SOL_CHAP_33 - SOL CHAP 33 AD_AS MODEL Part 1: Multiple...

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SOL CHAP 33 AD_AS MODEL Part 1: Multiple choices: 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.advances in technological knowledge d.All of the above are correct. ANS: D PTS: 1 DIF: 1 REF: 33-1 TOP: Growth MSC: Definitional 2. A short period of falling incomes and rising unemployment is called a a.depression. b.recession. c.expansion. d.business cycle. ANS: B PTS: 1 DIF: 1 REF: 33-1 TOP: Business cycle MSC: Definitional 3. Which of the following is correct? a.Economic fluctuations are easily predicted by competent economists. b.Recessions have never occurred very close together. c.Other measures of spending, income, and production do not fluctuate closely with real GDP. d.None of the above is correct. ANS: D PTS: 1 DIF: 1 REF: 33-1 TOP: Business cycle MSC: Definitional 4. 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. ANS: A PTS: 1 DIF: 1 REF: 33-1 TOP: Aggregate demand and supply model MSC: Interpretive 5. Real GDP a.moves in the same direction as unemployment. b.is not adjusted for inflation. c.also measures real income. d.All of the above are correct. ANS: C PTS: 1 DIF: 1 REF: 33-1 TOP: Real GDP MSC: Definitional
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6. Historically, the change in real GDP during recessions has been a.mostly a change in investment spending. b.mostly a change in consumption spending. c.about equally divided between consumption and investment spending. d.sometimes mostly a change in consumption and sometimes mostly a change in investment. ANS: A PTS: 1 DIF: 1 REF: 33-1 TOP: Investment and the business cycle MSC: Definitional 7. Investment is a a.small part of real GDP, so it accounts for a small share of the fluctuation in real GDP. b.small part of real GDP, yet it accounts for a large share of the fluctuation in real GDP. c.large part of real GDP, so it accounts for a large share of the fluctuation in real GDP. d.large part of real GDP, yet it accounts for a small share of the fluctuation in real GDP. ANS: B PTS: 1 DIF: 1 REF: 33-1 TOP: Investment and the business cycle MSC: Definitional 8. According to classical macroeconomic theory, changes in the money supply affect a.real GDP and the price level. b.real GDP but not the price level. c.the price level, but not real GDP. d.neither the price level nor real GDP. ANS: C PTS: 1 DIF: 2 REF: 33-2 TOP: Classical theory MSC: Definitional 9. Most economists believe that classical macroeconomic theory is a good description of the world a.in neither the short nor long run. b.in the short run and in the long run.
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SOL_CHAP_33 - SOL CHAP 33 AD_AS MODEL Part 1: Multiple...

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