8) A negative supply shock in the short run causes* the aggregate supply curve to shift to the left.* the price level to fall.* unemployment to fall.* equilibrium real GDP to rise.9) A decrease in aggregate demand results in a(n) in the* recession; long run* expansion; long run* expansion; short run* recession; short run10) Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico which subsequently drove up natural gas, gasoline, and heating oil prices. Three years later, once the refining capacity was restored, these prices came back down. The restoration of refining capacity should* shift the short-run aggregate supply curve to the left.* shift the short-run aggregate supply curve to the right.* move the economy up along a stationary short-run aggregate supply curve.* move the economy down along a stationary short-run aggregate supply curve.Section 2.Q1. a) Assume consumer confidence falls. Show on your graph the short-run impact of the change in consumer confidence and label the new equilibrium price level and output Y and PL, respectively.b) how will this shift affect unemployment, and what types of unemployment might be affected?Q2. Suppose the economy is in a long-run equilibrium.* draw a diagram to illustrate the state of the economy.* Explain and show how the improvement of technology will affect both short and long aggregate supply.

1) 2) 3) 4 5) 6) 7 During the expansion phase of the business cycle, A) employment decreases. B) income decreases. C) unemployment increases. D) production increases. Because of the slope of the aggregate demand curve, we can say that A) a decrease in the price level leads to a higher level of aggregate spending. B) a decrease in the price level leads to a lower level of aggregate spending. C) adecrease in the price level leads to a higher level of aggregate supply. D) an increase in the price level leads to a higher level of aggregate spending. The interest rate effect is described as an increase in the price level which A) lowers the interest rate thereby reducing government spending. B) lowers the interest rate thereby reducing investment and consumption spending. C) raises the interest rate thereby reducing government spending. D) raises the interest rate thereby reducing investment and consumption spending. The basic aggregate demand and aggregate supply curve model helps explain A) fluctuations in real GDP and the price level. B) long-term growth. C) price fluctuations in an individual market. D) output fluctuations in an individual market. The international trade effect states that A) an increase in the price level will raise net exports. B) an increase in the price level will lower net exports. C) an increase in the price level will raise exports. D) an increase in the price level will lower imports. Which of the following will shift the aggregate demand curve to the right, ceteris paribus? A) an increase in interest rates B) a decrease in disposable income C) a decrease in expected profits for firms D) an increase in net exports The short-run aggregate supply curve has a(n) slope because as prices of rise, prices of rise more slowly. A) positive; final goods and services; inputs B) infinite; final goods and services; inputs C) positive; inputs; final goods and services D) infinite; inputs; final goods and services