1、Name: _ Date: _1. Business cycles are:A) regular and predictable.B) irregular but predictable.C) regular but unpredictable.D) irregular and unpredictable.2. Short-run fluctuations in output and employment are called:A) sectoral shifts.B) the classical dichotomy.C) business cycles.D) productivity slo

2、wdowns.3. Recessions typically, but not always, include at least _ consecutive quarters of declining real GDP.A) twoB) fourC) sixD) eight4. Over the business cycle, investment spending _ consumption spending.A) is inversely correlated withB) is more volatile thanC) has about the same volatility asD)

3、 is less volatile than5. When GDP growth declines, investment spending typically _ and consumption spending typically _.A) increases; increasesB) increases; decreasesC) decreases; decreasesD) decreases; increases6. Okun's law is the _ relationship between real GDP and the _.A) negative; unemploy

4、ment rateB) negative; inflation rateC) positive; unemployment rateD) positive; inflation rate7. The statistical relationship between changes in real GDP and changes in the unemployment rate is called:A) the Phillips curve.B) the Solow residual.C) the Fisher effect.D) Okun's law.8. The version of

5、 Okun's law studied in Chapter 10 assumes that with no change in unemployment, real GDP normally grows by 3 percent over a year. If the unemployment rate rose by 2 percentage points over a year, Okun's law predicts that real GDP would:A) decrease by 1 percent.B) decrease by 2 percent.C) decr

6、ease by 3 percent.D) increase by 1 percent.9. The version of Okun's law studied in Chapter 10 assumes that with no change in unemployment, real GDP normally grows by 3 percent over a year. If the unemployment rate fell by 1 percentage point over a year, Okun's law predicts that real GDP woul

7、d:A) decrease by 1 percent.B) decrease by 2 percent.C) increase by 4 percent.D) increase by 5 percent.10. Long-run growth in real GDP is determined primarily by _, while short-run movements in real GDP are associated with _.A) variations in labor-market utilization; technological progressB) technolo

8、gical progress; variations in labor-market utilizationC) money supply growth rates; changes in velocityD) changes in velocity; money supply growth rates11. Leading economic indicators are:A) the most popular economic statistics.B) data that are used to construct the consumer price index and the unem

9、ployment rate.C) variables that tend to fluctuate in advance of the overall economy.D) standardized statistics compiled by the National Bureau of Economic Research.12. A decline in the Index of Supplier Deliveries is typically an indicator of a future _in economic production, and a narrowing of the

10、interest rate spread between the 10-year Treasury note and 3-month Treasury bill is typically an indicator of a future _ in economic production.A) increase; slowdownB) increase; increaseC) slowdown; increaseD) slowdown; slowdown13. The index of leading indicators compiled by the Conference Board inc

11、ludes 10 data series that are used to forecast economic activity about _ in advance.A) one monthB) six to nine monthsC) one to two yearsD) five to ten years14. Measures of average workweeks and of supplier deliveries (vendor performance) are included in the index of leading indicators, because short

12、er workweeks tend to indicate_ future economic activity and slower deliveries tend to indicate _ future economic activity.A) stronger; strongerB) stronger; weakerC) weaker; strongerD) weaker; weaker15. Most economists believe that prices are:A) flexible in the short run but many are sticky in the lo

13、ng run.B) flexible in the long run but many are sticky in the short run.C) sticky in both the short and long runs.D) flexible in both the short and long runs.16. Most economists believe that the classical dichotomy:A) holds approximately in both the short run and the long run.B) holds approximately

14、in the long run but not at all in the short run.C) holds approximately in the short run but not at all in the long run.D) does not hold even approximately in either the long run or the short run.17. A 5 percent reduction in the money supply will, according to most economists, reduce prices 5 percent

15、:A) in both the short and long runs.B) in neither the short nor long run.C) in the short run but lead to unemployment in the long run.D) in the long run but lead to unemployment in the short run.18. Monetary neutrality, the irrelevance of the money supply in determining values of_ variables, is gene

16、rally thought to be a property of the economy in the long run.A) realB) nominalC) real and nominalD) neither real nor nominal19. Alan Blinder's survey of firms found that the typical firm adjusts its prices:A) more than once a week.B) about once a month.C) once or twice a year.D) less than once

17、a year.20. Alan Blinder's survey of firms found that the theory of price stickiness accepted by the most firms was:A) menu costs.B) coordination failure.C) nominal contracts.D) procyclical elasticity.21. All of the following are suggested by the results of Alan Blinder's survey of firms exce

18、pt:A) there is only one theory of price stickiness.B) coordinating wage and price setting could improve welfare.C) reasons for price stickiness vary by industry.D) activist monetary policy can be used to cure recessions.22. A difference between the economic long run and the short run is that:A) the

19、classical dichotomy holds in the short run but not in the long run.B) monetary and fiscal policy affect output only in the long run.C) demand can affect output and employment in the short run, whereas supply is the ruling force in the long run.D) prices and wages are sticky in the long run only.23.

