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Multiple Choice Quiz
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1
An increase in consumer wealth causes:
A)A movement along the aggregate demand curve
B)A shift in the aggregate demand curve to the right
C)A movement along the aggregate supply curve
D)A shift in the aggregate supply curve to the right
2
Which of the following causes a movement along the aggregate supply curve?
A)An output gap
B)Inflation expectations
C)Inflation shocks
D)None of the above
3
If an economy has an expansionary gap, inflation:
A)Increases
B)Remains the same
C)Decreases
D)None of the above
4
In the long run,
A)Actual output > potential output and actual inflation < expected inflation
B)Actual output < potential output and actual inflation > expected inflation
C)Actual output = potential output and actual inflation = expected inflation
D)Actual output > potential output and actual inflation > expected inflation
5
An economy's long run equilibrium occurs at the intersection of:
A)Aggregate demand and aggregate supply
B)Aggregate demand and long run aggregate supply
C)Aggregate demand and MPR
D)Aggregate demand, aggregate supply, and long run aggregate supply
6
When we have an output gap,
A)We are not in equilibrium
B)We are in long run equilibrium
C)We are in short run equilibrium
D)None of the above
7
If the economy has an expansionary gap, a self correcting economy will experience:
A)A shift in the aggregate supply curve to the right
B)A shift in the aggregate supply curve to the left
C)A shift in the aggregate demand curve to the left
D)A shift in the aggregate demand curve to the right
8
If the economy's self-correcting mechanism is fast:
A)Only monetary policy is effective and stabilizing
B)Only fiscal policy is effective and stabilizing
C)Both monetary and fiscal policies are effective and stabilizing
D)Neither monetary and fiscal policies are effective and stabilizing
9
The existence of a war can trigger:
A)A recessionary gap
B)A deflationary gap
C)An inflationary gap
D)None of the above
10
An aggregate supply shock is:
A)An inflation shock
B)A shock to potential output
C)Either
D)None





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