1.How is the short run typically defined?

a. as a time period in which the prices of output CANNOT change, but in which the prices of inputs have time to adjust

b. as a time period in which output prices can change in response to supply and demand, but in which all input prices have NOT yet been able to completely adjust

c. as a time period in which neither the prices of output nor the prices of inputs are able to change

d. as any time period of less than a year in which the prices of output CANNOT change greater than 1 percent.

2.Which of the following could cause a recession?

a. a decrease in aggregate demand

b. an increase in long-run aggregate supply

c. an increase in aggregate demand

d. an increase in short-run aggregate supply

3.Traditionally, government has used which lever to influence which side of the economy?

a. It has used taxing and spending to influence the demand side of the economy.

b. It has used spending to influence the supply side of the economy.

c. It has used supply management to influence the demand side of the economy.

d. It has used demand management to influence the supply side of the economy.

4.If the desired reserve ratio were increased, then what would be the result?

a. The money supply would tend to decrease, but the outstanding loans of banks would tend to increase.

b. Both the money supply and the outstanding loans of banks would tend to decrease.

c. The money supply would tend to increase, but the outstanding loans of banks would tend to decrease.

d. Both the money supply and the outstanding loans of banks would tend to increase.

5.In the short run, an expansionary fiscal policy can cause a rise in real GDP in combination with which of the following changes in the price level?

a. a rise in the price level

b. NO rise in the price level

c. a reduction in the price level

d. a rise or a reduction in the price level, depending on the economy