Question 1

New technology, oil price changes, pork-barrel spending, interest rate changes, changes in planned investment, and disasters are examples of:
A) long-term economic shocks.
B) short-term economic shocks.
C) political unrest.
D) monetary policy.
E) fiscal policy.

Accepted Answer

These factors are examples of short-term economic shocks because they can have immediate and dramatic effects on the economy, but are not necessarily long-lasting or permanent.

Question 2

Which of the following is NOT an example of a short-term macroeconomic shock?
A) a drought
B) planned investment expenditures
C) increased military spending
D) a change in the tax code
E) political unrest

Accepted Answer

Planned investment expenditures are not considered a short-term macroeconomic shock because they are planned and expected. The other choices are all examples of short-term macroeconomic shocks that can cause sudden changes in economic activity.

Question 3

Which of the following is NOT an example of a short-term macroeconomic shock?
A) planned investment expenditures
B) a hurricane
C) increased military spending
D) a change in the tax code
E) new technology

Accepted Answer

Planned investment expenditures are not a short-term macroeconomic shock because they are a deliberate decision made by businesses, rather than an unforeseen event that disrupts the economy.

Question 4

Which of the following is NOT an example of a short-term macroeconomic shock?
A) political unrest
B) a change in the tax code
C) a drought
D) increased military spending
E) None of these answers is correct.

Accepted Answer

All the options (A, B, C, D) can be considered examples of short-term macroeconomic shocks as they can cause sudden and significant impacts on an economy's output, prices, or employment levels in the short term.

Question 5

Which of the following is NOT an example of a short-term macroeconomic shock?
A) increased oil prices
B) a drought
C) increased military spending
D) a change in the tax code
E) None of these answers is correct.

Accepted Answer

Increased oil prices, a drought, and increased military spending are all examples of events that can cause short-term macroeconomic shocks by suddenly altering supply and demand dynamics. A change in the tax code, while impactful, is typically considered a policy tool rather than a shock, as it is usually planned and implemented with forethought. However, the statement that none of these answers is correct suggests that all provided options are considered examples of short-term macroeconomic shocks in the context of this question, which implies a misunderstanding or a trick in the question's phrasing.

Question 6

The long-run model determines ________ output and ________.
A) current; unemployment
B) potential; unemployment
C) current; long-run inflation
D) potential; potential inflation
E) potential; long-run inflation

Accepted Answer

The long-run model in economics is used to determine potential output and long-run inflation. Potential output refers to the level of output (GDP) that an economy can produce when it is operating at full capacity, without generating inflationary pressures. Long-run inflation refers to the rate of inflation that the economy experiences over a long period, which is influenced by factors like monetary policy and the rate of growth in the money supply.

Question 7

Potential output is defined as:
A) the amount of total output if all inputs were utilized at their long-run, sustainable levels.
B) what an economy produces when it is at capacity.
C) the current level of output.
D) the amount of output where inflation is zero.
E) the level of output when unemployment is 10 percent.

Accepted Answer

Potential output is the amount of total output that an economy can produce when all inputs are utilized at their long-run, sustainable levels. It is not necessarily the same as the current level of output or the level at which inflation is zero or unemployment is at a certain percent.

Question 8

Taxes, oil price changes, government spending, interest rate changes, new technologies, and disasters are examples of:
A) long-term economic shocks.
B) short-term economic shocks.
C) political unrest.
D) monetary policy.
E) fiscal policy.

Accepted Answer

Short-term economic shocks are events that can temporarily disrupt economic activity and can include factors like taxes, oil price changes, government spending, interest rate changes, new technologies, and disasters. These elements can cause immediate but typically not permanent changes in the economy.

Question 9

What is the best definition of the short term in the short-term model?
A) about two years
B) the amount of time the economy spends at its potential output
C) the length of time for short-term deviations to return to their long-run values
D) the length of a recession
E) There is no such thing as the short term.

Accepted Answer

The short term in the short-term model refers to the length of time it takes for short-term deviations (such as fluctuations in output, employment, and prices) to return to their long-run values. This can vary depending on the specific context, but generally involves a time frame of a few years. Choice A is too specific and may not apply to all situations. Choice B refers to potential output, which is a long-run concept. Choice D focuses on recessions, which are a specific type of short-term deviation. Choice E is incorrect as the short term is a commonly used time frame in economics.

Question 10

One implication of the Keynes quote, "In the long run we are all dead," is that:
A) the economy is always in its long-run equilibrium.
B) we know with certainty what the long run is.
C) the long run is made up of a sequence of short runs.
D) there is no difference between the long and short runs.
E) there is no short run.

Accepted Answer

The quote implies that the long run is made up of a sequence of short runs, as Keynes is emphasizing the importance of focusing on the present and addressing immediate economic problems rather than solely planning for the distant future. The other answer choices are incorrect because they do not align with the meaning of the quote.

Question 11

Which of the following is NOT an example of a short-term macroeconomic shock?
A) a drought
B) high unemployment
C) increased military spending
D) a change in the tax code
E) political unrest

Accepted Answer

High unemployment is typically considered a longer-term issue rather than a short-term macroeconomic shock. Short-term shocks are sudden events that temporarily disturb the economy, whereas high unemployment can persist over a longer period and is often a result of underlying economic issues.