20、The aggregate demand curve is the _ relationship between the quantity of output demanded and the _.A) positive; money supplyB) negative; money supplyC) positive; price levelD) negative; price level24. The relationship between the quantity of output demanded and the aggregate price level is called:A)

21、 aggregate demand.B) aggregate supply.C) aggregate output.D) aggregate consumption.25. If an aggregate demand curve is drawn with real GDPY)( along the horizontal axis and the price level (P) along the vertical axis, using the quantity theory of money as a theory of aggregate demand, this curve slop

22、es _ to the right and gets _ as it moves farther to the right.A) downward; steeperB) downward; flatterC) upward; steeperD) upward; flatter26. The assumption of constant velocity in the quantity equation is the equivalent of the assumption of a constant:A) short-run aggregate supply curve.B) long-run

23、 aggregate supply curve.C) price level in the short run.D) demand for real balances per unit of output.27. Along an aggregate demand curve, which of the following are held constant?A) real output and pricesB) nominal output and velocityC) the money supply and real outputD) the money supply and veloc

24、ity28. According to the quantity theory of money, if output is higher, _ real balances are required, and for fixed M this means _P.A) higher; lowerB) lower; higherC) higher; higherD) lower; lower29. According to the quantity equation, if the velocity of money and the supply of money are fixed, and t

25、he price level increases, then the quantity of goods and services purchased:A) increases.B) decreases.C) does not change.D) may either increase or decrease.30. For a fixed money supply, the aggregate demand curve slopes downward because at a lower price level real money balances are _, generating a

26、_ quantity of output demanded.A) higher; greaterB) higher; smallerC) lower; greaterD) lower; smaller31. The aggregate demand curve tells us possible:A) combinations of M and Y for a given value of P.B) combinations of M and P for a given value of Y.C) combinations of P and Y for a given value of M.D

27、) results if the Federal Reserve reduces the money supply.32. When an aggregate demand curve is drawn with real GDPY)( along the horizontal axis and the price level (P) along the vertical axis, if the money supply is decreased, then the aggregate demand curve will shift:A) downward and to the left.B

28、) downward and to the right.C) upward and to the left.D) upward and to the right.33. When the Federal Reserve reduces the money supply, at a given price level the amount of output demanded is _ and the aggregate demand curve shifts _.A) greater; inwardB) greater; outwardC) lower; inwardD) lower; out

29、ward34. When the Federal Reserve increases the money supply, at a given price level the amount of output demanded is _ and the aggregate demand curve shifts _.A) greater; inwardB) greater; outwardC) lower; inwardD) lower; outward35. Looking at the aggregate demand curve alone, one can tell _ that wi

30、ll prevail in the economy.A) the quantity of output and the price levelB) the quantity of outputC) the price levelD) neither the quantity of output nor the price level36. The relationship between the quantity of goods and services supplied and the price level is called:A) aggregate demand.B) aggrega

31、te supply.C) aggregate investment.D) aggregate production.37. Aggregate supply is the relationship between the quantity of goods and services supplied and the:A) money supply.B) unemployment rate.C) interest rate.D) price level.38. A short-run aggregate supply curve shows fixed _, and a long-run agg

32、regate supply curve shows fixed _.A) output; outputB) prices; pricesC) prices; outputD) output; prices39. In the long run, the level of output is determined by the:A) interaction of supply and demand.B) money supply and the levels of government spending and taxation.C) amounts of capital and labor a

33、nd the available technology.D) preferences of the public.40. When a long-term aggregate supply curve is drawn with real GDPY)( along the horizontal axis and the price level (P) along the vertical axis, this curve:A) slopes upward and to the right.B) slopes downward and to the right.C) is horizontal.

34、D) is vertical.41. The vertical long-run aggregate supply curve satisfies the classical dichotomy because the natural rate of output doesnot depend on:A) the labor supply.B) the supply of capital.C) the money supply.D) technology.42. If the long-run aggregate supply curve is vertical, then changes i

35、n aggregate demand affect:A) neither prices nor level of output.B) both prices and level of output.C) level of output but not prices.D) prices but not level of output.43. The natural level of output is:A) affected by aggregate demand.B) the level of output at which the unemployment rate is zero.C) t

36、he level of output at which the unemployment rate is at its natural level.D) permanent and unchangeable.44. The long-run aggregate supply curve is vertical at the level of output:A) determined by aggregate demand.B) at which unemployment is at its natural rate.C) at which the inflation rate is zero.

