1) Deflation, inflation, and disinflation are pretty common terms for us. Which of the following is an example of disinflation?

a) real GDP goes from $17 trillion to $17.8 trillion to $18 trillion.

b) the CPI goes from 260 to 266 to 268

c) nominal GDP goes from $18 trillion to $17 trillion to $17.5 trillion.

d) GDP deflator goes from 133 to 132 to 130

e) the labor force grows from 160 million to 170 million to 190 million

f) the GDP deflator goes from 110 to 115

2) Potential GDP is an important concept. One, two or all three of the following would cause it to decline. Which one or ones?

a) The amount of capital shrinks.

b) The Covid recession hit and the unemployment rate soared

c) many baby boomers retire and fewer younger workers replace them, so the number of potential worker shrinks.

d) prices fall in the economy

3) fiscal and monetary policy are very important parts of AD and SRAS. Which of the following is correct regarding how we use these curves?

a) monetary policy, but not fiscal policy, can shift AD

b) fiscal policy, but not monetary policy, can shift AD

c) monetary policy, but not fiscal policy, can shift SRAS.

d) fiscal policy, but not monetary policy, can shift SRAS.

e) both fiscal policy and monetary policy can shift AD.

d) none of the above are true

4) the short run aggregate supply (SRAS) curve is used together with AD to explain the economy in the short-run (over the course of a few years). One or more of the following will move you up along the SRAS curve (that is, P rises). Which one or ones?

a) firms investing more due to lower interest rates

b) firms investing less due to higher interest rates

c) Firms produce more due to higher prices for produced goods

d) firms produce less due to higher prices for produced goods

e) Firms cut production due to a higher price of oil (which is turned into gasoline for cars, kerosene for airplanes, and diesel for trucks).

d) firms cut production due to a lower price of oil (which is turned into gasoline for cars, kerosene for airplanes, and diesel for trucks).

e) prices fall and total spending rises

d) prices rise and total spending falls

5) one or more of the following will shift the AD left. Which one or ones?

a) firms investing more due to lower interest rates

b) firms investing less due to higher interest rates

c) Firms produce more due to higher prices for produced goods

d) firms produce less due to higher prices for produced goods

e) Firms cut production due to a higher price of oil (which is turned into gasoline for cars, kerosene for airplanes, and diesel for trucks).

d) firms cut production due to a lower price of oil (which is turned into gasoline for cars, kerosene for airplanes, and diesel for trucks).

e) prices fall and total spending rises

d) prices rise and total spending falls