The Business Cycle & Economics Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. How will an economy in long run equilibrium adjust to a permanent increase in consumer demand?

Question 2 2. Rhonda's Restaurant is experiencing a big increase in customers after adding some new menu items. What will Rhonda do with her prices?

Question 3 3. When the economy has a recessionary gap, what will be true about employment?

Question 4 4. The demand for products made at Marx Manufacturing has declined in the last week. How will the owner of Marx Manufacturing change the wages of her employees in response?

Question 5 5. Which of the following is true regarding wages and prices when the economy is in long run equilibrium?

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Question 6 6. What is fiscal policy?

Question 7 7. When the economy is growing too slowly (recession) or too quickly (high inflation), the two approaches the government can use, according to economists, include which of the following?

Question 8 8. According to Keynesian economists, why do recessions occur?

Question 9 9. Which of the following statements best describes the use of fiscal policy during a recession?

Question 10 10. The most appropriate countercyclical policy, or stabilization policy, in times of unemployment, according to Classical economists, is for the government to do which of the following?

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Question 11 11. Aggregate demand refers to which of the following?

Question 12 12. What is aggregate supply?

Question 13 13. On the AS/AD model, the vertical line at economic equilibrium represents which of the following?

Question 14 14. Why is economic equilibrium found at the point where the aggregate demand curve, the long-term supply curve, and the short-term supply curve cross?

Question 15 15. In Keynes' aggregate supply-aggregate demand model, what is long-term supply?

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Question 16 16. Which one of the following is the best explanation of economic fluctuation?

Question 17 17. What do you call the period of economic fluctuation where growth is the highest during a business cycle?

Question 18 18. What do you call the period in the business cycle where the economy is bouncing off the trough?

Question 19 19. What's the name of the model economists use to explain economic fluctuations in a market economy?

Question 20 20. Which of the following is the best explanation of the difference between a recession and depression in a business cycle?

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Question 21 21. How does the government intervene in the supply and demand of demerit goods?

Question 22 22. A rise in minimum wage has all of the following consequences EXCEPT which one?

Question 23 23. The city officials of Anytown, USA, allows a company to re-purpose a plot of land currently used as a public park. The company plans on building a multiplex movie theater with a large parking garage, which will lead to what type of market failure?

Question 24 24. A simple street lamp or lighthouse is an example of which one of the following?

Question 25 25. What is the market effect of a monopoly?

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Question 26 26. Which of the following is true of wages and prices in the Keynesian Model?

Question 27 27. What did Keynes believe?

Question 28 28. The _____ Model more accurately describes economic growth in the _____.

Question 29 29. Which model of economic growth more accurately describes economic growth in the long-run?

Question 30 30. What do classical economists believe?

The Business Cycle & Economics Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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