1. Since 2015, the productivity of a worker in Vietnam has increased by almost 50%. As a result,
   1. Only the short run aggregate supply curve shifts to the right.
   2. The aggregate demand curve shifts to the right.
   3. The short run aggregate supply curve shifts to the right and the long run supply curve also shifts to the right if the increase in productivity is expected to remain thus increasing Vietnam's potential output.
   4. There are no shifts but movements along the long run aggregate supply curve because price dictates the level of output in the long run.

1. What of the following factors will NOT shift the long run supply curve to the right
   1. An increase in the number of immigrants
   2. An increase in the number of women working
   3. An increase in the number of retirees
   4. An increase in the skillset of workers

1. The economy is self-correcting in:
   1. The short run because of sticky wages, but not in the long-run. Therefore, policy makers will focus on stabilization policies targeting potential output.
   2. Cases where a decrease in nominal wages is necessary to return to the potential output but not when an increase in nominal wages is necessary to return to potential output. This is why stabilization policies focus on the minimum wage.
   3. Cases where there are no changes in the short-run aggregate supply. The equilibrium will always be attained by only changes in the aggregate demand.
   4. The long run because prices are fully flexible. Therefore, in the short run, instead of going through a recessionary or inflationary gap, the government could make the economy stay at the original equilibrium with stabilization policies.

1. When responding to negative supply shocks, governments need to consider that:
   1. Using stabilization policies affecting the aggregated demand they cannot reduce employment and inflation at the same time.
   2. There is no tradeoff between inflation and employment because the negative supply shock will lead to lower price levels.
   3. Stabilization of prices requires lower unemployment since interest rates will go up.
   4. Stabilization of unemployment requires lower price level since firms only have an incentive to produce more when inflation is lower.
2. The level of real GDP
   1. Cannot be larger than potential output because the economy does not have enough production capacity in the short run.
   2. Fluctuates above and below potential output except for when the short-run aggregate supply curve intersects the aggregate demand at the vertical line that represents the long-run aggregate supply curve.
   3. Is equal to nominal GDP regardless of inflation.
   4. Will be lower than planned aggregate spending when there is no change in inventories.

1. What is the main source of tax revenue in the US?
   1. Personal income
   2. Corporate profits
   3. Social insurance payments
   4. Tuition fees

1. The statement "Government spending always crowds out private spending"
   1. Is used to justify why expansionary fiscal policies will always work
   2. Considers that investment spending does not respond to changes in government spending
   3. Does not take into account that during a recession not all the resources are used
   4. None of the above

1. The Ricardian equivalence refers to...:
   1. The opportunity cost of trading
   2. The future increase in consumption by individuals when they expect that taxes will increase
   3. Consumers' cut in their spending today to save for inevitable increases in future tax rates necessary to pay an increase in government spending.
   4. The difference between current level of output and potential output

1. The difference between deficit and debt can best be described as :
   1. Debt is the difference between the amount of money a government spends and the amount it receives in taxes over a given period. While deficit is the sum of money a government owes at a particular time.
   2. A deficit is the difference between the amount of money a government spends and the amount it receives in taxes over a given period. While debt is the sum of money a government owes at a particular time.
   3. Deficit is when a government collects more tax revenue than it spends on government purchases and transfers. While debt occurs when tax revenue is less than what the government spends on government purchases and transfers.
   4. Deficit measures the imbalance of the government budget in a particular point in time and it necessarily increases over time. While debt is the government budget for a particular period

1. Lags in the implementation of a fiscal policy ...
   1. Will contribute to a rapid implementation of stabilization policies
   2. Will always facilitate stabilization in the long run even when the economy returns to its potential level of output on its own
   3. Can lead to expansionary fiscal policy amid an inflationary gap and therefore they will make things worse instead of better.
   4. Will not exist when there is a large gap between the realization that there is a recessionary gap and the implementation of an expansionary fiscal policy