1. Which of the following will cause a movement from one point on an AD curve to another

point on the same AD curve?

a. a change in consumption

b. a change in government expenditures

c. a change in net exports

d. a change in the price level

2. Most economists use the aggregate demand and aggregate supply model primarily to

analyze

a. short-run fluctuations in the economy.

b. the effects of macroeconomic policy on the prices of individual goods.

c. the long-run effects of international trade policies.

d. productivity and economic growth.

3. The model of short-run economic fluctuations focuses on the price level and

a. real GDP.

b. economic growth.

c. the neutrality of money.

d. None of the above is correct.

4. The aggregate demand curve

a. has a slope that is explained in the same way as the slope of the demand curve for

a particular product.

b. is vertical in the long run.

c. shows an inverse relation between the price level and the quantity of all goods and

services demanded.

d. All of the above are correct.

5. The wealth effect, interest rate effect, and exchange rate effect are all explanations for

a. the slope of short-run aggregate supply.

b. the slope of long-run aggregate supply.

c. the slope of the aggregate demand curve.

d. everything that makes the aggregate demand curve shift.

6. Suppose a stock market crash makes people feel poorer. This decrease in wealth would

induce people to

a. decrease consumption, which shifts aggregate supply left.

b. decrease consumption, which shifts aggregate demand left.

c. increase consumption, which shifts aggregate supply right.

d. increase consumption, which shifts aggregate demand right.

7. The aggregate supply curve is upward sloping in

a. the short and long run.

b. neither the short nor long run.

c. the long run, but not the short run.

d. the short run, but not the long run.

8. The long-run aggregate supply curve shows that by itself a permanent change in

aggregate demand would lead to a long-run change

a. in the price level and real GDP.

b. in the price level, but not real GDP.

c. in real GDP, but not the price level.

d. in neither the price level nor real GDP.

9. Other things the same, if the long-run aggregate supply curve shifts left, prices

a. and output both increase.

b. and output both decrease.

c. increase and output decreases.

d. decrease and output increases.

10. Suppose the economy is in long-run equilibrium. In a short span of time, there is a large

influx of skilled immigrants, a major new discovery of oil, and a major new technological

advance in electricity production. In the short run, we would expect

a. the price level to rise and real GDP to fall.

b. the price level to fall and real GDP to rise.

c. the price level and real GDP both to stay the same.

d. All of the above are possible.