Question 1

As the price level rises

Accepted Answer

A) people are more willing to lend, so interest rates rise. 
B) people are more willing to lend, so interest rates fall. 
C) people are less willing to lend, so interest rates fall. 
D) people are less willing to lend, so interest rates rise. 
A) people are more willing to lend, so interest rates rise. 
B) people are more willing to lend, so interest rates fall. 
C) people are less willing to lend, so interest rates fall. 
D) people are less willing to lend, so interest rates rise.

Question 2

Refer to Financial Crisis. In the long run, if the Fed does not respond, the change in price expectations created by the crisis shifts

Accepted Answer

A) aggregate demand right. 
B) aggregate demand left. 
C) short-run aggregate supply right. 
D) short-run aggregate supply left. 
A) aggregate demand right. 
B) aggregate demand left. 
C) short-run aggregate supply right. 
D) short-run aggregate supply left.

Question 3

Other things the same, if the long-run aggregate supply curve shifts left, prices

Accepted Answer

A) and output both increase. 
B) and output both decrease. 
C) increase and output decreases. 
D) decrease and output increases. 
A) and output both increase. 
B) and output both decrease. 
C) increase and output decreases. 
D) decrease and output increases.

Question 4

Policymakers who control monetary and fiscal policy and want to offset the effects on output of an economic contraction caused by a shift in aggregate supply could use policy to shift

Accepted Answer

A) aggregate supply to the right. 
B) aggregate supply to the left. 
C) aggregate demand to the right. 
D) aggregate demand to the left. 
A) aggregate supply to the right. 
B) aggregate supply to the left. 
C) aggregate demand to the right. 
D) aggregate demand to the left.

Question 5

During the 2008-2009 unemployment rose from about 4.4% to about

Accepted Answer

A) 6% 
B) 8% 
C) 10% 
D) 12% 
A) 6% 
B) 8% 
C) 10% 
D) 12%

Question 6

In which case can we be sure aggregate demand shifts left overall?

Accepted Answer

A) people want to save more for retirement and the Fed increases the money supply. 
B) people want to save more for retirement and the Fed decreases the money supply. 
C) people want to save less for retirement and the Fed increases the money supply. 
D) people want to save less for retirement and the Fed decreases the money supply. 
A) people want to save more for retirement and the Fed increases the money supply. 
B) people want to save more for retirement and the Fed decreases the money supply. 
C) people want to save less for retirement and the Fed increases the money supply. 
D) people want to save less for retirement and the Fed decreases the money supply.

Question 7

Most economists believe that classical theory describes the world in the short run but not in the long run.

Accepted Answer

A) True 
 B)False

Question 8

The long-run trend in real GDP is upward. How is this possible given business cycles? What explains the upward trend?

Accepted Answer

There are occasional short-lived periods

Question 9

A decrease in the money supply will shift the long-run aggregate-supply curve to the left.​

Accepted Answer

A) True 
 B)False

Question 10

Suppose the government raises taxes. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Accepted Answer

The aggreg

Question 11

Other things the same, a decrease in the price level makes consumers feel

Accepted Answer

A) less wealthy, so the quantity of goods and services demanded falls. 
B) less wealthy, so the quantity of goods and services demanded rises. 
C) more wealthy, so the quantity of goods and services demanded rises. 
D) more wealthy, so the quantity of goods and services demanded falls. 
A) less wealthy, so the quantity of goods and services demanded falls. 
B) less wealthy, so the quantity of goods and services demanded rises. 
C) more wealthy, so the quantity of goods and services demanded rises. 
D) more wealthy, so the quantity of goods and services demanded falls.

Question 12

Suppose that the economy is at long-run equilibrium. If there is a sharp rise in the stock market combined with a significant increase in the minimum wage, then in the short run

Accepted Answer

A) real GDP will rise and the price level might rise, fall, or stay the same. 
B) real GDP will fall and the price level might rise, fall, or stay the same. 
C) the price level will rise, and real GDP might rise, fall, or stay the same. 
D) the price level will fall, and real GDP might rise, fall, or stay the same. 
A) real GDP will rise and the price level might rise, fall, or stay the same. 
B) real GDP will fall and the price level might rise, fall, or stay the same. 
C) the price level will rise, and real GDP might rise, fall, or stay the same. 
D) the price level will fall, and real GDP might rise, fall, or stay the same.

