Chapter 33 Problem Set #6

In the short run, recessions in South Korea and Indonesia will cause

• the U.S. price level and real GDP to rise.

• the U.S. price level and real GDP to fall.

• the U.S. price level to rise and real GDP to fall.

• the U.S. price level to fall and real GDP to rise.

Which of the following would cause prices and real GDP to rise in the short run?

• Short-run aggregate supply shifts right.

• Short-run aggregate supply shifts left.

• Aggregate demand shifts right.

• Aggregate demand shifts left.

Which of the following would cause prices and real GDP to rise in the short run?

• an increase in the expected price level

• an increase in the money supply

• a decrease in the capital stock

• None of the above is correct.

Which of the following would cause prices to rise and real GDP to fall in the short run?

• an increase in the expected price level

• an increase in the capital stock

• an increase in the quantity of labor available

• All of the above are correct.

Which of the following will reduce the price level and real output in the short run?

• an increase in the money supply

• an increase in oil prices

• a decrease in the money supply

• technical progress

Suppose a shift in aggregate demand creates an economic contraction. If policymakers can respond with sufficient speed and precision, they can offset the initial shift by shifting

• aggregate supply right.

• aggregate supply left.

• aggregate demand right.

• aggregate demand left.

An economic contraction caused by a shift in aggregate demand causes prices to

• rise in the short run, and rise even more in the long run.

• rise in the short run, and fall back to their original level in the long run.

• fall in the short run, and fall even more in the long run.

• fall in the short run, and rise back to their original level in the long run.

Refer to Figure 33-1. An increase in the money supply would move the economy from C to:

• B in the short run and the long run.

• D in the short run and the long run.

• B in the short run and A in the long run.

• D in the short run and C in the long run.

Refer to Figure 33-1. If the economy starts at C, an increase in the money supply moves the economy

• to A in the long run.

• to B in the long run.

• back to C in the long run.

• to D in the long run.

Refer to Figure 33-1. If the economy starts at A and moves to D in the short run, the economy

• moves to A in the long run.

• moves to B in the long run.

• moves to C in the long run.

• stays at D in the long run.