Question 1

Subprime loans generally have a lower loan-to-value ratio than do prime loans.

Accepted Answer

A) True 
 B)False

Question 2

As the price level rises,ceteris paribus,people holding some of their wealth in monetary form become

Accepted Answer

A)  less wealthy and they buy less. 
B)  more wealthy and they buy more. 
C)  less wealthy and they buy more. 
D)  more wealthy and they buy less. 
A)  less wealthy and they buy less. 
B)  more wealthy and they buy more. 
C)  less wealthy and they buy more. 
D)  more wealthy and they buy less.

Question 3

Business taxes fall.This raises __________,which raises __________ and the __________ curve shifts rightward.

Accepted Answer

A)  consumption; aggregate demand (A
D) ; AD 
B)  investment; government purchases; AD 
C)  investment; aggregate demand (A
D) ; AD 
D)  net exports; aggregate demand (A
D) ; AD 
E)  none of the above 
A)  consumption; aggregate demand (A
D) ; AD 
B)  investment; government purchases; AD 
C)  investment; aggregate demand (A
D) ; AD 
D)  net exports; aggregate demand (A
D) ; AD 
E)  none of the above

Question 4

An economic policy initiative results in the AD curve shifting to the right.As a result,

Accepted Answer

A)  the price level will rise. 
B)  the price level will stay constant. 
C)  the price level will fall. 
D)  Real GDP will rise in the short run. 
E)  a and d 
A)  the price level will rise. 
B)  the price level will stay constant. 
C)  the price level will fall. 
D)  Real GDP will rise in the short run. 
E)  a and d

Question 5

As the dollar depreciates,foreign goods become more expensive for Americans.

Accepted Answer

A) True 
 B)False

Question 6

Exhibit 8-4
  
-Refer to Exhibit 8-4. A shift in short-run aggregate supply from SRAS? to SRAS? would have been the result of

Accepted Answer

A)  a decrease in the price level. 
B)  an increase in the price level. 
C)  an adverse supply shock. 
D)  a beneficial supply shock. 
A)  a decrease in the price level. 
B)  an increase in the price level. 
C)  an adverse supply shock. 
D)  a beneficial supply shock.

Question 7

Short-run equilibrium exists

Accepted Answer

A)  where the AD curve intersects the short-run aggregate supply (SRAS) curve. 
B)  where the AD curve intersects the long-run aggregate supply (LRAS) curve. 
C)  on the AD curve only. 
D)  on the SRAS curve only. 
A)  where the AD curve intersects the short-run aggregate supply (SRAS) curve. 
B)  where the AD curve intersects the long-run aggregate supply (LRAS) curve. 
C)  on the AD curve only. 
D)  on the SRAS curve only.

Question 8

The purchases made by the foreign sector are called __________; the purchases made by the household sector are called __________; the purchases made by the government sector are called __________; and the purchases made by the business sector are called investment.

Accepted Answer

A)  net exports; consumption; net interest 
B)  net exports; domestic spending; government purchases 
C)  net exports; consumption; government purchases 
D)  exports; domestic spending; government product 
E)  imports; consumption; government expenditures 
A)  net exports; consumption; net interest 
B)  net exports; domestic spending; government purchases 
C)  net exports; consumption; government purchases 
D)  exports; domestic spending; government product 
E)  imports; consumption; government expenditures

Question 9

Which of the following statements is false?

Accepted Answer

A)  Real GDP is the quantity of goods and services valued in base-year prices or base-year dollars. 
B)  "Aggregate demand" and the "quantity demanded of Real GDP" are the same. 
C)  According to the aggregate demand (A
D)  curve, the quantity demanded of Real GDP and the price level are inversely related. 
D)  Real GDP is denominated in current-year prices. 
E)  b and d 
A)  Real GDP is the quantity of goods and services valued in base-year prices or base-year dollars. 
B)  "Aggregate demand" and the "quantity demanded of Real GDP" are the same. 
C)  According to the aggregate demand (A
D)  curve, the quantity demanded of Real GDP and the price level are inversely related. 
D)  Real GDP is denominated in current-year prices. 
E)  b and d

Question 10

Which of the following questions is false?

Accepted Answer

A)  Purchasing power and the price level are inversely related. 
B)  The real balance effect refers to the change in the purchasing power of dollar-denominated assets as a result of a change in the price level. 
C)  The aggregate demand curve slopes downward because of the real balance, interest rate, and international trade effects. 
D)  A change in the quantity demanded of Real GDP is directly brought about by a change in interest rates. 
A)  Purchasing power and the price level are inversely related. 
B)  The real balance effect refers to the change in the purchasing power of dollar-denominated assets as a result of a change in the price level. 
C)  The aggregate demand curve slopes downward because of the real balance, interest rate, and international trade effects. 
D)  A change in the quantity demanded of Real GDP is directly brought about by a change in interest rates.

Question 11

The short-run aggregate supply curve shows the various amounts of real output that producers are willing to

Accepted Answer

A)  sell at different profit levels. 
B)  sell at different price levels. 
C)  buy at different income levels. 
D)  buy at different price levels. 
A)  sell at different profit levels. 
B)  sell at different price levels. 
C)  buy at different income levels. 
D)  buy at different price levels.

Question 12

Which of the following is not a factor that can shift the short-run aggregate supply curve?

Accepted Answer

A)  changes in the wage rate 
B)  changes in the price of energy 
C)  changes in the stock of capital goods 
D)  improvements in management techniques 
E)  none of the above 
A)  changes in the wage rate 
B)  changes in the price of energy 
C)  changes in the stock of capital goods 
D)  improvements in management techniques 
E)  none of the above

Question 13

Which of the following statements is false?

