Economics 002 - Principles of Economics II » Fall 2020 » AD As Model Quesstions Quiz

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Question #1
_______________________ are economists who generally emphasize the importance of aggregate supply in determining the size of the macroeconomy over the _____________.
A.   Keynesian economists; long run
B.   Keynesian economists; short run
C.   Neoclassical economists; long run
D.   Neoclassical economists; short run
Question #2
In an AD/ASAD/AS diagram, __________________________ could explain a rise in cyclical unemployment?
A.   a shift in AS to the left
B.   a shift to the left in either AS or AD
C.   a shift in AS to the right
D.   a shift in AD to the left
Question #3
_________________ results when an economy experiences high unemployment and high inflation at the same time.
A.   Stagflation
B.   Deflation
C.   Reflation
D.   Recession
Question #4
When prices of outputs in an economy become sufficiently high causing production to exceed potential GDP, the resulting:
A.   lower prices will lead to a lower quantity of demand.
B.   higher wages will encourage workers to produce more at high prices.
C.   downward slope in aggregate supply curve will be short run.
D.   hyper-intense production will be unsustainable in the long run.
Question #5
_______________________ happens when the economy is producing at its potential and unemployment is at the natural rate of unemployment.
A.   Stagflation
B.   The interest rate effect
C.   The foreign price effect
D.   Full employment GDP
Question #6
As the aggregate price level in an economy rises, ____________________.
A.   investment increases
B.   consumer demand increases
C.   interest rates increase
D.   exports decrease
Question #7
Which of the following will have the greatest influence on the slope of the demand curve in a single market model?
A.   higher wages
B.   full employment
C.   substitute goods
D.   wealth effects
Question #8
Aggregate supply curves are ________________________ for low levels of output, and ____________________________ for high levels of output.
A.   relatively steep; relatively flat
B.   relatively steep; remain steep
C.   relatively flat; relatively steep
D.   relatively flat; remain flat
Question #9
Economic production has fallen to less than full potential due to inadequate incentives for firms to produce. The duration of this economic condition will likely be:
A.   short-term
B.   indefinite
C.   unknown
D.   long-term
Question #10
Why is productivity growth considered to be the most important factor in the AD/ASAD/AS model?
A.   it shifts the AD curve in the short-term
B.   it shifts the AS curve in the short-term
C.   it shifts the AS curve in the long-term
D.   it shifts the AD curve in the long-term
Question #11
Melanie decided to save 20% of her annual earnings for 10 years so she would have a down payment for a house. After 5 years, what change in the economy would cause an increase in the purchasing power of the funds she has managed to save?
A.   stagflation
B.   depression
C.   recession
D.   deflation
Question #12
In macroeconomics, _____________________ denotes the relationship between the total quantity of goods and services and the price level for output.
A.   potential GDP
B.   aggregate supply (AS)
C.   aggregate demand (AD)
D.   macroeconomic equilibrium
Question #13
When the economy of a country is operating close to its full capacity:
A.   the unemployment rate is greater than the natural rate of unemployment.
B.   unemployment is close to zero.
C.   the unemployment rate is less than the natural rate of unemployment.
D.   cyclical unemployment is close to zero.
Question #14
The ____________ describes a situation where sufficient credit is available, but the economy experiences a reduction in consumption and investment.
A.   interest rate effect
B.   wealth effect
C.   price effect
D.   inflation rate effect
Question #15
Potential GDP in the U.S. will be unaffected by ____________________.
A.   the unemployment rate
B.   technology
C.   government institutions
D.   the amount of capital available
Question #16
Aggregate supply (AS) denotes the relationship between the __________________ that firms choose to produce and sell and the _________________, holding the price of inputs fixed.
A.   total quantity; price level for output
B.   price of goods; number of employees
C.   total inputs; types of goods
D.   type of goods; input price of raw materials
Question #17
In an AD/AS diagram, an increase in structural unemployment will:
A.   have no effect on AS or AD.
B.   shift AS to the left.
C.   shift AS to the right.
D.   shift AD to the left.

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