1. If the government decides to increase expenditure on public transportation, there will be:

a) a shift of the aggregate-demand curve to the right

b) no effect on the aggregate-demand curve

c) a movement along the aggregate-demand curve

d) a shift of the aggregate-demand curve to the left

2. The exchange-rate effect implies that when the price level increases:

Group of answer choices:

a) net exports do not change

b) any of the options is possible

c) net exports increase

d) net exports decrease

3. An increase in inflationary expectations would cause the aggregate supply to ________ [ Select ] ["fall", "keep constant", "increase", "fluctuate"] in the short run.

4. When factors (other than price level) that affect the quantity of goods and services supplied change:

Group of answer choices:

a) the aggregate-supply curve shifts

b) the aggregate supply becomes vertical

c) the aggregate-supply curve becomes horizontal

d) the aggregate-supply curve is not affected

5. The sticky-wage theory states that in the short run:

Group of answer choices:

a) none of the options are correct

b) wages adjust instantaneously to changes in prices

c) wages do not adjust to changes in prices; therefore, real wages change and suppliers adjust their output levels

d) wages adjust to changes in prices; therefore, real wages are unchanged and suppliers do not adjust their output levels

6. If people's expectations about future price levels change: Group of answer choices:

a) the short-run aggregate-supply curve becomes horizontal

b) the short-run aggregate-supply curve is not affected

c) the short-run aggregate-supply curve becomes vertical

d) the short-run aggregate-supply curve shifts

7. If resources become more productive:

Group of answer choices:

a) both the short-run and the long-run aggregate-supply curves shift

b) neither the short-run aggregate curve nor the long-run supply curve shifts

c) the aggregate-demand curve shifts

d) the short-run aggregate-supply curve is not affected but the long-run aggregate curve shifts

8. Starting with AD₁ and AS₁ in the graph below, if production taxes increase, then in the short run, output __________ [ Select ] ["is unchanged", "decreases", "increases"] and prices _________ [ Select ] ["decrease", "is unchanged", "increase"] .

\fP AS1 AS 2 C a AD2 AD1 Y