Question 1

The idea that a shift in aggregate demand affects both inflation and unemployment is consistent with

Accepted Answer

A)  The Keynesian view of the economy.
B)  The consensus view of the economy.
C)  The monetarist view of the economy.
D)  A vertical aggregate demand curve.E) A) and C)
F) A) and D)

Question 2

The trade-off between unemployment rates and inflation originates in the

Accepted Answer

A)  Vertical AS curve.
B)  Downward-sloping AS curve.
C)  Upward-sloping AD curve.
D)  Upward-sloping AS curve.E) B) and D)
F) A) and B)

Question 3

Higher unemployment and higher inflation rates will most likely occur with

Accepted Answer

A)  A rightward shift of the Phillips curve.
B)  A rightward shift of the aggregate supply curve.
C)  A rightward shift of the aggregate demand curve.
D)  A leftward shift of the aggregate demand curve.E) A) and D)
F) C) and D)

Question 4

Which of the following causes stagflation?

Accepted Answer

A)  Workers push costs upward and thereby initiate inflation.
B)  Wage increases equal productivity increases,thereby setting off inflation.
C)  A leftward shift in the aggregate demand curve.
D)  A leftward shift in the aggregate supply curve.E) A) and C)
F) C) and D)

Question 5

Ceteris paribus,tariffs and nontariff barriers on imported factor inputs result in

Accepted Answer

A)  An increase in the price level and a decrease in unemployment.
B)  An increase in the price level and an increase in unemployment.
C)  A decrease in the price level and a decrease in unemployment.
D)  A decrease in the price level and an increase in unemployment.E) B) and C)
F) A) and B)

Question 6

An aggregate supply curve that is always vertical is most consistent with which of the following views of the economy?

Accepted Answer

A)  Keynesian.
B)  Monetarist.
C)  Supply-side.
D)  Consensus.E) A) and B)
F) A) and C)

Question 7

According to supply-side theory,which of the following would cause a rightward shift in the aggregate supply curve?

Accepted Answer

A)  Eliminating job search assistance.
B)  Increasing transfer payments to the unemployed.
C)  Eliminating government-funded training programs for the structurally unemployed.
D)  Lifting trade restrictions.E) C) and D)
F) B) and D)

Question 8

Which of the following shifts,ceteris paribus,will cause lower rates of both unemployment and inflation?

Accepted Answer

A)  An increase in aggregate demand.
B)  An increase in aggregate supply.
C)  A decrease in aggregate demand.
D)  A decrease in aggregate supply.E) A) and B)
F) B) and D)

Question 9

An attempt to lower unemployment with demand-side stimulus policies will cause an increase in the price level,which is illustrated by

Accepted Answer

A)  A leftward shift of the Phillips curve.
B)  A leftward shift of the aggregate demand curve.
C)  A rightward shift of the aggregate supply curve.
D)  A rightward shift of the aggregate demand curve.E) C) and D)
F) None of the above

Question 10

Which view of aggregate supply predicts that the outcomes of fiscal and monetary policy depend on how close the economy is to full employment?

Accepted Answer

A)  The Keynesian view.
B)  The monetarist view.
C)  The hybrid view.
D)  The Keynesian view,the monetarist view,and the hybrid view.E) C) and D)
F) B) and C)

Question 11

An increase in tax rates will yield larger tax revenues only if the absolute value of the tax elasticity of supply is less than 1.0.
The tax elasticity of supply must be less than 1 to boost revenues when rates are increased; if it is greater than 1,higher taxes will lower revenue.

Accepted Answer

A) True 
 B)False

Question 12

A leftward shift in aggregate demand will cause a decrease in both output and price level if aggregate supply is

Accepted Answer

A)  Upward-sloping to the right.
B)  Vertical.
C)  Downward-sloping to the right.
D)  Horizontal.E) A) and B)
F) A) and C)

Question 13

A decrease in marginal tax rates will cause ________ in investment and a ________ shift in AS.

