Question 1

The following question are based on the following diagram:
 
-The trough of the cycle is best characterized by letter

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.
E)   E.F) C) and D)
G) All of the above

Question 2

Which of the following events shifts the short-run aggregate supply curve to the right?

Accepted Answer

A)   technological improvements
B)   increases in input prices
C)   reductions in the amounts of available labor and capital
D)   increases in consumer and government spending
E)   significant shortages of important raw materialsF) B) and E)
G) A) and B)

Question 3

During a period when total spending is too high relative to potential output,the economy experiences

Accepted Answer

A)   excessive unemployment.
B)   falling average prices.
C)   a glut.
D)   a Great Crash.
E)   inflation.F) B) and C)
G) A) and C)

Question 4

Since 1945,the average annual unemployment rate in the United States has

Accepted Answer

A)   varied from 10 to 20 percent.
B)   increased steadily from 2 to 12 percent.
C)   varied from slightly under 3 to over 9 percent.
D)   decreased steadily from 10 to slightly under 7 percent.
E)   not varied by more than 3 percentage points over the entire period.F) A) and B)
G) C) and D)

Question 5

In general,a business cycle goes through its phases in the following sequence:

Accepted Answer

A)   trough, peak, expansion, recession.
B)   recession, trough, expansion, peak.
C)   trough, recession, expansion, peak.
D)   trough, expansion, recession, peak.
E)   expansion, recession, trough, peak.F) All of the above
G) B) and E)

Question 6

Preceding the Great Crash of 1929,the country enjoyed a period of relative economic prosperity.This prosperity was largely attributable to

Accepted Answer

A)   stronger growth in agriculture than the country had seen in years.
B)   demand for manufactured goods to replace those that were worn or outdated.
C)   after-effects of the high production years preceding World War I.
D)   government policies that stimulated growth through taxation and investment.
E)   the fact that wages and prices were rising exponentially.F) All of the above
G) B) and E)

Question 7

If the aggregate demand and supply curves intersect in the positively sloped range of the aggregate supply curve,a decrease in aggregate demand decreases

Accepted Answer

A)   the price level but not total real output.
B)   total real output but not the price level.
C)   both total real output and the price level.
D)   neither total real output nor the price level.
E)   total employment while increasing the price level.F) A) and B)
G) All of the above

Question 8

Deviations in national output around potential output are called a

Accepted Answer

A)   business cycle.
B)   price index.
C)   Keynesian equilibrium.
D)   market phase.
E)   theory.F) A) and B)
G) D) and E)

Question 9

An economist who argues that a free market economy,if left to itself,is strong enough to recover from any economic crisis reflects

Accepted Answer

A)   Keynesian analysis.
B)   a strong Marxist influence.
C)   the classical view.
D)   the post-Marxian-Keynesian synthesis.
E)   his or her own original view, with no apparent relationship to the thinking of other economists.F) B) and D)
G) B) and E)

Question 10

The following question are based on the following diagrams in which D₀ and S₀ refer to the initial aggregate demand and short-run aggregate supply curves:
 
-Economic conditions during World War II are best illustrated by diagram

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.
E)   E.F) None of the above
G) A) and C)

Question 11

In the short run,increases in product prices increase firms' ________ per unit.

Accepted Answer

A)   production costs
B)   employment
C)   sales
D)   capacity
E)   profitF) C) and E)
G) A) and E)

Question 12

People actively looking for work who CANNOT find jobs because of an insufficiency of aggregate demand are examples of ________ unemployment.

Accepted Answer

A)   frictional
B)   structural
C)   cyclical
D)   inflationary
E)   residualF) D) and E)
G) A) and E) C

Question 13

In general,an increase in productive capacity

Accepted Answer

A)   leaves the aggregate demand and supply curves unchanged.
B)   causes the aggregate supply curve to become vertical.
C)   causes the aggregate demand curve to become horizontal.
D)   shifts the aggregate demand curve to the left and pushes up price levels.
E)   shifts the aggregate supply curve to the right and increases real output.F) A) and B)
G) A) and C)

Question 14

People unemployed because they lack the necessary qualifications to fill available jobs are examples of ________ unemployment.

