Hubbard & O'Brien Quiz 13c

On-Line Quiz

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  1. A negative supply shock in the short run causes

      the aggregate supply curve to shift to the left.
      the price level to fall.
      unemployment to fall.
      equilibrium real GDP to rise.

  2. The long-run adjustment to a negative supply shock results in

      the short-run aggregate supply curve shifting to the right.
      the price level rising.
      unemployment rising.
      workers being willing to accept higher wages.

  3. In the long run,

      GDP > potential GDP.
      unemployment is at its natural rate.
      LRAS and SRAS lie on the same line.
      the inflation rate is zero.

  4. When the price of oil rises unexpectedly, the equilibrium price level ________ and the unemployment rate ________ in the short run.

      rises; falls
      rises; rises
      falls; falls
      falls; rises

  5. Stagflation usually results from

      a supply shock.
      a decrease in aggregate demand.
      an increase in aggregate supply.
      an increase in aggregate demand.

  6. Forecasts made by White House economists and economists at the Congressional Budget Office in 2011 project that real GDP

      would return to potential GDP by the end of 2011.
      would not return to potential GDP until the first quarter of 2013.
      would not return to potential GDP until 2016.
      would never return to potential GDP.

  7. Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?

      falling oil prices
      increases in housing prices
      the financial crisis
      a decline in government spending

  8. At the beginning of the recession of 2007-2009, real GDP in the United States was ________ potential GDP, and in June 2009, real GDP was ________ potential GDP.

      below; above
      below; below
      above; below
      above; above

  9. In the dynamic aggregated demand and aggregate supply model, if AD shifts faster than AS

      inflation occurs.
      deflation occurs.
      stagflation occurs.
      disinflation occurs.

  10. In the United States, because shipping plays such an important role in the economy, declines in cargo volumes reflect

      increases in short-run aggregate supply.
      increases in inflation.
      declines in aggregate demand.
      decreases in long-run aggregate supply.


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