Accepted Answer

A)  an increase; rightward
B)  a decrease; rightward
C)  an increase; leftward
D)  a decrease; leftwardE) B) and C)
F) None of the above

Question 14

According to the consensus view,when demand increases near full employment,

Accepted Answer

A)  The price level increases,but real GDP stays the same.
B)  Real GDP increases,but the price level stays the same.
C)  Both the price level and real GDP increase.
D)  The price level decreases,but real GDP increases.E) A) and C)
F) A) and D)

Question 15

The consensus view

Accepted Answer

A)  Incorporates only the Keynesian perspective.
B)  Incorporates only the monetarist perspective.
C)  Incorporates both the Keynesian and monetarist perspective.
D)  Ignores both the Keynesian and monetarist perspective.E) A) and C)
F) A) and D)

Question 16

A World View article titled "Economic Hit from Japan Quake Seen Up to $200 Billion" implies that the most likely impact of this destruction would be

Accepted Answer

A)  An increase in aggregate demand.
B)  An increase in aggregate supply.
C)  A decrease in aggregate demand.
D)  A decrease in aggregate supply.E) None of the above
F) A) and D)

Question 17

A movement along the Phillips curve shows that the unemployment rate and inflation rate are

Accepted Answer

A)  Inversely related to each other.
B)  Directly related to each other.
C)  Changing in response to shifts in aggregate supply.
D)  Changing in response to supply-side policy.E) A) and B)
F) A) and C)

Question 18

If the misery index is 12 and the inflation rate is 4 percent,we can conclude

Accepted Answer

A)  The inflation rate will quickly rise by 8 percent.
B)  The unemployment rate must be 8 percent.
C)  The AD curve must be shifting to the right.
D)  Monetary policy is not succeeding at keeping inflation low.E) A) and D)
F) B) and D)

Question 19

If the absolute value of the tax elasticity of supply is 0.8,a tax decrease of 10 percent will

Accepted Answer

A)  Increase output by 8 percent and decrease tax revenues.
B)  Increase output by 12.5 percent and increase tax revenues.
C)  Decrease output by 12.5 percent and increase tax revenues.
D)  Decrease output by 8 percent and increase tax revenues.E) A) and B)
F) C) and D)

Question 20

A rightward shift in aggregate demand will cause an increase in output and price level if aggregate supply is

Accepted Answer

A)  Upward-sloping to the right.
B)  Vertical.
C)  Downward-sloping to the right.
D)  Horizontal.E) A) and B)
F) A) and C)

Exam 16: Supply-Side Policy: Short-Run Options

A leftward shift in aggregate demand will cause a decrease in both output and price level if aggregate supply is

Correct AnswerverifiedShow Answer

Which of the following causes stagflation?

Correct AnswerverifiedShow Answer

The trade-off between unemployment rates and inflation originates in the

Correct AnswerverifiedShow Answer

A rightward shift in aggregate demand will cause an increase in output and price level if aggregate supply is

Correct AnswerverifiedShow Answer

An aggregate supply curve that is always vertical is most consistent with which of the following views of the economy?

Correct AnswerverifiedShow Answer

If the misery index is 12 and the inflation rate is 4 percent,we can conclude

Correct AnswerverifiedShow Answer

The consensus view

Correct AnswerverifiedShow Answer

The idea that a shift in aggregate demand affects both inflation and unemployment is consistent with

Correct AnswerverifiedShow Answer

An attempt to lower unemployment with demand-side stimulus policies will cause an increase in the price level,which is illustrated by

Correct AnswerverifiedShow Answer

A movement along the Phillips curve shows that the unemployment rate and inflation rate are

Correct AnswerverifiedShow Answer

According to supply-side theory,which of the following would cause a rightward shift in the aggregate supply curve?

Correct AnswerverifiedShow Answer

Which view of aggregate supply predicts that the outcomes of fiscal and monetary policy depend on how close the economy is to full employment?

Correct AnswerverifiedShow Answer

An increase in tax rates will yield larger tax revenues only if the absolute value of the tax elasticity of supply is less than 1.0. The tax elasticity of supply must be less than 1 to boost revenues when rates are increased; if it is greater than 1,higher taxes will lower revenue.

Correct AnswerverifiedShow Answer

Which of the following shifts,ceteris paribus,will cause lower rates of both unemployment and inflation?

Correct AnswerverifiedShow Answer

According to the consensus view,when demand increases near full employment,

Correct AnswerverifiedShow Answer

Ceteris paribus,tariffs and nontariff barriers on imported factor inputs result in

Correct AnswerverifiedShow Answer

Higher unemployment and higher inflation rates will most likely occur with

Correct AnswerverifiedShow Answer

If the absolute value of the tax elasticity of supply is 0.8,a tax decrease of 10 percent will

Correct AnswerverifiedShow Answer

A World View article titled "Economic Hit from Japan Quake Seen Up to $200 Billion" implies that the most likely impact of this destruction would be

Correct AnswerverifiedShow Answer

A decrease in marginal tax rates will cause ________ in investment and a ________ shift in AS.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A decrease in marginal tax rates will cause in investment and a shift in AS.

Correct Answer
verified