1. Which of the following is an example of consumer spending?

Doraville buys trees to plant in its new city park.

Mariana purchases stock in a computer company.

Ralph hires a pest control company to treat his home.

2. Which of the following is an example of investment spending?

Gail hires a stock broker to make investments for her.

The Gull Corporation buys a building to be its new warehouse.

Farm Pride Bakery pays its local and state business taxes.

3. Which of the following events would cause upward movement along that nation's existing aggregate demand curve, ceteris paribus?

Canada experiences an increase in its overall price level.

German workers notice a rise in their disposable income.

Mexico experiences an increase in consumer confidence.

4. The wealth effect of a change in the price level causes ______.

changes in government spending

changes in consumer spending

the interest rate effect

5. Which of the following events, ceteris paribus, would lead to a change in consumption that would shift the U.S. aggregate demand curve to the right?

The U.S. government lowers personal income taxes.

American firms react to pessimistic business forecasts.

The U.S. government decreases its purchases.

6. Which of the following events, ceteris paribus, would lead to a change in investment that would shift the U.S. aggregate demand curve to the left?

The overall U.S. price level decreases.

American firms react to pessimistic business forecasts.

American wages and salaries rise.

7. Which of the following statements accurately describes a difference between an aggregate demand (AD) curve and a short-run aggregate supply (SRAS) curve?

An AD curve is positively sloped, whereas a SRAS curve is negatively sloped.

An AD curve is positively sloped, whereas a SRAS curve is perfectly vertical.

An AD curve is negatively sloped, whereas a SRAS curve is positively sloped.

8. Movement along a short-run aggregate supply curve represents a change in ______.

quantity of output

rents

wages

9. A short-run aggregate supply curve shows that the quantity of real GDP that suppliers are willing and able to produce ______ with increasing ______.

decreases; wages

decreases; costs

increases; price levels

10. Which of the following is a logical sequence to provide the described shifts in the short-run aggregate supply (SRAS) curve and the long-run aggregate supply (LRAS) curve?

reduced labor force, lower productivity, leftward shift in the SRAS curve, and rightward shift in the LRAS curve

increased government regulation, lower productivity, and rightward shifts in both the SRAS curve and LRAS curve

increased investment in capital, lower costs of production, and rightward shifts in both the SRAS curve and the LRAS curve

11. In which of the following groups are ALL of the factors capable of shifting ONLY the short-run aggregate supply (SRAS) curve?

changes in technology, changes in input prices, and changes in the overall price level

changes in input prices, changes in the expected price level, and unexpected supply shocks

changes in government regulations, changes in input prices, and changes in the stock of capital

12. Which of the following is an example of a negative supply shock?

a long bout of favorable weather

a widespread outage in the power grid

an increase in the overall price level

12. Contrast an economic boom with an economic recession.

An economic boom occurs when actual real GDP is greater than potential real GDP, whereas a recession occurs when the actual real GDP is less than potential real GDP.

An economic boom occurs when the price level is greater than the equilibrium position, whereas a recession occurs when the price level is less than the equilibrium position.

An economic boom occurs when the potential real GDP is greater than the actual real GDP, whereas a recession occurs when the potential real GDP is less than the actual real GDP.

13. Which of the following statements accurately describes the onset of the 2007-2008 recession that occurred in the United States?

There was a rightward shift in the aggregate demand curve and a leftward shift in the short-run aggregate supply curve.

There was a leftward shift in the long-run aggregate supply curve and a rightward shift in the aggregate demand curve.

There were leftward shifts in both the short-run aggregate supply curve and the aggregate demand curve.

14. What do efficiency wages and the legal minimum wage have in common?

Both cause wages to be sticky downward.

Both increase during recessions.

Both cause wages to be inflexible upward.

15. The classical macroeconomic model is associated with ______.

Bill Gates

Jean Baptiste Say

Larry Ellison

16. Which of the following statements summarizes an argument made against the classical model?

The production of goods and services creates income for owners of inputs.

Supply does not automatically create an adequate demand.

Wages and prices adjust quickly to economic changes.