Accepted Answer

A)  An increase in wage rates causes producers to move up the SRAS curve. 
B)  An increase in the price level causes producers to move up the SRAS curve. 
C)  The SRAS curve is upward sloping. 
D)  The long-run aggregate supply curve is vertical. 
A)  An increase in wage rates causes producers to move up the SRAS curve. 
B)  An increase in the price level causes producers to move up the SRAS curve. 
C)  The SRAS curve is upward sloping. 
D)  The long-run aggregate supply curve is vertical.

Question 14

An increase in labor productivity shifts the

Accepted Answer

A)  AD curve rightward. 
B)  AD curve leftward. 
C)  short-run aggregate supply (SRAS) curve leftward. 
D)  SRAS curve rightward. 
E)  none of the above 
A)  AD curve rightward. 
B)  AD curve leftward. 
C)  short-run aggregate supply (SRAS) curve leftward. 
D)  SRAS curve rightward. 
E)  none of the above

Question 15

Exhibit 8-3
  
-Refer to Exhibit 8-3. Which of the following could not have caused a shift in aggregate demand from AD? to AD??

Accepted Answer

A)  a change in the price level 
B)  an increase in wealth 
C)  an increase in foreign real national income 
D)  a decrease in personal income taxes 
E)  a decrease in business taxes 
A)  a change in the price level 
B)  an increase in wealth 
C)  an increase in foreign real national income 
D)  a decrease in personal income taxes 
E)  a decrease in business taxes

Question 16

If investment changes because of a change in the price level,then the

Accepted Answer

A)  economy moves from one point on an AD curve to another point on the same curve. 
B)  AD curve shifts. 
C)  economy moves from one point on a SRAS curve to another point on the same curve. 
D)  SRAS curve shifts. 
E)  none of the above 
A)  economy moves from one point on an AD curve to another point on the same curve. 
B)  AD curve shifts. 
C)  economy moves from one point on a SRAS curve to another point on the same curve. 
D)  SRAS curve shifts. 
E)  none of the above

Question 17

A decrease in the price of machinery

Accepted Answer

A)  shifts the SRAS curve to the right. 
B)  shifts the SRAS curve to the left. 
C)  causes an upward movement along the existing SRAS curve. 
D)  causes a downward movement along the existing SRAS curve. 
E)  none of the above 
A)  shifts the SRAS curve to the right. 
B)  shifts the SRAS curve to the left. 
C)  causes an upward movement along the existing SRAS curve. 
D)  causes a downward movement along the existing SRAS curve. 
E)  none of the above

Question 18

A falling interest rate affects the demand for consumer __________ and shifts the AD curve to the __________.

Accepted Answer

A)  nondurables; right 
B)  nondurables; left 
C)  durables; right 
D)  durables; left 
A)  nondurables; right 
B)  nondurables; left 
C)  durables; right 
D)  durables; left

Question 19

Which set of changes is definitely predicted to lower Real GDP in the short run?

Accepted Answer

A)  Interest rates rise and wage rates fall. 
B)  Interest rates rise and there is a beneficial supply shock. 
C)  Interest rates rise and labor productivity increases. 
D)  Interest rates rise and individuals expect lower (future) incomes. 
E)  c and d 
A)  Interest rates rise and wage rates fall. 
B)  Interest rates rise and there is a beneficial supply shock. 
C)  Interest rates rise and labor productivity increases. 
D)  Interest rates rise and individuals expect lower (future) incomes. 
E)  c and d

Question 20

Foreign real national income rises.This raises U.S.___________ which ________ aggregate demand (AD).The AD curve shifts ___________.

Accepted Answer

A)  net exports; raises; rightward 
B)  imports; raises; rightward 
C)  prices; reduces; leftward 
D)  investment; reduces; leftward 
E)  none of the above 
A)  net exports; raises; rightward 
B)  imports; raises; rightward 
C)  prices; reduces; leftward 
D)  investment; reduces; leftward 
E)  none of the above

Exam 8: Aggregate Demand and Aggregate Supply

Subprime loans generally have a lower loan-to-value ratio than do prime loans.

As the price level rises,ceteris paribus,people holding some of their wealth in monetary form become

Business taxes fall.This raises __________,which raises __________ and the __________ curve shifts rightward.

An economic policy initiative results in the AD curve shifting to the right.As a result,

As the dollar depreciates,foreign goods become more expensive for Americans.

Exhibit 8-4 -Refer to Exhibit 8-4. A shift in short-run aggregate supply from SRAS? to SRAS? would have been the result of

Short-run equilibrium exists

The purchases made by the foreign sector are called __________; the purchases made by the household sector are called __________; the purchases made by the government sector are called __________; and the purchases made by the business sector are called investment.

Which of the following statements is false?

Which of the following questions is false?

The short-run aggregate supply curve shows the various amounts of real output that producers are willing to

Which of the following is not a factor that can shift the short-run aggregate supply curve?

Which of the following statements is false?

An increase in labor productivity shifts the

Exhibit 8-3 -Refer to Exhibit 8-3. Which of the following could not have caused a shift in aggregate demand from AD? to AD??

If investment changes because of a change in the price level,then the

A decrease in the price of machinery

A falling interest rate affects the demand for consumer __________ and shifts the AD curve to the __________.

Which set of changes is definitely predicted to lower Real GDP in the short run?

Foreign real national income rises.This raises U.S.___________ which ________ aggregate demand (AD).The AD curve shifts ___________.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

Business taxes fall.This raises ,which raises and the __ curve shifts rightward.

The purchases made by the foreign sector are called ; the purchases made by the household sector are called ; the purchases made by the government sector are called __; and the purchases made by the business sector are called investment.

A falling interest rate affects the demand for consumer and shifts the AD curve to the .

Foreign real national income rises.This raises U.S._ which aggregate demand (AD).The AD curve shifts _.