Question 13

If there are sticky wages, and the price level is greater than what was expected, then

Accepted Answer

A) the quantity of aggregate goods and services supplied falls, which is shown by a shift of the short-run aggregate supply curve to the left. 
B) the quantity of aggregate goods and services supplied falls, as shown by a movement to the left along the short-run aggregate supply curve. 
C) the quantity of aggregate goods and services supplied rises, as shown by a shift of the short-run aggregate supply curve to the right. 
D) the quantity of aggregate goods and services supplied rises, as shown by a movement to the right along the short-run aggregate supply curve. 
A) the quantity of aggregate goods and services supplied falls, which is shown by a shift of the short-run aggregate supply curve to the left. 
B) the quantity of aggregate goods and services supplied falls, as shown by a movement to the left along the short-run aggregate supply curve. 
C) the quantity of aggregate goods and services supplied rises, as shown by a shift of the short-run aggregate supply curve to the right. 
D) the quantity of aggregate goods and services supplied rises, as shown by a movement to the right along the short-run aggregate supply curve.

Question 14

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

Accepted Answer

A) both investment and consumption 
B) consumption but not investment 
C) investment but not consumption 
D) neither investment nor consumption 
A) both investment and consumption 
B) consumption but not investment 
C) investment but not consumption 
D) neither investment nor consumption

Question 15

Which of the following shifts the long-run aggregate supply curve to the left?

Accepted Answer

A) either an increase in the price of imported natural resources or a reduction in trade restrictions. 
B) neither an increase in the price of imported natural resources or a reduction in trade restrictions. 
C) an increase in the price of imported natural resources and an increase in trade restrictions. 
D) an increase in trade restrictions and a decrease in the price of imported natural resources. 
A) either an increase in the price of imported natural resources or a reduction in trade restrictions. 
B) neither an increase in the price of imported natural resources or a reduction in trade restrictions. 
C) an increase in the price of imported natural resources and an increase in trade restrictions. 
D) an increase in trade restrictions and a decrease in the price of imported natural resources.

Question 16

Figure 33-10.  
-Refer to Figure 33-10. If the economy starts at point C, stagflation would be consistent with point

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
A) A. 
B) B. 
C) C. 
D) D.

Question 17

When the price level falls

Accepted Answer

A) households want to lend less. 
B) the interest rate rises. 
C) firms want to spend less on investment goods. 
D) None of the above are correct. 
A) households want to lend less. 
B) the interest rate rises. 
C) firms want to spend less on investment goods. 
D) None of the above are correct.

Question 18

Other things the same, as the price level falls, the exchange rate rises. A rise in the exchange rate leads to a decrease in net exports.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following explains why production rises in most years?

Accepted Answer

A) increases in the labor force 
B) increases in the capital stock 
C) advances in technological knowledge 
D) All of the above are correct. 
A) increases in the labor force 
B) increases in the capital stock 
C) advances in technological knowledge 
D) All of the above are correct.

Question 20

The aggregate demand curve shifts left if either

Accepted Answer

A) speculators gain confidence in U.S. assets or foreign countries enter into recession. 
B) speculators gain confidence in U.S. assets or recessions in foreign countries end. 
C) speculators lose confidence in U.S. assets or foreign countries enter into recession. 
D) speculators lose confidence in U.S. assets or recessions in foreign countries end. 
A) speculators gain confidence in U.S. assets or foreign countries enter into recession. 
B) speculators gain confidence in U.S. assets or recessions in foreign countries end. 
C) speculators lose confidence in U.S. assets or foreign countries enter into recession. 
D) speculators lose confidence in U.S. assets or recessions in foreign countries end.

Exam 33: Aggregate Demand and Aggregate Supply

As the price level rises

Refer to Financial Crisis. In the long run, if the Fed does not respond, the change in price expectations created by the crisis shifts

Other things the same, if the long-run aggregate supply curve shifts left, prices

Policymakers who control monetary and fiscal policy and want to offset the effects on output of an economic contraction caused by a shift in aggregate supply could use policy to shift

During the 2008-2009 unemployment rose from about 4.4% to about

In which case can we be sure aggregate demand shifts left overall?

Most economists believe that classical theory describes the world in the short run but not in the long run.

The long-run trend in real GDP is upward. How is this possible given business cycles? What explains the upward trend?

A decrease in the money supply will shift the long-run aggregate-supply curve to the left.​

Suppose the government raises taxes. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Other things the same, a decrease in the price level makes consumers feel

Suppose that the economy is at long-run equilibrium. If there is a sharp rise in the stock market combined with a significant increase in the minimum wage, then in the short run

If there are sticky wages, and the price level is greater than what was expected, then

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

Which of the following shifts the long-run aggregate supply curve to the left?

Figure 33-10. -Refer to Figure 33-10. If the economy starts at point C, stagflation would be consistent with point

When the price level falls

Other things the same, as the price level falls, the exchange rate rises. A rise in the exchange rate leads to a decrease in net exports.

Which of the following explains why production rises in most years?

The aggregate demand curve shifts left if either

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

A decrease in the money supply will shift the long-run aggregate-supply curve to the left.