Chapter 14 Aggregate Demand and Aggregate Supply

| November 9, 2018

34)
A supply shock is an ________ event that shifts the aggregate ________ curve.
A)
internal; supply
B)
external; supply
C)
internal; demand
D)
external; demand

35)
When there is a recession (a fall in output) and prices are increasing, and
this situation is caused by adverse supply shocks, the term economists use to
describe it is
A)
aggregate shifts.
B)
stagnation.
C)
inflation.
D)
stagflation.

Recall
the Application about the causes of oil price increases to answer the following
question(s). Economist Lutz Kilian examined the importance of supply
disruptions to the U.S. oil market by constructing measures of supply
disruptions in oil producing countries based on a detailed examination of prior
trends in demand and specifications in oil contracts.

36)
Recall the application. If speculators believe oil prices are going to rise in
the future, they will ________ oil now, which will tend to ________ the current
price of oil.
A)
buy; decrease
B) buy; increase
C)
sell; decrease
D)
sell; increase

37)
Recall the application. Oil price increases may be caused by
A)
decreases in world demand.
B)
increases in world supply.
C)
speculation in oil markets.
D)
price ceilings in oil markets.

38)
Recall the application. Oil price increases may be caused by
A)
increases in world demand.
B)
increases in world supply.
C)
increase in the U.S. supply of money.
D)
beneficial supply shocks for the U.S. consumer.

39)
Recall the application. Oil supply disruptions explain ________ of the
variability of oil prices.
A)
about 50%
B)
more than 90%
C)
only a small fraction
D)
absolutely none

40)
The long-run aggregate supply curve is horizontal.

41)
Aggregate demand determines output in the short run if prices are flexible.

42)
If the supply of money increases, the long-run aggregate supply curve suggests
that output will not change but price level will.

43)
Aggregate demand and aggregate supply must be combined to determine the price
level and the “real” GDP.

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