Question 1

Explain how aggregate demand and aggregate supply may affect your job prospects after you leave college.Support your answer with an appropriate example.

Accepted Answer

The ability to find a job depe

Question 2

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 3

Velocity is the average number of times a dollar is spent to buy

Accepted Answer

A) final goods and services in a year. 
B) final and intermediate goods and services in a year. 
C) final goods,but not services,in a year. 
D) services in a year. 
A) final goods and services in a year. 
B) final and intermediate goods and services in a year. 
C) final goods,but not services,in a year. 
D) services in a year.

Question 4

As the U.S.dollar appreciates against foreign currencies,the U.S.____________ curve shifts _____________ resulting in a(n)_________________ in the U.S.price level and a(n)_________________ in Real GDP in the United States.

Accepted Answer

A) AD;leftward;decrease;decrease 
B) AD;rightward;increase;increase 
C) SRAS;rightward;decrease;increase 
D) SRAS;leftward;increase;decrease 
A) AD;leftward;decrease;decrease 
B) AD;rightward;increase;increase 
C) SRAS;rightward;decrease;increase 
D) SRAS;leftward;increase;decrease

Question 5

If wage rates rise at the same time that labor productivity increases,what is the effect on short-run aggregate supply (SRAS)?

Accepted Answer

A) SRAS rises. 
B) SRAS falls. 
C) SRAS remains constant. 
D) SRAS may rise,fall,or remain constant. 
A) SRAS rises. 
B) SRAS falls. 
C) SRAS remains constant. 
D) SRAS may rise,fall,or remain constant.

Question 6

The short-run aggregate supply curve is

Accepted Answer

A) downward sloping. 
B) upward sloping. 
C) vertical. 
D) horizontal. 
A) downward sloping. 
B) upward sloping. 
C) vertical. 
D) horizontal.

Question 7

Starting from short-run equilibrium,the following occurs: personal income taxes are cut,business taxes are cut,and labor productivity rises.What is the effect on the price level and Real GDP in the short run?

Accepted Answer

A) Real GDP rises and the price level necessarily falls. 
B) Real GDP rises and the price level necessarily rises. 
C) Real GDP falls and the price level necessarily remains the same. 
D) Real GDP rises and the effect on the price level cannot be determined. 
E) Real GDP rises and the price level necessarily remains the same. 
A) Real GDP rises and the price level necessarily falls. 
B) Real GDP rises and the price level necessarily rises. 
C) Real GDP falls and the price level necessarily remains the same. 
D) Real GDP rises and the effect on the price level cannot be determined. 
E) Real GDP rises and the price level necessarily remains the same.

Question 8

Exhibit 8-1  
-Refer to Exhibit 8-2.Based on the given change,what word (rises or falls)should go in blank (5)and blank (6),respectively,to summarize the resulting impact on short run equilibrium?

Accepted Answer

A) rises;rises 
B) falls;falls 
C) rises;falls 
D) falls;rises 
A) rises;rises 
B) falls;falls 
C) rises;falls 
D) falls;rises

Question 9

In short-run equilibrium,the quantities supplied and demanded of Real GDP can be less than or greater than Natural Real GDP.

Accepted Answer

A) True 
 B)False

Question 10

Starting from short-run equilibrium,the following occurs: individuals expect higher (future)incomes and 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 rises. 
B) The price level falls and Real GDP falls. 
C) The price level rises,but the effect on Real GDP cannot be determined. 
D) Real GDP rises,but the effect on the price level cannot be determined. 
E) Real GDP falls,but the effect on the price level cannot be determined. 
A) The price level rises and Real GDP rises. 
B) The price level falls and Real GDP falls. 
C) The price level rises,but the effect on Real GDP cannot be determined. 
D) Real GDP rises,but the effect on the price level cannot be determined. 
E) Real GDP falls,but the effect on the price level cannot be determined.

Question 11

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 12

If some of a person's wealth is in cash,it follows that

Accepted Answer

A) this person's monetary wealth will change as the price level changes. 
B) this person's monetary wealth will not change as the price level changes. 
C) this person is wealthier than a person who holds all his wealth in nonmonetary form. 
D) a and c 
E) b and c 
A) this person's monetary wealth will change as the price level changes. 
B) this person's monetary wealth will not change as the price level changes. 
C) this person is wealthier than a person who holds all his wealth in nonmonetary form. 
D) a and c 
E) b and c

Question 13

A decrease in the price level

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 14

If the price level remains constant but the wage rate increases,then there will be __________ in production and the SRAS curve will shift __________.

Accepted Answer

A) an increase;rightward 
B) a decrease;rightward 
C) an increase;leftward 
D) a decrease;leftward 
A) an increase;rightward 
B) a decrease;rightward 
C) an increase;leftward 
D) a decrease;leftward

Question 15

After an adverse supply shock occurs,the ____________ curve shifts _____________ resulting in a(n)_________________ in the price level and a(n)________________ in Real GDP.

