1. Potential GDP or full employment GDP refers to the level of
A) nominal GDP in the short run.
B) nominal GDP in the long run.
C) real GDP in the LR.
D) real GDP in the short run.
2. The LRAS curve shows that,
A) a decrease in the price level decreases the level of potential GDP.
B) a decrease in the price level decreases the aggregate quantity of GDP supplied.
C) a decrease in the price level has no effect on the aggregate quantity of GDP supplied.
D) a decrease in the price level increases the aggregate quantity of GDP supplied.
3. Menu costs are
A) the costs of rising inflation
B) the costs of fixed list of inputs
C) the costs to firms of changing prices (for example, in a catalog)
D) the costs of raw materials
1. The short-run aggregate supply curve has a(n) ________ slope because as prices of ________ rise, prices of ________ are slow to adjust (sticky) or fixed in the short run.
A) positive; inputs; final goods and services
B) infinite; inputs; final goods and services
C) positive; final goods and services; inputs
D) infinite; final goods and services; inputs
2. Technological innovation such as the introduction of the personal computer:
A) shifted the SRAS curve to the left.
B) moved the economy up along the SRAS curve.
C) moved the economy up along the LRAS curve.
D) shifted the SRAS curve to the right.
3. Positive technological change such as the adoption of the internet would cause
A) the economy to move up along the SRAS curve.
B) the economy to move down along the LRAS curve.
C) the LRAS curve to shift to the left.
D) the LRAS curve to shift to the right.
1. During the Great Recession, there was a crisis in confidence on the part of households and businesses and
A) AD shifted left.
B) SRAS shifted left.
C) LRAS shifted left.
D) SRAS shifted right.
2. Technological change such as the introduction of the Internet made millions of workers more ____________________ and ______________ increased.
A) productive; output
B) aware of job opportunities; potential output
C) aware of job opportunities; output
D) productive; potential output
3. In the aggregate demand and aggregate supply model of the U. S. economy, the LR equilibrium is where
A) AD, LRAS and SRAS intersect.
B) SRAS and LRAS intersect.
C) SRAS and AD intersect.
D) the price level = 100 and AD, LRAS and SRAS intersect.
1. AD _______________ as the price level falls because ________________________________. A) decreases; real wealth rises.
B) decreases; profits decrease.
C) increases; real wealth rises.
D) increases; profits increase.
2. When the price level rises, households and businesses need more cash for purchases. This __________ the demand for loanable funds, _______________ the real interest rate and __________ consumption and investment expenditures in AD.
A) decreases; increases; decreases
B) increases; increases; decreases
C) decreases; decreases; increases
D) increases; decreases; increases
3. In the early 2000s in the U.S., _______ interest rates resulted in a(an) ______________ in demand for housing and ____________ home prices.
A) high; decrease; falling
B) low; decrease; falling
C) low; increase; rising
D) high; increase; rising
1.Just prior to the financial crisis, a major turning point came when home prices started _______________ and subprime borrowers started ___________________________..
A) rising; rushing to banks to obtain reverse mortgages.
B) rising; rushing to banks to refinance their mortgages.
C) falling; buying even more houses.
D) falling; defaulting on their mortgages.
2.How would a transfer of $1,000 from your checking account to your savings account impact the M1 and M2 money supplies?
A) no change in M1 or M2
B) M1 falls by $1,000, and M2 is unchanged
C) M1 falls by $1,000, and M2 rises by $1,000
D) M1 is unchanged, and M2 rises by $1,000
3.As workers and firms adjust to the price level being higher than expected, _________________ will shift _________________ in the AD/SRAS/LRAS model.
A) LRAS; left
B) SRAS; right
C) AD; left
D) SRAS; left
4.Credit cards are:
A) part of the M2 money supply.
B) part of the M1 money supply.
C) not money.
D) evil.
