Question 1

Which of the following will not lead to a leftward shift in the SRAS curve?

Accepted Answer

A)  an increase in wage rates 
B)  an increase in the prices of nonlabor inputs 
C)  an increase in productivity 
D)  an adverse supply shock 
A)  an increase in wage rates 
B)  an increase in the prices of nonlabor inputs 
C)  an increase in productivity 
D)  an adverse supply shock

Question 2

In short-run equilibrium,it is always true that

Accepted Answer

A)  quantity demanded of Real GDP = quantity supplied of Real GDP = Natural Real GDP. 
B)  quantity demanded of Real GDP > quantity supplied of Real GDP. 
C)  quantity demanded of Real GDP = quantity supplied of Real GDP. 
D)  a and b 
E)  There is not enough information to answer the question. 
A)  quantity demanded of Real GDP = quantity supplied of Real GDP = Natural Real GDP. 
B)  quantity demanded of Real GDP > quantity supplied of Real GDP. 
C)  quantity demanded of Real GDP = quantity supplied of Real GDP. 
D)  a and b 
E)  There is not enough information to answer the question.

Question 3

Part of the story of the interest rate effect is that a lower price level causes __________ in the demand for credit,which then causes the interest rate to __________.

Accepted Answer

A)  a decrease; fall 
B)  a decrease; rise 
C)  an increase; fall 
D)  an increase; rise 
A)  a decrease; fall 
B)  a decrease; rise 
C)  an increase; fall 
D)  an increase; rise

Question 4

Starting from short-run equilibrium,wage rates rise.What is the effect on the price level and Real GDP in the short run?

Accepted Answer

A)  The price level rises and Real GDP falls. 
B)  The price level falls and Real GDP rises. 
C)  The price level rises and Real GDP rises. 
D)  The price level falls Real GDP falls. 
A)  The price level rises and Real GDP falls. 
B)  The price level falls and Real GDP rises. 
C)  The price level rises and Real GDP rises. 
D)  The price level falls Real GDP falls.

Question 5

Which of the following statements represents a correct and sequentially accurate economic explanation?

Accepted Answer

A)  Business taxes rise,investment falls,total expenditures on goods and services falls,AD rises,and the AD curve shifts rightward. 
B)  The dollar depreciates,net exports rise,total expenditures on goods and services rises,AD rises,and the AD curve shifts rightward. 
C)  The interest rate falls,consumption rises,total expenditures on goods and services rises,AD rises,and the AD curve shifts rightward. 
D)  b and c 
E)  a,b,and c 
A)  Business taxes rise,investment falls,total expenditures on goods and services falls,AD rises,and the AD curve shifts rightward. 
B)  The dollar depreciates,net exports rise,total expenditures on goods and services rises,AD rises,and the AD curve shifts rightward. 
C)  The interest rate falls,consumption rises,total expenditures on goods and services rises,AD rises,and the AD curve shifts rightward. 
D)  b and c 
E)  a,b,and c

Question 6

Suppose a drop in prices in the stock market makes people feel less financially secure.This would cause __________ the economy's AD curve.

Accepted Answer

A)  movement down along 
B)  movement up along 
C)  a rightward shift of 
D)  a leftward shift of 
A)  movement down along 
B)  movement up along 
C)  a rightward shift of 
D)  a leftward shift of

Question 7

The aggregate demand (AD)curve is the graphical representation of production in the short run.

Accepted Answer

A) True 
 B)False

Question 8

An increase in the price of nonlabor inputs

Accepted Answer

A)  shifts the AD curve leftward. 
B)  shifts the SRAS curve leftward. 
C)  is the same thing as a beneficial supply shock. 
D)  shifts the AD curve rightward. 
E)  shifts the SRAS curve rightward. 
A)  shifts the AD curve leftward. 
B)  shifts the SRAS curve leftward. 
C)  is the same thing as a beneficial supply shock. 
D)  shifts the AD curve rightward. 
E)  shifts the SRAS curve rightward.

Question 9

When the dollar appreciates,U.S.net exports fall and aggregate demand decreases.

Accepted Answer

A) True 
 B)False

Question 10

Unusually good weather that improves crop production and a major oil discovery are both examples of a beneficial supply shock.

Accepted Answer

A) True 
 B)False

Question 11

The economy suffers an adverse supply shock.As a result,in the short run Real GDP will __________ and the price level will __________.

Accepted Answer

A)  rise; rise 
B)  fall; fall 
C)  fall; remain constant 
D)  fall; rise 
E)  rise; fall 
A)  rise; rise 
B)  fall; fall 
C)  fall; remain constant 
D)  fall; rise 
E)  rise; fall

Question 12

Suppose consumption increases at each price level.As a result,aggregate demand __________,and the AD curve shifts __________.

