Question 1

If some nonprice level determinant causes total spending to decrease,then the effect on aggregate demand will be a:

Accepted Answer

A)  movement upward along the curve. 
B)  movement downward along the curve. 
C)  shift to the left. 
D)  shift to the right. 
A)  movement upward along the curve. 
B)  movement downward along the curve. 
C)  shift to the left. 
D)  shift to the right.

Question 2

The short-run aggregate supply curve slopes:

Accepted Answer

A)  downward because firms can sell more, and hence, will produce more when prices are lower. 
B)  downward because firms find it costs less to purchase labor and other inputs when prices are lower and hence, they produce more. 
C)  upward because firms normally can purchase some labor and other inputs at fixed costs for some period of time. 
D)  upward because firms find that it costs more to purchase labor and other inputs when prices are higher and hence they must produce and sell more in order to make a profit. 
A)  downward because firms can sell more, and hence, will produce more when prices are lower. 
B)  downward because firms find it costs less to purchase labor and other inputs when prices are lower and hence, they produce more. 
C)  upward because firms normally can purchase some labor and other inputs at fixed costs for some period of time. 
D)  upward because firms find that it costs more to purchase labor and other inputs when prices are higher and hence they must produce and sell more in order to make a profit.

Question 3

As the price level decreases,other things being equal,

Accepted Answer

A)  aggregate demand increases. 
B)  the quantity of real gross domestic product demanded increases. 
C)  the quantity of real gross domestic product demanded decreases. 
D)  real gross domestic product supplied increases. 
A)  aggregate demand increases. 
B)  the quantity of real gross domestic product demanded increases. 
C)  the quantity of real gross domestic product demanded decreases. 
D)  real gross domestic product supplied increases.

Question 4

If you are living in a period of continued high inflation on a fixed income,the cost of the goods and services you buy ____ and your nominal income ____.

Accepted Answer

A)  decreases, decreases 
B)  increases, increases 
C)  decreases, remains the same 
D)  increases, remains the same 
A)  decreases, decreases 
B)  increases, increases 
C)  decreases, remains the same 
D)  increases, remains the same

Question 5

Short-run aggregate supply:

Accepted Answer

A)  is a fixed volume of output. 
B)  reflects how much RGDP suppliers are willing and able to produce at different price levels. 
C)  shifts only when the LRAS shifts. 
D)  is not affected at all by the price level. 
A)  is a fixed volume of output. 
B)  reflects how much RGDP suppliers are willing and able to produce at different price levels. 
C)  shifts only when the LRAS shifts. 
D)  is not affected at all by the price level.

Question 6

At a given price level,anything that changes the amount of total purchases in the economy will cause the aggregate demand curve to shift.

Accepted Answer

A) True 
 B)False

Question 7

If the price level in the United States increases,domestic goods will become relatively more expensive than foreign goods.Consumers will import more and reduce the quantity of domestic goods and services they buy.

Accepted Answer

A) True 
 B)False

Question 8

Any permanent change in the quantity of any factor of production available - capital,technology,land,or labor - can cause a shift in both the long-run and short-run aggregate supply curves.

Accepted Answer

A) True 
 B)False

Question 9

Ceteris paribus,which of the following would cause the aggregate demand curve to shift to the right?

Accepted Answer

A)  higher personal taxes 
B)  a rise in consumer confidence 
C)  reduced stock market wealth 
D)  a reduction in transfer payments 
A)  higher personal taxes 
B)  a rise in consumer confidence 
C)  reduced stock market wealth 
D)  a reduction in transfer payments

Question 10

Cost-push inflation is caused by:

Accepted Answer

A)  an increase in aggregate demand. 
B)  a decrease in aggregate demand. 
C)  an increase in aggregate supply. 
D)  a decrease in aggregate supply. 
A)  an increase in aggregate demand. 
B)  a decrease in aggregate demand. 
C)  an increase in aggregate supply. 
D)  a decrease in aggregate supply.

Question 11

The short-run aggregate supply curve slopes upward because:

Accepted Answer

A)  firms normally can purchase some inputs at prices that are temporarily fixed in the short run. 
B)  firms seek maximum profits and always try to increase output in the short run. 
C)  firms purchase inputs that increase in price as the price level rises in the short run. 
D)  All of the above are correct. 
A)  firms normally can purchase some inputs at prices that are temporarily fixed in the short run. 
B)  firms seek maximum profits and always try to increase output in the short run. 
C)  firms purchase inputs that increase in price as the price level rises in the short run. 
D)  All of the above are correct.

