the economics of money, banking, and financial markets

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24.7 AD/AS Analysis of Foreign Business Cycle Episodes

1. 
   

   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

   
   


2. 
   

   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

   
   


3. 
   

   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