Accepted Answer

A) AD;leftward;decrease;decrease 
B) AD;rightward;increase;increase 
C) SRAS;rightward;decrease;increase 
D) SRAS;leftward;increase;decrease 
A) AD;leftward;decrease;decrease 
B) AD;rightward;increase;increase 
C) SRAS;rightward;decrease;increase 
D) SRAS;leftward;increase;decrease

Question 16

An increase in the price of a nonlabor input such as oil will cause

Accepted Answer

A) a movement down the SRAS curve. 
B) a movement up the SRAS curve. 
C) a leftward shift in the SRAS curve. 
D) a rightward shift in the SRAS curve. 
E) no change regarding the SRAS curve. 
A) a movement down the SRAS curve. 
B) a movement up the SRAS curve. 
C) a leftward shift in the SRAS curve. 
D) a rightward shift in the SRAS curve. 
E) no change regarding the SRAS curve.

Question 17

Which of the following will cause a movement from one point on an AD curve to another point on the same AD curve?

Accepted Answer

A) a change in consumption 
B) a change in government expenditures 
C) a change in net exports 
D) a change in the price level 
E) all of the above 
A) a change in consumption 
B) a change in government expenditures 
C) a change in net exports 
D) a change in the price level 
E) all of the above

Question 18

A decrease in the money supply may __________ total expenditures and thus __________ aggregate demand.

Accepted Answer

A) raise;raise 
B) raise;lower 
C) lower;raise 
D) lower;lower 
A) raise;raise 
B) raise;lower 
C) lower;raise 
D) lower;lower

Question 19

Greater wealth makes people _____________ willing to spend on consumption,causing __________ the economy's AD curve.

Accepted Answer

A) more;movement down along 
B) more;a rightward shift of 
C) less;movement up along 
D) less;a rightward shift of 
A) more;movement down along 
B) more;a rightward shift of 
C) less;movement up along 
D) less;a rightward shift of

Question 20

As the interest rate rises,the cost of a given investment project __________ and businesses invest __________.

Accepted Answer

A) rises;more 
B) rises;less 
C) falls;more 
D) falls;less 
A) rises;more 
B) rises;less 
C) falls;more 
D) falls;less

Exam 8: Aggregate Demand and Aggregate Supply

Explain how aggregate demand and aggregate supply may affect your job prospects after you leave college.Support your answer with an appropriate example.

Which of the following statements is false?

Velocity is the average number of times a dollar is spent to buy

As the U.S.dollar appreciates against foreign currencies,the U.S.____________ curve shifts _____________ resulting in a(n)_________________ in the U.S.price level and a(n)_________________ in Real GDP in the United States.

If wage rates rise at the same time that labor productivity increases,what is the effect on short-run aggregate supply (SRAS)?

The short-run aggregate supply curve is

Starting from short-run equilibrium,the following occurs: personal income taxes are cut,business taxes are cut,and labor productivity rises.What is the effect on the price level and Real GDP in the short run?

Exhibit 8-1 -Refer to Exhibit 8-2.Based on the given change,what word (rises or falls)should go in blank (5)and blank (6),respectively,to summarize the resulting impact on short run equilibrium?

In short-run equilibrium,the quantities supplied and demanded of Real GDP can be less than or greater than Natural Real GDP.

Starting from short-run equilibrium,the following occurs: individuals expect higher (future)incomes and wage rates rise.What is the effect on the price level and Real GDP in the short run?

An increase in labor productivity shifts the

If some of a person's wealth is in cash,it follows that

A decrease in the price level

If the price level remains constant but the wage rate increases,then there will be __________ in production and the SRAS curve will shift __________.

After an adverse supply shock occurs,the ____________ curve shifts _____________ resulting in a(n)_________________ in the price level and a(n)________________ in Real GDP.

An increase in the price of a nonlabor input such as oil will cause

Which of the following will cause a movement from one point on an AD curve to another point on the same AD curve?

A decrease in the money supply may __________ total expenditures and thus __________ aggregate demand.

Greater wealth makes people _____________ willing to spend on consumption,causing __________ the economy's AD curve.

As the interest rate rises,the cost of a given investment project __________ and businesses invest __________.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, controlled, and Relative

Supply,demand,and Price: Applications

Macroeconomic Measurements, part I: Prices and Unemployment

Macroeconomic Measurements, part II: 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

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

Filters

As the U.S.dollar appreciates against foreign currencies,the U.S.______ curve shifts _ resulting in a(n)_ in the U.S.price level and a(n)_______ in Real GDP in the United States.

If the price level remains constant but the wage rate increases,then there will be in production and the SRAS curve will shift .

After an adverse supply shock occurs,the ______ curve shifts _ resulting in a(n)_ in the price level and a(n)______ in Real GDP.

A decrease in the money supply may total expenditures and thus aggregate demand.

Greater wealth makes people ___ willing to spend on consumption,causing the economy's AD curve.

As the interest rate rises,the cost of a given investment project and businesses invest .