Accepted Answer

A)   frictional
B)   structural
C)   cyclical
D)   inflationary
E)   residualF) B) and D)
G) A) and B)

Question 15

The level of real national output produced at each price level is called a(n)

Accepted Answer

A)   aggregate supply curve.
B)   production possibilities curve.
C)   aggregate production function.
D)   capital output ratio.
E)   product-price yield curve.F) B) and C)
G) C) and D)

Question 16

A major purpose of Keynes's General Theory was to explain

Accepted Answer

A)   how a less-than-full employment equilibrium was possible in a capitalist economy.
B)   the automatic mechanisms in a capitalist society that generate a high level of employment.
C)   how supply creates its own demand.
D)   the close interrelationships between the savers and investors in any society.
E)   why Marx's predictions about capitalism were inevitable.F) D) and E)
G) B) and E)

Question 17

The view that unemployment becomes increasingly severe as machinery is substituted for labor is most closely associated with

Accepted Answer

A)   Ernst Say.
B)   Maynard Keynes.
C)   Eric Mill.
D)   Karl Marx.
E)   Adam Smith.F) A) and B)
G) A) and E) D

Question 18

An aggregate supply curve

Accepted Answer

A)   becomes horizontal at full employment.
B)   slopes downward and to the right during periods of unemployment.
C)   can be derived by adding up the supply curves for all individual commodities.
D)   is constructed on the assumptions that the money supply is fixed and there is full employment of resources.
E)   is constructed by allowing all commodity prices to vary.F) A) and C)
G) A) and B)

Question 19

If the money supply is fixed,increases in the price level reduce

Accepted Answer

A)   interest rates.
B)   imports.
C)   the rate of inflation.
D)   total real output purchased.
E)   the average money cost of each transaction.F) A) and D)
G) A) and E) D

Question 20

The gap between actual and potential output

Accepted Answer

A)   is a measure of the costs of inflation.
B)   is a measure of what it costs society to tolerate less than full employment.
C)   is necessary to ensure economic efficiency.
D)   has always been positive.
E)   is calculated as 3 × (unemployment rate - 0.055)  × potential GDP.F) A) and C)
G) A) and B)

Exam 16: Business Fluctuations and Unemployment

The following question are based on the following diagram: -The trough of the cycle is best characterized by letter

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Which of the following events shifts the short-run aggregate supply curve to the right?

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During a period when total spending is too high relative to potential output,the economy experiences

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Since 1945,the average annual unemployment rate in the United States has

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In general,a business cycle goes through its phases in the following sequence:

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Preceding the Great Crash of 1929,the country enjoyed a period of relative economic prosperity.This prosperity was largely attributable to

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If the aggregate demand and supply curves intersect in the positively sloped range of the aggregate supply curve,a decrease in aggregate demand decreases

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Deviations in national output around potential output are called a

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An economist who argues that a free market economy,if left to itself,is strong enough to recover from any economic crisis reflects

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The following question are based on the following diagrams in which D₀ and S₀ refer to the initial aggregate demand and short-run aggregate supply curves: -Economic conditions during World War II are best illustrated by diagram

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In the short run,increases in product prices increase firms' ________ per unit.

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People actively looking for work who CANNOT find jobs because of an insufficiency of aggregate demand are examples of ________ unemployment.

Correct AnswerverifiedC

In general,an increase in productive capacity

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People unemployed because they lack the necessary qualifications to fill available jobs are examples of ________ unemployment.

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The level of real national output produced at each price level is called a(n)

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A major purpose of Keynes's General Theory was to explain

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The view that unemployment becomes increasingly severe as machinery is substituted for labor is most closely associated with

Correct AnswerverifiedD

An aggregate supply curve

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If the money supply is fixed,increases in the price level reduce

Correct AnswerverifiedD

The gap between actual and potential output

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C

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D

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D

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