Question 1

Current buyers' and sellers' behaviors are correctly expressed by

Accepted Answer

A)  One set of aggregate supply and demand curves.
B)  Multiple sets of aggregate supply and demand curves.
C)  Many sets of aggregate supply and demand curves.
D)  None of the choices are correct.

Question 2

Alternating periods of economic growth and contraction are

Accepted Answer

A)  The result of government intervention according to Keynes.
B)  The result of recurrent shifts of aggregate demand and aggregate supply.
C)  Indicative of an unstable economy and require government intervention according to classical economists.
D)  Not typical of the U.S. economy.

Question 3

The profit effect occurs because,in the short run,resource costs typically do not increase as rapidly as the price of goods and services.

Accepted Answer

A) True 
 B)False

Question 4

Changes in real GDP are used to measure

Accepted Answer

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

Question 5

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 6

Keynes argued that policy levers were both effective and necessary.

Accepted Answer

A) True 
 B)False

Question 7

Use the following figure to answer the questions : Figure 8.7:  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 8

A positively sloped aggregate supply curve reflects

Accepted Answer

A)  The idea that greater production lowers profit margins,which raises quantity demanded.
B)  The decrease in the real value of money as the price level rises.
C)  The rising costs associated with increased capacity utilization.
D)  None or the other choices.

Question 9

Business cycles result from recurrent shifts of the aggregate supply and demand curves.

Accepted Answer

A) True 
 B)False

Question 10

Why does the slope of the aggregate supply curve change from the short run to the long run?

Accepted Answer

In the short run,the aggregate supply cu...

Question 11

Use the following figure to answer the questions : Figure 8.5:  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.

Question 12

The study of aggregate economic activity for the economy as a whole is

Accepted Answer

A)  Opportunity cost.
B)  Scarcity.
C)  Macroeconomics.
D)  Microeconomics

Question 13

Unlike the classical economists,Keynes asserted that

Accepted Answer

A)  The economy was inherently unstable.
B)  Laissez faire policies would lead to macro equilibrium.
C)  Prices and wages were flexible.
D)  Markets would naturally self-adjust.

Question 14

The emphasis by some economists on long-term outcomes is reminiscent of

Accepted Answer

A)  Keynesian theory.
B)  Classical theory.
C)  Supply-side theory.
D)  None of the choices are correct.

Question 15

According to Keynes,which of the following can be used to slow down an overheated economy?

Accepted Answer

A)  Decrease government purchases.
B)  Decrease taxes.
C)  Make more money available.
D)  Employ more people.

Question 16

Which of the following is not associated with the aggregate supply curve?

Accepted Answer

A)  Factors of production.
B)  The interest rate effect.
C)  The profit effect.
D)  The cost effect.

Question 17

Which of the following is illustrated by the aggregate demand curve?

Accepted Answer

A)  How real personal income varies with the inflation rate.
B)  How total quantity of output demanded varies with the average price level.
C)  How real output varies with the inflation rate.
D)  How real personal income varies with the price level.

Question 18

Use the following figure to answer the questions : Figure 8.3:  2 and AS1,the equilibrium price level in Figure 8.3 is A) P1. B) P2. C) P3. D) P4." class="answers-bank-image d-inline" rel="preload" > 
-Given AD2 and AS1,the equilibrium price level in Figure 8.3 is

Accepted Answer

A)  P1.
B)  P2.
C)  P3.
D)  P4.

Question 19

Keynes believed that a market-driven economy was inherently unstable.

Accepted Answer

A) True 
 B)False

Question 20

Keynesian levers include

Accepted Answer

A)  Deregulation.
B)  Fiscal policy.
C)  Monetary policy.
D)  Aggregate supply.

Exam 8: The Business Cycle

Keynesian levers include

Correct AnswerverifiedShow Answer

Current buyers' and sellers' behaviors are correctly expressed by

Correct AnswerverifiedShow Answer

According to Keynes,which of the following can be used to slow down an overheated economy?

Correct AnswerverifiedShow Answer

Which of the following is illustrated by the aggregate demand curve?

Correct AnswerverifiedShow Answer

Unlike the classical economists,Keynes asserted that

Correct AnswerverifiedShow Answer

The profit effect occurs because,in the short run,resource costs typically do not increase as rapidly as the price of goods and services.

Correct AnswerverifiedShow Answer

Changes in real GDP are used to measure

Correct AnswerverifiedShow Answer

Use the following figure to answer the questions : Figure 8.5: -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 AnswerverifiedShow Answer

Use the following figure to answer the questions : Figure 8.7: -Using Figure 8.7,a shift in aggregate demand from AD1 to AD2 is most likely to cause

Correct AnswerverifiedShow Answer

The emphasis by some economists on long-term outcomes is reminiscent of

Correct AnswerverifiedShow Answer

A positively sloped aggregate supply curve reflects

Correct AnswerverifiedShow Answer

Keynes believed that a market-driven economy was inherently unstable.

Correct AnswerverifiedShow Answer

Alternating periods of economic growth and contraction are

Correct AnswerverifiedShow Answer

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

Which of the following is not associated with the aggregate supply curve?

Correct AnswerverifiedShow Answer

The study of aggregate economic activity for the economy as a whole is

Correct AnswerverifiedShow Answer

Why does the slope of the aggregate supply curve change from the short run to the long run?

Correct AnswerverifiedIn the short run,the aggregate supply cu...View AnswerShow Answer

Business cycles result from recurrent shifts of the aggregate supply and demand curves.

Correct AnswerverifiedShow Answer

Keynes argued that policy levers were both effective and necessary.

Correct AnswerverifiedShow Answer

Use the following figure to answer the questions : Figure 8.3: -Given AD2 and AS1,the equilibrium price level in Figure 8.3 is

Correct AnswerverifiedShow Answer

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Use the following figure to answer the questions : Figure 8.5: -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
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Use the following figure to answer the questions : Figure 8.7: -Using Figure 8.7,a shift in aggregate demand from AD₁ to AD₂ is most likely to cause

Correct Answer
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In the short run,the aggregate supply cu...
View Answer

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Use the following figure to answer the questions : Figure 8.3: -Given AD₂ and AS₁,the equilibrium price level in Figure 8.3 is

Correct Answer
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