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24.7 AD/AS Analysis of Foreign Business Cycle Episodes
According to aggregate demand and supply analysis, the rising oil prices coupled with the
subprime financial crisis in 2007- 2008 caused the unemployment rate to ____ and the level
of real aggregate output to ____.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Answer: B
Diff: 2 Type: MC Page Ref: 595
Skill: Recall
Objective List: 24.1 Interpret the aggregate demand and supply framework for the determination
of aggregate output and the inflation rate
The run-up of oil prices in 2007 led to ____.
A) a negative supply shock
B) a negative demand shock
C) a positive supply shock
D) a positive negative shock
Answer: A
Diff: 2 Type: MC Page Ref: 595
Skill: Recall
Objective List: 24.1 Interpret the aggregate demand and supply framework for the determination
of aggregate output and the inflation rate
Aggregate demand and supply analysis can be used ____.
A) to examine the effects of macroeconomic shocks on prices
B) to build the LM curve
C) as an alternative to IS LM model
D) to value real assets in the long run
Answer: A
Diff: 3 Type: MC Page Ref: 595
Skill: Recall
Objective List: 24.1 Interpret the aggregate demand and supply framework for the determination
of aggregate output and the inflation rate