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13 Dec 2019

If there is a large increase in the price of oil, which of the following would most likely occur in the short run?

a. The aggregate supply curve shifts upward, the price level rises, and output falls.
b. The aggregate supply curve shifts downward, the price level falls, and output increases.
c. The aggregate demand curve shifts upward, output remains unchanged, and the price level rises.
d. The aggregate demand curve shifts upward, the price level rises, and output increases.
e. The aggregate demand curve shifts downward, the price level falls, and output falls.

A demand shock

a. can be traced back to a shift in the economy's production possibilities frontier
b. is any event that causes the aggregate demand curve to shift
c. is usually caused by a change in real GDP
d. is generally a good thing for the economy
e. is usually caused by a change in the price level

If output exceeds its full-employment level, the wage rate will eventually fall, causing a drop in the price level and a drop in real GDP until full employment is restored.

a. True
b. False

If there is an excess demand for money, there is an excess

a. supply of bonds and the price of bonds will not change.
b. supply of bonds and the price of bonds will increase.
c. supply of bonds and the price of bonds will decrease.
d. demand for bonds and the price of bonds will increase.
e. demand for bonds and the price of bonds will decrease

If the interest rate dropped, what would be the effect on spending?

a. Business spending on new capital would decrease.
b. Spending on automobiles would decrease.
c. Business spending on new factories would increase.
d. Spending on new homes would decrease.
e. Spending on consumer durables would decrease.

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