Question 1

Which of the following statements is false?

Accepted Answer

A) Some prices in an economy adjust faster than other prices. 
B) Aggregate demand curves slope downward. 
C) Firms may not adjust their prices immediately because they may be unable to figure out whether a decline in demand is temporary or permanent. 
D) The absolute price of a good is the dollar or money price of the good. 
E) none of the above 
A) Some prices in an economy adjust faster than other prices. 
B) Aggregate demand curves slope downward. 
C) Firms may not adjust their prices immediately because they may be unable to figure out whether a decline in demand is temporary or permanent. 
D) The absolute price of a good is the dollar or money price of the good. 
E) none of the above

Question 2

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 3

A rise in wage rates

Accepted Answer

A) causes the AD curve to shift leftward. 
B) causes the short-run aggregate supply (SRAS)curve to shift rightward. 
C) does not affect the present position of the SRAS curve. 
D) causes the AD curve to shift rightward. 
E) causes the SRAS curve to shift leftward. 
A) causes the AD curve to shift leftward. 
B) causes the short-run aggregate supply (SRAS)curve to shift rightward. 
C) does not affect the present position of the SRAS curve. 
D) causes the AD curve to shift rightward. 
E) causes the SRAS curve to shift leftward.

Question 4

The short-run aggregate supply (SRAS)curve shows the quantity

Accepted Answer

A) demanded of all goods and services at different price levels,ceteris paribus. 
B) supplied of all goods and services at a particular price level,ceteris paribus. 
C) supplied of all goods and services at different price levels,ceteris paribus. 
D) supplied of GDP at a particular price level,ceteris paribus. 
A) demanded of all goods and services at different price levels,ceteris paribus. 
B) supplied of all goods and services at a particular price level,ceteris paribus. 
C) supplied of all goods and services at different price levels,ceteris paribus. 
D) supplied of GDP at a particular price level,ceteris paribus.

Question 5

Exhibit 8-1  
-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point B.If businesses become pessimistic about future sales,at which point is the economy most likely to end up in the short run?

Accepted Answer

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

Question 6

Exhibit 8-1  
-Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If wage rates rise,at which point is the economy most likely to end up in the short run?

Accepted Answer

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

Question 7

An increase in the interest rate __________ purchases of consumer __________.

Accepted Answer

A) increases;durables 
B) increases;nondurables 
C) reduces;durables 
D) reduces;nondurables 
A) increases;durables 
B) increases;nondurables 
C) reduces;durables 
D) reduces;nondurables

Question 8

Exhibit 8-4  
-Refer to Exhibit 8-4.A shift in short-run aggregate supply from SRAS2 to SRAS1 could have been the result of

Accepted Answer

A) a decrease in the price level. 
B) an increase in the price level. 
C) an increase in wage rates. 
D) a decrease in wage rates. 
A) a decrease in the price level. 
B) an increase in the price level. 
C) an increase in wage rates. 
D) a decrease in wage rates.

Question 9

If consumption changes because of a change in a factor other than 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 short-run aggregate supply (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 short-run aggregate supply (SRAS)curve to another point on the same curve. 
D) SRAS curve shifts. 
E) none of the above

Question 10

Starting from short-run equilibrium,the following occurs: the U.S.dollar depreciates and wage rates rise.Moreover,the effect on the economy from the dollar depreciating is stronger than the effect on the economy from rising wage rates.What is the effect on the price level and Real GDP in the short run?

Accepted Answer

A) The price level falls and Real GDP falls. 
B) The price level rises and Real GDP falls. 
C) The price level falls and Real GDP rises. 
D) The price level rises and Real GDP rises. 
E) none of the above 
A) The price level falls and Real GDP falls. 
B) The price level rises and Real GDP falls. 
C) The price level falls and Real GDP rises. 
D) The price level rises and Real GDP rises. 
E) none of the above

Question 11

If the nominal wage is $12 per hour and the price level (as measured by a price index)is 2,it follows that the real wage is _________ per hour.

