Question Question 1 1 / 1 point As the aggregate price level in an economy decreases, a) consumer demand decreases. b) investment decreases. c) interest rates decrease. d) imports decrease. Question 2 0 / 1 point In an AD/ASAD/AS model: a) the GDP deflator is shown on the vertical axis. b) the Consumer Price Index always slopes upwards. c) real GDP is shown on the horizontal axis. d) the potential GDP always slopes downwards. Question 3 0 / 1 point The _________________ means that a higher price level leads to lower real wealth. a) foreign price effect b) employment effect c) wealth effect d) interest rate effect Question 4 1 / 1 point _______________________ are economists who generally emphasize the importance of aggregate supply in determining the size of the macroeconomy over the _____________. a) Keynesian economists; short run b) Neoclassical economists; short run c) Neoclassical economists; long run d) Keynesian economists; long run Question 5 1 / 1 point When prices of outputs in an economy become sufficiently high causing production to exceed potential GDP, the resulting: a) downward slope in aggregate supply curve will be short run. b) hyper-intense production will be unsustainable in the long run. c) lower prices will lead to a lower quantity of demand. d) higher wages will encourage workers to produce more at high prices. Question 6 1 / 1 point 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) unknown b) short-term c) long-term d) indefinite Question 7 1 / 1 point The maximum quantity that an economy can produce, given its existing levels of labor, physical capital, technology, and institutions, is called: a) real GDP. b) aggregate demand. c) potential GDP. d) aggregate supply. Question 8 1 / 1 point The ____________ describes a situation where sufficient credit is available, but the economy experiences a reduction in consumption and investment. a) wealth effect b) interest rate effect c) price effect d) inflation rate effect Question 9 1 / 1 point In an AD/AS model, the point where the economy has excess capacity is called the: a) crossing point of the potential GDP line b) intermediate zone of the AS curve c) neoclassical zone of the AS curve d) Keynesian zone of the AS curve Question 10 1 / 1 point Changes in the price level of the different components of aggregate demand are reflected in the AD/ASAD/AS macroeconomic model by a ________________________. a) flatter top portion of AD curve b) downward sloping AD curve c) shorter distance to equilibrium point d) longer distance to equilibrium point Chapter 11 Problems Question 11 1 / 1 point The graph above reflects a significant increase in world oil prices. What will the impact on aggregate supply most likely lead to? a) an increase in economic growth b) a decrease in the natural unemployment rate c) less inflationary pressures d) an increase in input prices Question 12 1 / 1 point The following table shows the aggregate supply and demand data for a country. Price Level Aggregate Demand Aggregate Supply 100 10,000 4,000 200 9,000 5,000 300 8,000 5,000 400 7,000 7,000 500 6,000 8,500 600 5,000 9,000 700 4,000 9,500 What is the equilibrium output? a) 8,000 b) 7,000 c) 9,000 d) 4,000 Chapter 12 Random Question 13 1 / 1 point The Keynesian economic framework is based on an assumption that: a) people can afford a high level of government services. b) an increase in government spending will cause the aggregate demand curve to shift to the left. c) an increase in government spending will cause the aggregate demand curve to shift to the left. d) prices and wages are sticky and do not adjust rapidly. Question 14 1 / 1 point The sum of all the income received for contributing resources to GDP is called ___________________. a) marg
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