Discuss the three ranges of the aggregate supply (AS) curve. What could cause the AS curve to shift to the left? What impact would a leftward shift of the AS curve have on the economy?
QUESTION 2If the Federal Reserve increases the money supply, ceteris paribus, the:
a. rate of interest decreases.
b. rate of interest increases.
c. rate of interest is unaffected.
d. Fed sells bonds.
QUESTION 3An individual who is employed part time, but is looking for a full-time job, is classified as:
a. frictionally unemployed.
b. cyclically unemployed.
c. structurally unemployed.
d. employed.
QUESTION 4Why does the aggregate demand (AD) curve slope downward? What could cause the AD curve to shift to the right? What impact would a rightward shift of the AD curve have on the economy?
QUESTION 5When the Fed increases the money supply, interest rates:
a. rise.
b. fall.
c. are unaffected.
d. rise and then fall.
e. fall and then rise.
QUESTION 6In a dynamic economy under ideal conditions:
a. the unemployment rate should be near zero.
b. some unemployment would be present due to workers temporarily being out of work while changing jobs.
c. unemployment would tend to move upward slightly as prices increased.
d. unemployment would tend to move slightly downward as unemployment compensation benefits increased.
QUESTION 7Cost-push inflation is caused by supply shocks like higher oil prices and poor weather conditions.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 8An increase in the money supply is represented by a(n):
a. rightward shift of the downward-sloping money supply curve.
b. upward shift of the money supply curve.
c. rightward shift of the money supply curve.
d. increase in the rate of interest.