1 Over the last 60 years the average annual growth of real GDP in the United States has been approximately a 1 percent b 3 percent c 5 percent d 9 percent 2 When an economy experiences long run economic growth a larger output can be achieved a only if there is a reduction in the natural rate of unemployment b only if the economy s actual unemployment is less than the natural rate c if prices increase d even though unemployment remains at its natural rate 3 Which of the following will most likely accompany an unanticipated reduction in aggregate demand a an increase in the general price level b an increase in unemployment c an increase in real GDP d an increase in resource prices 4 Which of the following will most likely accompany an unanticipated increase in short run aggregate supply a an increase in real GDP b an increase in the general level of prices c an increase in the actual rate of unemployment d an increase in the natural rate of unemployment 5 If the general level of prices is higher than business decision makers anticipated when they entered into long term contracts for raw materials and other resources which of the following is most likely to occur a a recession b output less than the economy s long run potential c a sharp reduction in imports d an unemployment rate that is less than the economy s natural rate of unemployment Use the figure below to answer the following question s Figure 10 1 6 At which point in Figure 10 1 is the economy at long run equilibrium a A b B c C d D 7 Which of the following would be most likely to cause a reduction in current aggregate demand in the United States a Increased business optimism about the future b The economies of key trading partners fall into a recession c A sharp increase in the value of stocks owned by Americans d An increase in the expected rate of inflation 8 When an economy is experiencing an economic boom and operating beyond its long run capacity a strong demand for investment funds will push interest rates upward b weak demand for resources will push the prices of resources downward c weak demand for investment funds will cause the real interes Answers 1 B 2 D 3 B 4 A 5 D 6 A 7 C 8 A
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