Accepted Answer

A)  increases; leftward 
B)  decreases; leftward 
C)  increases; rightward 
D)  decreases; rightward 
A)  increases; leftward 
B)  decreases; leftward 
C)  increases; rightward 
D)  decreases; rightward

Question 13

The real balance effect is the change in

Accepted Answer

A)  purchasing power that results from a change in income. 
B)  the amount of money one has that results from a change in income. 
C)  purchasing power that results from a change in the price level. 
D)  the amount of money one has that results from a change in the price level. 
E)  none of the above 
A)  purchasing power that results from a change in income. 
B)  the amount of money one has that results from a change in income. 
C)  purchasing power that results from a change in the price level. 
D)  the amount of money one has that results from a change in the price level. 
E)  none of the above

Question 14

As the price level falls,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 15

A fall in the price level changes the purchasing power of money.This is relevant to the __________ effect.

Accepted Answer

A)  international trade 
B)  real balance 
C)  aggregate demand 
D)  interest rate 
E)  aggregate supply 
A)  international trade 
B)  real balance 
C)  aggregate demand 
D)  interest rate 
E)  aggregate supply

Question 16

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

Accepted Answer

A)  Wealth increases and there is an adverse supply shock. 
B)  Individuals expect higher (future)incomes and wage rates fall. 
C)  Business taxes rise and wage rates fall. 
D)  The U.S.dollar appreciates and there is a beneficial supply shock. 
E)  none of the above 
A)  Wealth increases and there is an adverse supply shock. 
B)  Individuals expect higher (future)incomes and wage rates fall. 
C)  Business taxes rise and wage rates fall. 
D)  The U.S.dollar appreciates and there is a beneficial supply shock. 
E)  none of the above

Question 17

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 18

Which of the following statements is true?

Accepted Answer

A)  A decrease in wage rates will shift the SRAS curve to the left. 
B)  An adverse supply shock will shift the SRAS curve to the left. 
C)  A fall in the prices of nonlabor inputs will shift the SRAS curve to the left. 
D)  An increase in labor productivity will shift the SRAS curve to the left. 
E)  c and d 
A)  A decrease in wage rates will shift the SRAS curve to the left. 
B)  An adverse supply shock will shift the SRAS curve to the left. 
C)  A fall in the prices of nonlabor inputs will shift the SRAS curve to the left. 
D)  An increase in labor productivity will shift the SRAS curve to the left. 
E)  c and d

Question 19

In a two-country world,an increase in foreign input prices,ceteris paribus,

Accepted Answer

A)  shifts the SRAS curve leftward,causing the price level to increase. 
B)  shifts the SRAS curve leftward,causing the price level to decrease. 
C)  shifts the SRAS curve rightward,causing the price level to increase. 
D)  shifts the SRAS curve rightward,causing the price level to decrease. 
E)  does not affect the SRAS curve or the price level. 
A)  shifts the SRAS curve leftward,causing the price level to increase. 
B)  shifts the SRAS curve leftward,causing the price level to decrease. 
C)  shifts the SRAS curve rightward,causing the price level to increase. 
D)  shifts the SRAS curve rightward,causing the price level to decrease. 
E)  does not affect the SRAS curve or the price level.

Question 20

An increase in the price level

Accepted Answer

A)  shifts the AD curve to the right. 
B)  shifts the AD curve to the left. 
C)  causes an upward movement along the existing AD curve. 
D)  causes a downward movement along the existing AD curve. 
E)  a and c 
A)  shifts the AD curve to the right. 
B)  shifts the AD curve to the left. 
C)  causes an upward movement along the existing AD curve. 
D)  causes a downward movement along the existing AD curve. 
E)  a and c

Exam 8: Production and Costs

Which of the following will not lead to a leftward shift in the SRAS curve?

In short-run equilibrium,it is always true that

Part of the story of the interest rate effect is that a lower price level causes __________ in the demand for credit,which then causes the interest rate to __________.

Starting from short-run equilibrium,wage rates rise.What is the effect on the price level and Real GDP in the short run?

Which of the following statements represents a correct and sequentially accurate economic explanation?

Suppose a drop in prices in the stock market makes people feel less financially secure.This would cause __________ the economy's AD curve.

The aggregate demand (AD)curve is the graphical representation of production in the short run.

An increase in the price of nonlabor inputs

When the dollar appreciates,U.S.net exports fall and aggregate demand decreases.

Unusually good weather that improves crop production and a major oil discovery are both examples of a beneficial supply shock.

The economy suffers an adverse supply shock.As a result,in the short run Real GDP will __________ and the price level will __________.

Suppose consumption increases at each price level.As a result,aggregate demand __________,and the AD curve shifts __________.

The real balance effect is the change in

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

A fall in the price level changes the purchasing power of money.This is relevant to the __________ effect.

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

Which of the following statements is false?

Which of the following statements is true?

In a two-country world,an increase in foreign input prices,ceteris paribus,

An increase in the price level

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

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,union,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

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

Filters

Part of the story of the interest rate effect is that a lower price level causes in the demand for credit,which then causes the interest rate to .

The economy suffers an adverse supply shock.As a result,in the short run Real GDP will and the price level will .

Suppose consumption increases at each price level.As a result,aggregate demand ,and the AD curve shifts .