Based on what you have learned using the Aggregate Demand-Aggregate Supply Model of the economy:

In the short run, how will anincrease in aggregate demand,ceteris paribus, most likely affect the overallprice levelandreal GDP?

Group of answer choices

Price Level:Decrease/ Real GDP:Increase

The price level and real GDP willnotbe affected.

Price Level:Increase/ Real GDP:Increase

Price Level:Decrease /Real GDP:Decrease

Price Level:Increase/ Real GDP:Decrease

Flag question: Question 2Question 21pts

Based on what you have learned using the Aggregate Demand-Aggregate Supply Model of the economy:

Suppose an economy in long-run equilibrium experiences asupply shockfrom substantiallyhigher energy costs. In which of the following ways arereal GDPand theprice levelmost likely to change?

Group of answer choices

Price Level:Decrease/ Real GDP:Decrease

Price Level:Increase/ Real GDP:Increase

Price Level:Increase/ Real GDP:Decrease

The price level and real GDP will not be affected.

Price Level:Decrease/ Real GDP:Increase

Flag question: Question 3Question 31pts

Which of the following statements is/areCORRECTin describing the situation in the previous question?

Group of answer choices

The economy experienced a positive demand shock.

The economy experienced economic growth.

Due to the change that occurred, the economy will experience stagflation.

All of these statements are correct in describing the situation in the previous question.

The economy experienced a positive supply shock.

Flag question: Question 4Question 41pts

Based on what you have learned using the Aggregate Demand-Aggregate Supply Model of the economy:

Which of the following would most likely result if the federal governmentincreased spendingwithout increasing tax revenues during a period offull employment?

Group of answer choices

A decrease in the national debt.

An increase in the price level.

A decrease in interest rates.

A recession.

A decrease in the price level.

Flag question: Question 5Question 51pts

The COVID-19 pandemic caused many U.S. consumers to reduce their consumption expenditures. The reduction in consumption expenditures is an example of:

Group of answer choices

a positive supply shock to the U.S. economy.

a negative supply shock to the U.S. economy.

a positive demand shock to the U.S. economy.

a positive demand shockanda positive supply shock to the U.S. economy.

a negative demand shock to the U.S. economy.

Flag question: Question 6Question 61pts

The diagram below shows theaggregate consumption functionfor a hypothetical economy called Behrendia. What is themarginal propensity to consume (MPC)in Behrendia?

Group of answer choices

0.75

0.40

0.375

1.00

0.60

Flag question: Question 7Question 71pts

Ceteris paribus, which of the following combination of events is most likely in increase investment spending in the economy by the biggest amount?

Group of answer choices

An increase in interest rates and a decrease in expected future real GDP.

A decrease in interest rates and a decrease in expected future real GDP.

A decrease in interest rates and an increase in expected future real GDP.

ALL of the answers listedwill increase investment spending in the economy by thesame amount.

An increase in interest rates and an increase in expected future real GDP.

Flag question: Question 8Question 81pts

The diagram below shows the macroeconomic situation in a country called Behrendia. Based on your understanding of the Expenditure-Output model, what is theequilibrium level of real GDPin Behrendia?

Group of answer choices

Between $120 billion and $300 billion.

$300 billion

Between $300 billion and $400 billion.

$400 billion

$120 billion

Flag question: Question 9Question 91pts

The same diagram from Question #8 is reproduced below, which shows the macroeconomic situation in a country called Behrendia. If Behrendia produces$350 billionof real GDP, which of the following statements isTRUE?

Group of answer choices

There will beeitherunexpected inventory accumulationorunexpected inventory depletion in Behrendia's economy.

There would be unexpected (unplanned) inventory depletion in Behrendia's economy.

Production in Behrendia will begin to decrease, eventually reducing real GDP.

Behrendia's economy would be in equilibrium.

There would be unexpected (unplanned) inventory accumulation in Behrendia's economy.

Flag question: Question 10Question 101pts

The same diagram from Question #8 is reproduced below, which shows the macroeconomic situation in a country called Behrendia. If Behrendia is initially at equilibrium, and theninvestment expendituresincrease by $10 billion,ceteris paribus, what will be the impact?

Group of answer choices

Equilibrium real GDP will increase to $130 billion.

Equilibrium real GDP will increase to $310 billion.

Equilibrium real GDP will increase to $410 billion.

Equilibrium real GDP will increase to $425 billion.

Equilibrium real GDP will increase to $500 billion.

Flag question: Question 11Question 111pts

Prior to the "revolution" in economic thinking introduced by John Maynard Keynes, the "classical/neoclassical" economists had argued that:

Group of answer choices

a market economy would produce many "great depressions."

a market economy is inherently stable and would always lead to full employment in the long run.

a market economy was inferior to a centrally-planned economy.

a market economy did not necessarily generate full employment in the long run.

Flag question: Question 12Question 121pts

The diagram below shows the macroeconomic situation in a country called Harborland.

Based on what you have learned, which of the following statements isTRUE?

Group of answer choices

Harborland is currently experiencing arecessionary gapof$100 billion.

Harborland is currently experiencing arecessionary gapof$650 billion.

Harborland is currently experiencing aninflationary gapof$100 billion.

Harborland's economy is currently atequlibriumand producing itsfull potentiallevel of real GDP.

Harborland is currently experiencing aninflationary gapof$750 billion.

Flag question: Question 13Question 131pts

The same diagram from Question #12 is reproduced below, which shows the macroeconomic situation in a country called Harborland.

Given the current economic situation in Harborland, those who adhere to the"neoclassical"perspective of the macroeconomy would argue that:

Group of answer choices

the economy is currently already at its long-run equilibrium and producing its potential level of output, so government action is not necessary.

government action is not necessary since the economy will eventually return to its long-run "full-employment" (potential) level of real GDP.

the government should use fiscal policy toincreaseaggregate demand.

we should always focus on theshort runbecause"in the long run, we are all dead."

the government should use fiscal policy toreduceaggregate demand.

Flag question: Question 14Question 141pts

The same diagram from Question #12 is reproduced below, which shows the macroeconomic situation in a country called Harborland.

Given the current economic situation in Harborland, those who adhere to the"Keynesian"perspective of the macroeconomy would argue that:

Group of answer choices

the government should use fiscal policy toincreaseaggregate demand.

we should always focus on thelong runbecause"in the short run, we are all dead."

the government should use fiscal policy toreduceaggregate demand.

government action is not necessary since the economy will eventually return to its long-run "full-employment" (potential) level of real GDP.

the economy is currently already at its long-run equilibrium and producing its potential level of output, so government action is not necessary.

Flag question: Question 15Question 151pts

During the "Golden age of Keynesian economics" in the 1960s, the "Phillips curve" was used to show that:

Group of answer choices

there wasno relationshipbetween the inflation rate and the unemployment rate.

the inflation rateincreasedwhenever the unemployment rateincreased.

the inflation ratedecreasedwhenever the unemployment ratedecreased.

the inflation rate and the unemplotment rate werealways constant.

the inflation rateincreasedwhenever the unemployment ratedecreased, so that there was a "tradeoff" between inflation and unemployment.