economists, Keynes asserted that

 

Keynesian theory became important when classical economic theory did not adequately explain a prolonged period of

 

The difference between market demand and aggregate demand is that

 

Ceteris paribus, based on the aggregate demand curve, if the price level _______ the quantity of real output _______ increases.

 

According to the real balances effect, when the price level

 

Which of the following is an example of the real balances effect, assuming the U.S. price level decreases?

 

The foreign trade effect states that, ceteris paribus

 

When the U.S. price level increases relative to the price level in foreign economies, U.S. consumers tend to buy

 

According to the foreign trade effect, when the U.S. price level decreases, U.S. consumers are likely to buy

 

Which of the following is an example of the interest-rate effect, assuming the U.S. price level decreases?

 

The total amount of output producers are willing and able to produce at alternative price levels in a given time period is known as

 

The aggregate supply curve is positively sloped because as the price level increases

 

Which of the following is an explanation of why the aggregate supply curve slopes upward, assuming the price level increases?

 

Which of the following results if the aggregate quantity supplied exceeds the aggregate quantity demanded?

 

Which of the following will occur if the aggregate quantity supplied is less than the aggregate quantity demanded?

 

Ceteris paribus, a leftward shift of the aggregate supply curve will cause the equilibrium price level to _______ and equilibrium real output to _______.

 

Which of the following is likely to cause a leftward shift in the aggregate supply curve, ceteris paribus?

 

Which of the following is likely to occur if OPEC increases the amount of oil it supplies and domestic energy prices fall, ceteris paribus?

 

If the stock market plunged over the next week, consumers would

 

Which of the following would cause the aggregate demand curve to decrease, ceteris paribus?

 

Which of the following is likely to occur if people reduce their spending because they are worried about an economic downturn, ceteris paribus?

 

Keynesian theory is referred to as a

 

If an economy is experiencing a recession, the Keynesian approach to achieving full employment is to

 

According to Keynes, which of the following should occur because of a decrease in government expenditure, ceteris paribus?

 

If an economy is experiencing a recession, the Keynesian approach to achieving full employment is to

 

According to monetary theories, an increase in the money supply shifts the aggregate

 

According to supply-side theories, an increase in supply incentives shifts the aggregate

 

According to supply-side theories, if the costs of production rises, then aggregate

 

If an economy is experiencing a recession, the classical approach to achieving full employment is to

 

According to Keynesian theory, the correct fiscal policy action to stimulate the economy would be to

 

Monetary policy can best cure a recession by

 

Which of the following is an example of supply-side policy?

 

According to the Aggregate Supply and Demand table, at which of the following price levels would a shortage occur?

 

According to the Aggregate Supply and Demand table, at which of the following price levels would a surplus occur?

 

According to Keynes, which of the following policy options would be most appropriate for the economy if full-employment output occurs below the current level of output?

 

Refer to the figure. At which of the following price levels would a surplus occur?

 

Refer to the figure. Ceteris paribus, if businesses experience higher costs for transporting goods because of an increased price for imported oil, the new equilibrium is likely to occur at

 

Refer to the figure. If the equilibrium price level is P1, then aggregate supply is

 

Increased costs are likely to cause

 

Which of the following is most likely to happen as a result of decreased consumer spending?

 

In 2007, the decline in the demand for housing caused the ____ curve to shift to the ____.

 

What fiscal policy tools are used to shift the aggregate demand curve?

 

Which of the following could cause a recession?

 

Inflation occurs when

 

The four components of aggregate demand are

 

An improvement in consumer confidence will cause

 

Ceteris paribus, _______ in consumer confidence will cause _______ in aggregate demand.

 

Which of the following is NOT an example of investment spending?

 

In a graph of the aggregate demand curve, an increase in investment by businesses is represented by a

 

All of the following represent government spending as a part of aggregate demand except for

 

Ceteris paribus, a decrease in exports will generate which of the following changes for aggregate demand?

 

Which of the following will occur if aggregate demand is below full employment GDP?

 

Which of the following will occur if aggregate demand is above full employment GDP?

 

Between 1921 and 1927, the stock market's value more than doubled, adding billions of dollars to the wealth of U.S. households and businesses. Which of the following indicates the appropriate change in the U.S. economy as a result of this stock market boom?

 

Most of the countries in the world suffered long and deep losses of output and employment between 1930 and 1935, which meant fewer purchases of U.S. goods and services. Which of the following indicates the appropriate change in the U.S. economy as foreigners purchased fewer U.S. goods and services?

 

If the value of the dollar plummets in international currency markets, initially this causes foreigners to buy more American goods. Which of the following indicates the appropriate change in the U.S. economy from the dollar become less valuable?

 

The terrorist attacks in September 2001 reduced consumer confidence. Which of the following indicates the resulting change in the U.S. economy after 9/11?

 

The purpose of fiscal stimulus is to shift aggregate

 

Which of the following is an example of fiscal stimulus?

 

If an economy has a GDP gap such that equilibrium output is less than full employment output, which of the following is a correct fiscal policy action?

 

Which of the following is a fiscal policy prescription for ending a recession?

 

Which of the following is the correct formula for the marginal propensity to consume?

 

If consumers spend 79 cents out of every extra dollar received, the

 

Ceteris paribus, if the government transfers income from individuals with a high marginal propensity to consume to those with a low marginal propensity to consume, in the short run, spending and output will

 

Which of the following helps explain the multiplier effect?

 

If the current level of spending falls short of full employment, the government can close the GDP gap by

 

The multiplier is equal to

 

If consumers spend 75 cents out of every extra dollar received, the

 

Which of the following economies has the largest multiplier?

 

If the marginal propensity to save is 0.1 and government spending is raised by $5 billion, then total aggregate spending will rise by

 

Assume a marginal propensity to consume of 0.6. The change in total spending for the economy as a result of a $10 billion new government spending injection would be

 

With respect to the aggregate demand curve, a tax cut will

 

A tax cut of $8 billion with a marginal propensity to consume of 0.90 will cause a cumulative change in spending equal to

 

If aggregate supply is upward sloping, fiscal stimulus causes _______ in aggregate demand and _______ in prices.

 

During an inflationary period, it is appropriate for the government to pursue policies that

 

If the economy is experiencing inflation, which of the following is most likely to decrease aggregate demand?

 

If the multiplier is 5 and defense expenditures decrease by $40 million, aggregate demand decreases by a total of

 

Which of the following is the appropriate fiscal policy during a recession?

 

According to the table, what is the marginal propensity to consume?

 

According to the table, what is the multiplier?

 

Refer to the figure. Assuming aggregate demand is represented by AD1 and full employment output is $5.6 trillion per year, the economy confronts a real GDP gap of

 

Refer to the figure. Assuming aggregate demand is represented by AD1 and full employment output is $5.6 trillion per year, the equilibrium level of income is

 

Refer to the figure. Assume aggregate demand is represented by AD2. Which of the following could cause a shift to AD3?

 

Refer to the figure. Which fiscal policy action would increase aggregate demand from AD1 to AD2, ceteris paribus?