Multiple Choice Questions
1. When the economy goes into a recession, real GDP _________ and unemployment _________.
a. Rises, rises
b. Rises, falls
c. Falls, rises
d. Falls, falls
2. A sudden crash in the stock market shifts
a. The aggregate-demand curve.
b. The short-run aggregate-supply curve, but not the long-run aggregate-supply curve.
c. The long-run aggregate-supply curve, but not the short-run aggregate-supply curve.
d. Both the short-run and the long-run aggregate supply curves.
3. A change in the expected price level shifts
a. The aggregate-demand curve.
b. The short-run aggregate-supply curve, but not the long-run aggregate-supply curve.
c. The long-run aggregate-supply curve, but not the short-run aggregate-supply curve.
d. Both the short-run and the long-run aggregate supply curves.
4. An increase in the aggregate demands for goods and a service has a larger impact on output _________ and a larger impact on the price level _________.
a. In the short run, in the long run
b. In the long run, in the short run
c. In the short run, also in the short run
d. In the long run, also in the long run
5. Stagflation is caused by
a. A leftward shift in the aggregate-demand curve.
b. A rightward shift in the aggregate-demand curve.
c. A leftward shift in the aggregate-supply curve.
d. A rightward shift in the aggregate-supply curve.
6. The idea that economic downturns result from an inadequate aggregate demand for goods and services is derived from the work of which economist?
a. Adam Smith
b. David Hume
c. David Ricardo
d. John Maynard Keynes