question
When the economy goes into a recession, real GDP ________, and unemployment ________.
answer
falls
rises
rises
question
A sudden crash in the stock market shifts the aggregate ___________ curve.
answer
demand
question
A change in the expected price level shifts the _______-run aggregate supply curve.
answer
short
question
An increase in the aggregate demand for goods and services has a larger impact on output in the________ run and a larger impact on the price level in the ________ run.
answer
short
long
long
question
__________________ is caused by a leftward shift in the aggregate-supply curve.
answer
Stagflation
question
The idea that economic downturns result from an inadequate aggregate demand for goods and services is derived from the work of which economist?
1) Adam Smith
2) David Hume
3) David Ricardo
4)John Maynard Keynes
1) Adam Smith
2) David Hume
3) David Ricardo
4)John Maynard Keynes
answer
4)John Maynard Keynes
question
TRUE/FALSE:
The aggregate-demand curve slopes downward because it is the horizontal sum of the demand curves for individual goods.
The aggregate-demand curve slopes downward because it is the horizontal sum of the demand curves for individual goods.
answer
false
question
TRUE/FALSE:
The long-run aggregate-supply curve is vertical because the price level does not affect long-run aggregate supply.
The long-run aggregate-supply curve is vertical because the price level does not affect long-run aggregate supply.
answer
true
question
TRUE/FALSE:
If firms adjusted their prices every day, then the short-run aggregate-supply curve would be horizontal.
If firms adjusted their prices every day, then the short-run aggregate-supply curve would be horizontal.
answer
false
question
TRUE/FALSE:
Whenever the economy enters a recession, its long-run aggregate-supply curve shifts to the left.
Whenever the economy enters a recession, its long-run aggregate-supply curve shifts to the left.
answer
false
question
According to the sticky-wage theory, the economy is in a recession because the price level has declined so that real wages are too ________; thus, labor demand is too _________.
answer
high
low
low
question
According to the sticky-price theory, the economy is in a recession because not all prices ___________ quickly.
answer
Adjust
question
According to the misperceptions theory, the economy is in a recession when the price level is ___________ what is expected
answer
below
question
Notice that real GDP trends upward over time but experiences ups and downs in the short run. These short-run fluctuations in real GDP are often referred to as the _________________ cycle.
answer
business
question
True or False: Small ups and downs in real GDP follow a consistent, predictable pattern.
answer
false
question
An increase in the money supply, a _____________ variable, will cause the price level, a _____________ variable, to increase but will have no long-run effect on the quantity of goods and services the economy can produce, a _______ variable. The separation of real variables and nominal variables is known as the classical _______________.
answer
nominal
nominal
real
dichotomy
nominal
real
dichotomy
question
The vertical axis of the aggregate demand and aggregate supply model measures the overall ___________ level.
answer
price
question
The aggregate _____________ curve shows the quantity of output that households, firms, the government, and foreign customers want to buy at each price level.
answer
demand
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