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Unformatted text preview: Chapter 20 Aggregate Demand and Aggregate Supply MULTIPLE CHOICE 1 . Which of the following explains why production rises in most years? a. increases in the labor force b. increases in the capital stock c. increases in technology d. All of the above are correct. 2 . On average over the past 50 years, the U.S. economy has grown at the rate of about a. 1 percent per year. b. 3 percent per year. c. 4 percent per year. d. 6 percent per year. 3 . A short period of falling incomes and rising unemployment is called a a. depression. b. recession. c. expansion. d. business cycle. 4 . During recessions a. workers are laid off. b. factories are idle. c. firms may find they are unable to sell all they produce. d. All of the above are correct. 5 . During a recession the economy experiences a. rising employment and income. b. rising employment and falling income. c. rising income and falling employment. d. falling employment and income. 6 . Business cycles a. are easily predicted by competent economists. b. have never occurred very close together. c. can only be seen as changes in real GDP. d. None of the above is correct. 7 . Business cycles a. are explained mostly by fluctuations in consumption. b. no longer are very important due to government policy. c. are fluctuations in real GDP and related variables over time. d. are easily predicted by competent economists. 8 . During recessions a. sales and profits fall. b. sales and profits rise. c. sales rise, profits fall. d. profits fall, sales rise. 9 . The decrease in real GDP during a recession is a. mostly a decrease in investment spending. b. mostly a decrease in consumption spending. c. about equally divided between consumption and investment spending. d. sometimes mostly a decrease in consumption and sometimes mostly a decrease in investment. 10 . Which of the following typically rises during a recession? a. garbage collection b. unemployment c. corporate profits d. automobile sales 11 . Most economists use the aggregate demand and aggregate supply model primarily to analyze a. short-run fluctuations in the economy. b. the effects of macroeconomic policy on the prices of individual goods. c. the long-run effects of international trade policies. d. productivity and economic growth 12 . Real GDP a. is the dollar value of all goods produced by the citizens of an economy within a given time measured in current year prices. b. measures economic activity and income....
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This note was uploaded on 04/14/2010 for the course ECON Econ 102 taught by Professor Kimball during the Winter '09 term at Harvard.
- Winter '09