The dynamic aggregate demand curve

Name: __________________________ Date: _____________1. The dynamic aggregate demand curve isA) upward sloping.B) downward sloping.C) a vertical line.D) a horizontal line.2 The Solow growth curve isA) upward sloping.B) downward sloping.C) a vertical line.D) a horizontal line.3. Which of the following can shift the Solow growth curve?A) warsB) increases in technologyC) strikesD) Each of these answers is correct.4. A negative real shock causes the Solow growth curve to shiftA) up.B) down.C) left.D) right.5. Wages that do not respond quickly to changes in the inflation rate areA) real wages.B) flexible wages.C) decreasing wages.D) sticky wages.6. The short-run aggregate supply curve isA) upward sloping.B) downward sloping.C) a vertical line.D) a horizontal line.Page 17. A negative real shock causesA) a lower inflation rate and a lower real growth rate.B) a lower inflation rate and a higher real growth rate.C) a higher inflation rate and a lower real growth rate.D) a higher inflation rate and a higher real growth rate.8. From Point X in the accompanying dynamic aggregate demand model, a negative realshock will cause the economy to move to PointA) W.B) X.C) Y .D) Z.Page 29. Beginning at Point A in the diagram above, what is the short-run growth rate in thiseconomy after a positive shock to aggregate demand?A) 6 percentB) 3 percentC) 1.2 percentD) 2 percent10. Beginning at Point A in the diagram above, what is the short-run growth rate in thiseconomy after a negative shock to aggregate demand?A) 6 percentB) 3 percentC) 1.2 percentD) 2 percent11. According to the diagram above, what is the long-run growth rate in this economy aftera positive money shock?A) 3 percentB) 4 percentC) 6 percentD) 2 percent12. In the short run, what happens to the economy when consumer spending decreases inthe AD and SRAS model?A) Inflation is higher and the real growth rate is higher.B) Inflation is higher and the real growth rate is lower.C) Inflation is lower and the real growth rate is higher.D) Inflation is lower and the real growth rate is lower.13. Which of the following causes the dynamic AD curve to shift left (decrease)?I. increased taxesII. increased consumer confidenceIII. increased import growthA) I and II onlyB) II and III onlyC) I and III onlyD) I, II, and III14. Who is Janet Yellen?A) Secretary of the U.S. TreasuryB) Chair of the President’s Council of Economic AdvisorsC) Vice President of the United StatesD) Chair of the Federal ReservePage 315. The Federal Reserve is theA) federal government’s bank.B) U.S. central bank.C) banker’s bank in the United StatesD) Each of these answers is correct.16 The monetary base (MB) refers toA) currency.B) currency plus total reserves held at the Fed.C) currency plus checkable deposits.D) currency, savings deposits, money market mutual funds, and small time deposits.17. M1 refers toA) currency.B) currency plus total reserves held at the Fed.C) currency plus checkable deposits.D) currency, checkable deposits, savings deposits, money market mutual funds, andsmall-time deposits.18. What part of the money pyramid does the Fed have direct control over?A) the monetary baseB) M1C) the monetary base plus M1D) M219. Which of the following is the most liquid asset?A) currencyB) checkable depositsC) savings depositsD) money market mutual funds20. If the required reserve ratio is 4 percent, the money multiplier isA) 4.B) 16.C) 20.D) 25.21. Suppose the reserve ratio is 20 percent for all banks. If the Fed increases bank reservesby $200, then the money supply willA) decrease by $400.B) increase by $400.C) decrease by $1,000.D) increase by $1,000.Page 422. Suppose you deposit $1,000 in your checking account. If the reserve ratio is 10 percent,how much of your deposit can the bank loan out?A) $0.B) $100.C) $900.D) $1,000.23. When the Federal Reserve makes an open market purchase, the reserves of the bankingsystem willA) increase.B) decrease.C) remain constant.D) become difficult to predict.24. If the Fed buys bonds in the open market,I. investment spending should increase.II. short-term interest rates should increase.III. inflation could increase.A) I and II onlyB) II and III onlyC) I and III onlyD) I, II, and III25. An increase in money growth will cause the economy’s AD curve toA) not shift.B) shift inward.C) shift outward.D) shift outward during expansions and inward during contractions.