Question : 41) Declines in spending residential construction often due to increases : 1244786

41) Declines in spending on residential construction are often due to increases in interest rates. The collapse in residential construction prior to and during the recession of 2007-2009 was due more to ________ than to higher interest rates.

A) the financial crisis that began in 2007

B) the rapid inflation of the early 2000s

C) increases in the price of lumber

D) rising wages in the construction industry

42) An increase in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?

A) The price level will fall, and the level of GDP will rise.

B) The price level will fall, and the level of GDP will fall.

C) The price level will rise, and the level of GDP will fall.

D) The price level will rise, and the level of GDP will be unaffected.

43) Which of the following correctly describes the automatic mechanism through which the economy adjusts to long-run equilibrium?

A) the leftward shift of the short-run aggregate supply curve that occurs after a recession

B) the rightward shift of the short-run aggregate supply curve that occurs after a recession

C) the leftward shift of the aggregate demand curve that occurs after a recession

D) the rightward shift of the aggregate demand curve that occurs after a recession

44) Suppose the economy is at full employment and firms become more pessimistic about the future profitability of new investment. Which of the following will happen in the short run?

A) Output will rise.

B) Prices will rise.

C) Unemployment will rise.

D) The aggregate demand curve will shift to the right.

45) Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP. Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

A) Output will increase.

B) Prices will decline.

C) Unemployment will decline.

D) Short-run aggregate supply will shift to the left.

46) Why does the short-run aggregate supply curve shift to the left in the long run, following an increase in aggregate demand?

A) Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices.

B) Workers and firms adjust their expectations of wages and prices downward and they push for higher wages and prices.

C) Workers and firms adjust their expectations of wages and prices upward and they push for higher wages and prices.

D) Workers and firms adjust their expectations of wages and prices upward and they accept lower wages and prices.

47) The automatic mechanism ________ the price level in the case of ________ and ________ the price level in the case of ________.

A) raises; recession; lowers; expansion

B) lowers; expansion; lowers; recession

C) raises; expansion; raises; recession

D) lowers; recession; raises; expansion

48) ________ of unemployment during ________ make it easier for workers to ________ wages.

A) High levels; a recession; accept lower

B) Low levels; an expansion; accept lower

C) Low levels; a recession; negotiate higher

D) High levels; an expansion; negotiate higher

49) Ceteris paribus, in the long run, a negative supply shock causes

A) the long-run aggregate supply curve to shift to the left.

B) the price level to rise initially, and then return to its lower level.

C) unemployment to fall below its short-run level.

D) equilibrium real GDP to fall.

50) Which of the following is considered a negative supply shock?

A) increasing investment in the economy causes the capital stock to rise

B) an unexpected increase in the price of natural gas

C) a decline in wages

D) an improvement in technology