1.The Wall Street Journal reported that retail sales in March of 2020 fell by 8.7% - the largest one month drop in U.S. history.Before this happened, the economy was at point ___ on the graph on page 265.After that the economy moved towards point ____. This means that there are labor and capital _____ and ______ pressure on prices.

A.C; A; surpluses; downward

B.A; B; shortages; upward

C.A; C; surpluses; downward

D.A; C; shortages; downward

E.None of the above since we are now moving towards a point in the upper range of segment III of the aggregate supply curve.

2.Oil prices fell from $45 per barrel in 2019 to $11 per barrel by late April of 2020.This led to ________ levels of ____________ unemployment in Williston, North Dakota even though it caused _____________ to increase.

A.Higher; frictional; aggregate demand (low prices means more demand)

B.Lower; structural; aggregate supply

C.No change in the; cyclical; inflation and unemployment in other states

D.Higher; cyclical; aggregate supply

3.Suppose the upcoming Biden Administration sends American families checks in an attempt to cause aggregate ______ to increase. If history is any guide, these checks will______________.However, under ________________ more permanent cuts in income tax rates led to:

A.Demand; have very little, if any lasting effects.John F. Kennedy and Ronald Reagan; prolonged increases in aggregate demand and even greater increases in aggregate supply.

B.Quantity demanded; cause inflation; President Obama; one of the largest recoveries since World War II.

C.Supply; cause aggregate demand to increase by a larger amount and trigger inflation.George H.W. Bush; increases in aggregate demand - but only by a small amount.

D.Demand; cause inflation; Franklin D. Roosevelt and Dwight Eisenhower; increases in aggregate supply and offsetting effects on inflation.

E.None of the above.

4.From page 267 in your book:Suppose by March of 2021 the U.S. economy looks a lot like it did in 1933.This would mean we would be at point ___ with the following issues taking place:_________________________. It would also mean that point ___ would not be a concern for economists most likely throughout 2021.

A. B; large surpluses of labor and capital equipment; rising unemployment and deflation; E

B. E; large surpluses of labor, greater cyclical unemployment and deflation; A

C. C; falling unemployment rates from greater government spending; B

D. B; large scale business failures and stagflation; E

E. B or C - depending how long social distancing disrupts the economy.

5.The Wall Street Journal has reported that Airbnb had a severe drop in demand this year.Moreover, the federal government was even more restrictive of new immigrants entering the United States. The long run effect on the U.S. could be:

A. A decrease in aggregate demand but an increase in aggregate supply.

B. A decrease in aggregate supply and some stagflationary pressure on the economy.

C. A decrease in aggregate supply and a greater recession - but less inflation and lower unemployment for native-born Americans.

D. Non-inflationary economic growth and deflation.