A fall in the price level is defined as
- Inflation
- Stagflation
- Deflation
- Demand-pull inflation
- Cost-push inflation

If the cost of labor increases, will the AS or AD curve shift? In which direction will it move?
- The AS curve will shift inward
- The AS curve will shift outward
- The AD curve will shift inward
- The AD curve will shift outward

By implementing the ______ (Latin name) assumption, economists are able to separate the causes for shifts in aggregate supply or aggregate demand.
- Ceteris paribus
- Caveat venditor
- Semper fidelis
- Caveat emptor

Who stated this critique of Say’s Law: “If people don’t spend all of their money, there will be a glut of goods and people would be out of work.”
- Thomas Malthus
- Adam Smith
- David Ricardo

Which statement is true?
- The aggregate demand curve slopes downward
- The aggregate demand curve is a horizontal line
- The aggregate demand curve slopes upward

The equation for productivity is
- Total inputs divided by total output
- Price multiplied by money supply
- Price multiplied by quantity
- Total output divided by total inputs

The Classical versus Keynesian controversy is primarily a dispute about:
- How economies adjust and find their way back to full employment
- How the free market works
- Whether tax cuts or increased government spending should be used to stimulate an economy

The Classical Price Adjustment Mechanism will return the economy to full employment at:
- A lower price level
- A higher price level
- With no impact on the price level

Although rigorous environmental standards promote clean air and water for an entire nation, such regulations take a heavy toll on a firm's annual expenses. How are a business's annual expenses affected when an entire industry attempts to clean up its production process?
- Business expenses remain constant as they change suppliers
- Expenses decrease as they begin to purchase resources in bulk, leading to economies of scale where the cost of production decreases up until a certain point
- Overhead costs increase as a result of changing to sustainable and biodegradable resources or renewable sources of energy

John Maynard Keynes believed that:
- Unemployment would be solved through government expenditures
- Unemployment would be solved through adjustments in wages and prices
- Unemployment would be solved by tax increases

The veil of money assumption means that:
- Real output is not influenced by the money supply
- Increasing M will increase Q
- Nominal output is not influenced by the money supply

In order to increase real output, under the veil of money assumption, how much money does the government need to print?
- The amount of money to be printed should be equal to the total cost of goods in demand
- Monetary policy is ineffective
- The government needs to print twice as much as current production
- A fiscal policy should be used in place of monetary policy to stimulate real output, consumption, and real GDP growth

Conservatives favor individual responsibility and less government intervention while liberals prefer a larger, more involved government.
- True
- False

Aggregate supply within the circular flow diagram equals
- Consumption + investment
- Wages + rent + interest + profits
- Wages - consumption
- (Investment - interest) + profits

Classical economists believe that
- A. Recession is a natural occurrence within the business cycle
- B. Unemployment is an unusual phenomenon throughout the business cycle
- C. The economy is self-correcting
- D. There is no need for government intervention in the free market
- All of the above
- A, C, and D only

The goal of quantitative easing is to drive up long-term interest rates to curb inflation.
- True
- False

The famous quote "in the long run we're all dead" was said by
- Jean Baptiste Say
- Thomas Malthus
- John Maynard Keynes
- Adam Smith

The Classical versus Keynesian controversy is primarily a dispute about:
- How economies adjust and find their way back to full employment
- How the free market works
- Whether tax cuts or increased government spending should be used to stimulate an economy

Those who endorse Keynesian economics are members of which party?
- 1. Ideological conservatives
- 2. Ideological liberals
- 3. Moderates
- Both 1 and 2

Why does the aggregate demand curve slope downward?
- The "wealth effect"
- The "interest rate effect"
- The "net export effect"
- All of the above

Keynesian fiscal and monetary policies are ineffective in curing
- Deflation
- Stagflation
- Inflation
- Budget deficits

Through the Quantity Theory of Money, Classical economists deduce that by stimulating real GDP through additional printing of money, ________, the outcome will result in _______ rather than an increase in purchasing power and, thus, consumption.
- Tax policy; stagflation
- Fiscal policy; deflation
- Trade policy; an increase in the price level
- Monetary policy; inflation

In the event of unemployment, Classical economists believe that ________, ________, and ________would all fall, causing an increase in consumption, production, investment, and a return to full employment.
- Prices, wages, and interest rates
- Income, savings, and wages
- Government spending, net exports, and prices

Match the term with the correct definition.
Aggregate supply
Equilibrium
Aggregate demand

- Combination of the overall price and quantity at which neither buyers or sellers wish to change their purchases sales, or price;
- Real GDP
- Price Level
- What everyone in economy would buy at different aggregate price levels
- How much out put the economy will produce at different levels; upward sloping
- Nominal GDP

A fall in the price level is defined as - Inflation - Stagflation...