Question 12

John Maynard Keynes is famous for saying, "In the long run ________."
A) there is no tomorrow
B) we are all dead
C) the only thing we have to fear is fear itself
D) the study of economics will be redundant
E) we will tear down this wall

Accepted Answer

The full quote is "In the long run we are all dead." Keynes was referring to the fact that economic policies and decisions should focus on the short-term impact, rather than solely relying on the long-term perspective.

Question 13

Defining  as current output, 
As potential output, and 
As short-run output, which of the following equations defines short-run output as the short-run fluctuation's share of potential GDP?
A) 
B) 
C) 
D) 
E)

Accepted Answer

The equation 11eab38d_072a_6146_a5fb_296c61010be2_TB6622_11 defines short-run output as the short-run fluctuation's share of potential GDP.

Question 14

Defining  as current output, 
As potential output, and 
As short-run fluctuations, which of the following equations is correct?
A) 
B) 
C) 
D) 
E)

Accepted Answer

The answer of Defining  as current output, 
As potential...

Question 15

Which of the following is NOT an example of a short-term macroeconomic shock?
A) a change in the tax code
B) pork-barrel spending
C) increased military spending
D) planned investment expenditures
E) political unrest

Accepted Answer

Planned investment expenditures are not considered a short-term macroeconomic shock as they are usually planned and anticipated by businesses and do not cause sudden fluctuations in the overall economy. The other options are all potential short-term macroeconomic shocks as they involve sudden changes or disruptions to the economy or government spending.

Question 16

Current output is defined as:
A) the amount of output when inflation is about 2 percent.
B) what an economy produces when it is at capacity.
C) the amount of total output at the current level of input utilization.
D) the amount of total output if all inputs are utilized at their long-run sustainable levels.
E) the amount of output where unemployment is zero.

Accepted Answer

Current output is the amount of total output at the current level of input utilization, regardless of inflation or unemployment levels. It reflects the current level of production given the current utilization of resources.

Question 17

Output fluctuations are defined as:
A) the amount of output where inflation is about 2 percent.
B) what an economy produces when it is at capacity.
C) the percentage difference between current output and potential output.
D) the amount of total output if all inputs were utilized at their long-run sustainable levels.
E) the amount of output where unemployment is zero.

Accepted Answer

Output fluctuations refer to the difference between the actual output and potential output of an economy. This difference is measured as a percentage and reflects the degree to which an economy is operating below or above its full potential. Therefore, option C, "the percentage difference between current output and potential output", is the correct definition of output fluctuations.

Question 18

The long-run model determines ________ output and ________, while the short-run model determines ________ and ________ inflation.
A) potential; long-run inflation; current output; current
B) potential; unemployment; current output; long-run
C) current; long-run inflation; unemployment; current
D) potential; unemployment; unemployment; current
E) current; unemployment; potential output; current

Accepted Answer

The long-run model determines potential output and long-run inflation, focusing on the economy's capacity and inflation trends over time. The short-run model, on the other hand, determines current output and current inflation, focusing on immediate economic conditions and price changes.

Question 19

Defining  as current output, 
As potential output, and 
As short-run fluctuations, which of the following equations is correct?
A) 
B) 
C) 
D) 
E)

Accepted Answer

The answer of Defining  as current output, 
As potential...

Question 20

The short-run model determines ________ and ________.
A) current output; current inflation
B) current output; long-run inflation
C) unemployment; current inflation
D) unemployment; potential output
E) potential output; unemployment

Accepted Answer

The short-run model focuses on the relationship between current output and current inflation, as it assumes that prices and wages are sticky in the short-run. It does not consider long-run inflation or potential output directly, although these concepts may be indirectly affected by changes in current output and inflation. The model also does not focus solely on unemployment, although it is an important factor that can affect output and inflation in the short-run.

Quiz 9: An Introduction to the Short Run

New technology, oil price changes, pork-barrel spending, interest rate changes, changes in planned investment, and disasters are examples of:

Which of the following is NOT an example of a short-term macroeconomic shock?

Which of the following is NOT an example of a short-term macroeconomic shock?

Which of the following is NOT an example of a short-term macroeconomic shock?

Which of the following is NOT an example of a short-term macroeconomic shock?

The long-run model determines output and .

Potential output is defined as:

Taxes, oil price changes, government spending, interest rate changes, new technologies, and disasters are examples of:

What is the best definition of the short term in the short-term model?

One implication of the Keynes quote, "In the long run we are all dead," is that:

Which of the following is NOT an example of a short-term macroeconomic shock?

John Maynard Keynes is famous for saying, "In the long run ________."

Defining as current output, As potential output, and As short-run output, which of the following equations defines short-run output as the short-run fluctuation's share of potential GDP?

Defining as current output, As potential output, and As short-run fluctuations, which of the following equations is correct?

Which of the following is NOT an example of a short-term macroeconomic shock?

Current output is defined as:

Output fluctuations are defined as:

The long-run model determines output and , while the short-run model determines and inflation.

Defining as current output, As potential output, and As short-run fluctuations, which of the following equations is correct?

The short-run model determines and .