Question 1

Which of the following best explains why the aggregate demand (AD) curve slopes downward?

Accepted Answer

Because as the price level rises, the real value of household wealth falls, interest rates rise, and net exports decrease.

Question 2

Suppose the Federal Reserve increases the money supply, causing interest rates to fall. What is the most likely short-run effect on the aggregate demand curve?

Accepted Answer

A rightward shift of the AD curve.

Question 3

Which of the following would cause a movement along the aggregate demand curve, rather than a shift of the curve?

Accepted Answer

A change in the price level, holding all else constant.

Question 4

If the U.S. dollar appreciates relative to other currencies, what is the likely effect on U.S. net exports and the aggregate demand curve?

Accepted Answer

Net exports decrease and AD shifts left.

Question 5

Which of the following is NOT a reason why the short-run aggregate supply (SRAS) curve is upward sloping?

Accepted Answer

The price level does not affect input costs in the short run.

Question 6

Suppose workers and firms expect the price level to rise by 4% next year. What is the likely effect on the short-run aggregate supply (SRAS) curve?

Accepted Answer

SRAS shifts to the left.

Question 7

Which of the following events would shift the long-run aggregate supply (LRAS) curve to the right?

Accepted Answer

An increase in the capital stock.

Question 8

During the 2020 recession, which component of aggregate demand increased, contrary to typical recessions?

Accepted Answer

Residential investment

Question 9

A sudden increase in oil prices is an example of which of the following?

Accepted Answer

A supply shock

Question 10

In the dynamic aggregate demand and aggregate supply model, what is the usual cause of inflation?

Accepted Answer

Aggregate demand increases more than long-run aggregate supply.

Question 11

Which school of thought argues that most fluctuations in real output are caused by changes in the money supply and recommends a constant growth rate of money?

Accepted Answer

Monetarist

Question 12

According to the Real Business Cycle model, what is the main source of fluctuations in real GDP?

Accepted Answer

Temporary productivity shocks

Question 13

Suppose the economy is in long-run equilibrium. If aggregate demand suddenly decreases, what is the short-run effect?

Accepted Answer

Real GDP falls below potential GDP and the price level falls.

Question 14

Which of the following best describes the long-run adjustment process after a negative demand shock?

Accepted Answer

SRAS shifts right as wages and input prices fall, restoring full employment at a lower price level.

Question 15

Which of the following is a plausible effect of a supply shock, such as a pandemic or oil price spike, in the short run?

Accepted Answer

Stagflation: higher prices and lower output.

Question 16

Which of the following policies would a Keynesian economist most likely support during a recession?

Accepted Answer

Increasing government purchases to stimulate aggregate demand.

Question 17

If the government increases personal income taxes, what is the likely short-run effect on aggregate demand?

Accepted Answer

Aggregate demand shifts to the left.

Question 18

Which of the following is a key difference between the Keynesian and New Classical schools of thought?

Accepted Answer

Keynesians believe prices and wages are sticky, while New Classical economists believe expectations are rational and prices adjust quickly.

Question 19

Which of the following would shift the short-run aggregate supply (SRAS) curve to the right?

Accepted Answer

A decrease in the price of oil.

Question 20

According to the Austrian school, what is the main cause of the business cycle?

Accepted Answer

Central bank-induced low interest rates leading to overinvestment.

Aggregate Demand and Aggregate Supply Analysis: Macroeconomics Study Notes

Guida di studio - Domande di pratica

Study guide - Flashcard