In the short run, an increase in the price level:

Select one:
a. increases output prices relative to input prices.
b. increases the profit margins of many producers.
c. increases RGDP supplied.
d. all of the above

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An increase in disposable income would tend to shift aggregate demand right.

Select one:
True
False

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Cost-push inflation is caused by:

Select one:
a. an increase in aggregate demand.
b. a decrease in aggregate demand.
c. an increase in aggregate supply.
d. a decrease in aggregate supply.

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Investment will decrease if business taxes ____, real interest rates ____, or if business
confidence ____.

Select one:
a. increase, increase, increases
b. decrease, decrease, decreases
c. increase, increase, decreases
d. decrease, decrease, increases

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Which of the following expenditures would be counted as consumption in GDP
accounts?

Select one:
a. Mary buys a new computer to check her e-mail and play computer games.
b. Mark buys a new computer for his medical economic consulting business.
c. Leslie, an EPA scientist, buys a new computer for her lab at work.
d. Juan leases a new computer for his graphic design company.

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Which of the following will cause consumption, and as a result, aggregate demand, to
decrease?

Select one:
a. a tax cut
b. a decrease in consumer confidence
c. increased population
d. an optimistic forecast of future income growth

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The SRAS would be vertical if:

Select one:
a. there was no profit effect.
b. there was no misperception effect.
c. there was no profit effect or misperception effect.
d. under no conceivable set of circumstances.

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The short-run aggregate supply curve slopes upward because:

Select one:
a. firms normally can purchase some inputs at prices that are temporarily fixed in the
short run.
b. firms seek maximum profits and always try to increase output in the short run.
c. firms purchase inputs that increase in price as the price level rises in the short run.
d. All of the above are correct.

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Exhibit 22-1

Refer to Exhibit 22-1. Which of the following would be illustrated by a shift in

aggregate demand from AD0 to AD2?

Select one:
a. an increase in government purchases, combined with a decrease in investment
b. an increase in consumption, combined with an increase in exports
c. an increase in business tax rates, combined with a decrease in consumer confidence
d. faster growth rates by a major trading partner, combined with an increase in stock
market wealth

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If both imports and exports rose,

Select one:
a. AD would decrease.
b. AD would increase.
c. AD would decrease if exports rose more than imports.
d. AD would increase if exports rose more than imports.

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The aggregate supply curves show how much a nation's businesses are willing and able
to produce at each price level.

Select one:
True
False

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Which of the following observations will be valid, if major trading partners of the United
States experience an economic slowdown?

Select one:
a. an increase in U.S. exports to them
b. aggregate demand will not be affected
c. U.S. net exports will decrease
d. aggregate demand will shift to the right

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____ are unexpected temporary events that can either increase or decrease the short-
run aggregate supply.

Select one:
a. Profit effects
b. Volatilities
c. Supply shocks
d. Misperception effects

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Question text
A decrease in the U.S. price level will:

Select one:
a. decrease U.S. exports.
b. decrease U.S. imports.
c. decrease RGDP demanded in the United States.
d. both (a) and (c)

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An increase in the U.S. price level will:

Select one:
a. decrease U.S. exports.
b. decrease U.S. imports.
c. increase RGDP demanded in the United States.
d. both (a) and (c)

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A disaster that destroys a large part of current agricultural output will not change LRAS,
while a disaster that destroys the capital stock in a major city will reduce LRAS.

Select one:
True
 False

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Exhibit 22-2

In Exhibit 22-2, which curve represents aggregate demand?

Select one:
a. A
b. B
c. C
d. none of the above

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Keynes believed that prices were ____ and that recessions would be relatively ____.

Select one:
a. inflexible; long
b. inflexible; brief
c. flexible; brief
d. flexible; long

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A reduction in the price level will cause the aggregate demand curve to shift to the left.

Select one:
True
False

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The aggregate demand curve is:

Select one:
a. Upward sloping
b. Downward sloping
c. Constant
d. Always vertica