Question 12

If some non-price level determinant causes total spending to increase,then the effect on aggregate demand will be a:

Accepted Answer

A)  movement upward along the curve. 
B)  movement downward along the curve. 
C)  shift to the left. 
D)  shift to the right. 
A)  movement upward along the curve. 
B)  movement downward along the curve. 
C)  shift to the left. 
D)  shift to the right.

Question 13

The real wealth effect is one reason for the negative slope of the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 14

According to Say's law,prolonged unemployment is impossible in the long-term classical model.

Accepted Answer

A) True 
 B)False

Question 15

Holding all other things constant,when the price level falls,interest rates:

Accepted Answer

A)  rise and firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. 
B)  rise and firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding. 
C)  falls and firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding. 
D)  falls and firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. 
A)  rise and firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. 
B)  rise and firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding. 
C)  falls and firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding. 
D)  falls and firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding.

Question 16

Exhibit 22-2   In Exhibit 22-2,which curve represents long-run aggregate supply?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  none of the above 
A)  A 
B)  B 
C)  C 
D)  none of the above

Question 17

If exports and imports both fell,but exports fell less than imports,

Accepted Answer

A)  AD would decrease. 
B)  AD would increase. 
C)  AD would be unaffected. 
D)  AD could either increase or decrease. 
A)  AD would decrease. 
B)  AD would increase. 
C)  AD would be unaffected. 
D)  AD could either increase or decrease.

Question 18

Investment will increase if business taxes ____,real interest rates ____,or if business confidence ____.

Accepted Answer

A)  increase, increases, increases 
B)  decrease, decrease, decreases 
C)  increase, increases, decreases 
D)  decrease, decrease, increases 
A)  increase, increases, increases 
B)  decrease, decrease, decreases 
C)  increase, increases, decreases 
D)  decrease, decrease, increases

Question 19

If the price of oil increased by 15 percent when oil producers believed that other prices were rising 10 percent over the same period,what would happen to the quantity of real output supplied by the oil industry?

Accepted Answer

Oil producers would be subject to the mi

Question 20

An increase in the price level will:

Accepted Answer

A)  increase the quantity of RGDP supplied, but not increase short-run aggregate supply. 
B)  decrease the quantity of RGDP supplied, but not decrease short-run aggregate supply. 
C)  increase short-run aggregate supply. 
D)  decrease short-run aggregate supply. 
A)  increase the quantity of RGDP supplied, but not increase short-run aggregate supply. 
B)  decrease the quantity of RGDP supplied, but not decrease short-run aggregate supply. 
C)  increase short-run aggregate supply. 
D)  decrease short-run aggregate supply.

Exam 22: Aggregate Demand and Aggregate Supply

If some nonprice level determinant causes total spending to decrease,then the effect on aggregate demand will be a:

The short-run aggregate supply curve slopes:

As the price level decreases,other things being equal,

If you are living in a period of continued high inflation on a fixed income,the cost of the goods and services you buy ____ and your nominal income ____.

Short-run aggregate supply:

At a given price level,anything that changes the amount of total purchases in the economy will cause the aggregate demand curve to shift.

If the price level in the United States increases,domestic goods will become relatively more expensive than foreign goods.Consumers will import more and reduce the quantity of domestic goods and services they buy.

Any permanent change in the quantity of any factor of production available - capital,technology,land,or labor - can cause a shift in both the long-run and short-run aggregate supply curves.

Ceteris paribus,which of the following would cause the aggregate demand curve to shift to the right?

Cost-push inflation is caused by:

The short-run aggregate supply curve slopes upward because:

If some non-price level determinant causes total spending to increase,then the effect on aggregate demand will be a:

The real wealth effect is one reason for the negative slope of the aggregate demand curve.

According to Say's law,prolonged unemployment is impossible in the long-term classical model.

Holding all other things constant,when the price level falls,interest rates:

Exhibit 22-2 In Exhibit 22-2,which curve represents long-run aggregate supply?

If exports and imports both fell,but exports fell less than imports,

Investment will increase if business taxes ____,real interest rates ____,or if business confidence ____.

If the price of oil increased by 15 percent when oil producers believed that other prices were rising 10 percent over the same period,what would happen to the quantity of real output supplied by the oil industry?

An increase in the price level will:

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

Filters

If you are living in a period of continued high inflation on a fixed income,the cost of the goods and services you buy and your nominal income .

Investment will increase if business taxes ,real interest rates ,or if business confidence .