Accepted Answer

A) $24.00 
B) $6.00 
C) $2.50 
D) $14.00. 
E) none of the above 
A) $24.00 
B) $6.00 
C) $2.50 
D) $14.00. 
E) none of the above

Question 12

A change in the quantity demanded of Real GDP is graphically represented as a

Accepted Answer

A) shift in the AD curve. 
B) movement from one point on the AD curve to another point on the same curve. 
C) movement from a point on the AD curve to a point on the SRAS curve. 
D) shift in the real balance effect curve. 
E) shift in the interest rate effect curve. 
A) shift in the AD curve. 
B) movement from one point on the AD curve to another point on the same curve. 
C) movement from a point on the AD curve to a point on the SRAS curve. 
D) shift in the real balance effect curve. 
E) shift in the interest rate effect curve.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

A decrease in the price of a nonlabor input such as electricity 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 15

An increase in labor's productivity will cause the SRAS curve to shift __________ and the price level to __________.

Accepted Answer

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

Question 16

The level of Real GDP that the economy produces in long-run equilibrium is Natural Real GDP.

Accepted Answer

A) True 
 B)False

Question 17

A rise in the price level prompts an increase in the demand for credit.This is relevant to the __________ effect.

Accepted Answer

A) international trade 
B) real balance 
C) aggregate demand 
D) interest rate 
E) b and c 
A) international trade 
B) real balance 
C) aggregate demand 
D) interest rate 
E) b and c

Question 18

As interest rates rise,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 19

Exhibit 8-1  
-Refer to Exhibit 8-1.If we assume that Real GDP and the unemployment rate are inversely related,which of the points on this graph is most likely representative of the highest unemployment rate?

Accepted Answer

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

Question 20

The AD curve shows the various amounts of real output that people are willing and able to

Accepted Answer

A) buy at different income levels. 
B) buy at different price levels. 
C) sell at different profit levels. 
D) sell at different price levels. 
E) none of the above 
A) buy at different income levels. 
B) buy at different price levels. 
C) sell at different profit levels. 
D) sell at different price levels. 
E) none of the above

Exam 8: Aggregate Demand and Aggregate Supply

Which of the following statements is false?

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

A rise in wage rates

The short-run aggregate supply (SRAS)curve shows the quantity

Exhibit 8-1 -Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point B.If businesses become pessimistic about future sales,at which point is the economy most likely to end up in the short run?

Exhibit 8-1 -Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If wage rates rise,at which point is the economy most likely to end up in the short run?

An increase in the interest rate __________ purchases of consumer __________.

Exhibit 8-4 -Refer to Exhibit 8-4.A shift in short-run aggregate supply from SRAS2 to SRAS1 could have been the result of

If consumption changes because of a change in a factor other than the price level,then the

If the nominal wage is $12 per hour and the price level (as measured by a price index)is 2,it follows that the real wage is _________ per hour.

A change in the quantity demanded of Real GDP is graphically represented as a

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

A decrease in the price of a nonlabor input such as electricity will cause

An increase in labor's productivity will cause the SRAS curve to shift __________ and the price level to __________.

The level of Real GDP that the economy produces in long-run equilibrium is Natural Real GDP.

A rise in the price level prompts an increase in the demand for credit.This is relevant to the __________ effect.

As interest rates rise,the ____________ curve shifts _____________ resulting in a(n)_________________ in the price level and a(n)________________ in Real GDP.

Exhibit 8-1 -Refer to Exhibit 8-1.If we assume that Real GDP and the unemployment rate are inversely related,which of the points on this graph is most likely representative of the highest unemployment rate?

The AD curve shows the various amounts of real output that people are willing and able to

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

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

An increase in the interest rate purchases of consumer .

Exhibit 8-4 -Refer to Exhibit 8-4.A shift in short-run aggregate supply from SRAS₂ to SRAS₁ could have been the result of

An increase in labor's productivity will cause the SRAS curve to shift and the price level to .

As interest rates rise,the ______ curve shifts _ resulting in a(n)_ in the price level and a(n)______ in Real GDP.