37、D) at a predetermined price level.45. If all prices are stuck at a predetermined level, then when a short-run aggregate supply curve is drawn with real GDP (Y) along the horizontal axis and the price level P)( along the vertical axis, this curve:A) is horizontal.B) is vertical.C) slopes upward and t

38、o the right.D) slopes downward and to the right.46. The price level decreases and output increases in the transition from the short run to the long run when the short-run equilibrium is _ the natural rate of output in the short run.A) aboveB) belowC) equal toD) either above or below47. If the short-

39、run aggregate supply curve is horizontal, then changes in aggregate demand affect:A) level of output but not prices.B) prices but not level of output.C) both prices and level of output.D) neither prices nor level of output.48. In the aggregate demandaggregate supply model, short-run equilibrium occu

40、rs at the combination of output and prices where:A) aggregate demand equals long-run aggregate supply.B) aggregate demand equals short-run aggregate supply.C) aggregate demand equals short-run and long-run aggregate supply.D) short-run aggregate supply equals long-run aggregate supply.49. If the sho

41、rt-run aggregate supply curve is horizontal, then the:A) classical dichotomy is satisfied.B) money supply cannot affect prices in the short run.C) money supply cannot affect output in the short run.D) money supply is irrelevant in the short run.50. The short-run aggregate supply curve is horizontal

42、at:A) a level of output determined by aggregate demand.B) the natural level of output.C) the level of output at which the economy's resources are fully employed.D) a fixed price level.51. The short run refers to a period:A) of several days.B) during which prices are sticky and unemployment may o

43、ccur.C) during which capital and labor are fully employed.D) during which there are no fluctuations.52. The long run refers to a period:A) of decades.B) during which capital and labor are sometimes not fully employed.C) during which prices are flexible.D) during which output deviates from the full-e

44、mployment level.53. If the short-run aggregate supply curve is horizontal and the long-run aggregate supply curve is vertical, then a change in the money supply will change _ in the short run and change _ in the long run.A) only prices; only outputB) only output; only pricesC) both prices and output

45、; only pricesD) both prices and output; both prices and output54. In the aggregate demandaggregate supply model, long-run equilibrium occurs at the combination of output and prices where:A) aggregate demand is greater than long-run aggregate supply.B) aggregate demand equals short-run aggregate supp

46、ly.C) aggregate demand equals short-run and long-run aggregate supply.D) short-run aggregate supply equals long-run aggregate supply.55. If a short-run equilibrium occurs at a level of output above the natural rate, then in the transition to the long run prices will _ and output will _.A) increase;

47、increaseB) decrease; decreaseC) increase; decreaseD) decrease; increase56. If a short-run equilibrium occurs at a level of output below the natural rate, then in the transition to the long run prices will _ and output will _.A) increase; increaseB) decrease; decreaseC) increase; decreaseD) decrease;

48、 increase57. If the short-run aggregate supply curve is horizontal and the Fed increases the money supply, then:A) output and employment will increase in the short run.B) output and employment will decrease in the short run.C) prices will increase in the short run.D) prices will decrease in the shor

49、t run.58. Assume that the economy starts from long-run equilibrium. If the Federal Reserve increases the money supply, then _ increase(s) in the short run and _increase(s) in the long run.A) prices; outputB) output; pricesC) output; outputD) prices; prices59. Assume that the economy begins in long-r

50、un equilibrium. Then the Fed reduces the money supply. In the short run _, whereas in the long run prices _ and output returns to its original level.A) output decreases and prices are unchanged; riseB) output decreases and prices are unchanged; fallC) output and prices both decrease; riseD) output a

51、nd prices both decrease; fall60. Monetary neutrality is a characteristic of the aggregate demandaggregate supply model in:A) both the short run and the long run.B) in neither the short run nor the long run.C) in the short run, but not in the long run.D) in the long run, but not in the short run.61.

52、The economic response to the overnight reduction in the French money supply by 20 percent in 1724,A) confirmed the neutrality of money because no real variables were affected by this nominal change.B) confirmed the quantity theory by leading to an immediate 20 percent reduction in the price level.C)

53、 confirmed that money is not neutral in the short run because both output and prices dropped.D) contradicted Okun's law because decreases in output were not associated with increases in unemployment.62. When the French money supply was reduced by 45 percent over a period of seven months in 1724, the only values in the economy that adjusted fully and instantaneously were:A) prices in grain markets.B) real wages.C) foreign exchange rates.D) interest rates.63. Stabilization policy refers