Question 1

Other things the same,an increase in the price level induces less spending on

Accepted Answer

A) ​household consumption and investment. 
B) ​household consumption,but not investment. 
C) ​investment,but not household consumption. 
D) ​neither investment nor household consumption. 
A) ​household consumption and investment. 
B) ​household consumption,but not investment. 
C) ​investment,but not household consumption. 
D) ​neither investment nor household consumption.

Question 2

Which of the following shifts aggregate demand to the left?

Accepted Answer

A) an increase in the price level. 
B) households decide to save a larger fraction of their income. 
C) an increase in net exports. 
D) Congress passes a new investment tax credit. 
A) an increase in the price level. 
B) households decide to save a larger fraction of their income. 
C) an increase in net exports. 
D) Congress passes a new investment tax credit.

Question 3

Which of the following would help explain why the aggregate demand curve slopes downward?

Accepted Answer

A) An unexpectedly low price level raises the real wage,which causes firms to hire fewer workers and produce a smaller quantity of goods and services. 
B) A lower price level causes domestic interest rates to rise and the real exchange rate to appreciate,which stimulates spending on net exports. 
C) A higher price level increases real wealth,which stimulates spending on consumption. 
D) A lower price level reduces the interest rate,which encourages greater spending on investment goods. 
A) An unexpectedly low price level raises the real wage,which causes firms to hire fewer workers and produce a smaller quantity of goods and services. 
B) A lower price level causes domestic interest rates to rise and the real exchange rate to appreciate,which stimulates spending on net exports. 
C) A higher price level increases real wealth,which stimulates spending on consumption. 
D) A lower price level reduces the interest rate,which encourages greater spending on investment goods.

Question 4

Other things the same,if the U.S.price level rises,then

Accepted Answer

A) the supply of dollars in the market for foreign-currency exchange increases,and net exports fall. 
B) the supply of dollars in the market for foreign-currency exchange increases,and net exports rise. 
C) the supply of dollars in the market for foreign-currency exchange decreases,and net exports fall. 
D) the supply of dollars in the market for foreign-currency exchange decreases,and net exports rise. 
A) the supply of dollars in the market for foreign-currency exchange increases,and net exports fall. 
B) the supply of dollars in the market for foreign-currency exchange increases,and net exports rise. 
C) the supply of dollars in the market for foreign-currency exchange decreases,and net exports fall. 
D) the supply of dollars in the market for foreign-currency exchange decreases,and net exports rise.

Question 5

Suppose a stock market boom makes people feel wealthier.The increase in wealth would cause people to desire

Accepted Answer

A) increased consumption,which shifts the aggregate-demand curve right. 
B) increased consumption,which shifts the aggregate-demand curve left. 
C) decreased consumption,which shifts the aggregate-demand curve right. 
D) decreased consumption,which shifts the aggregate-demand curve left. 
A) increased consumption,which shifts the aggregate-demand curve right. 
B) increased consumption,which shifts the aggregate-demand curve left. 
C) decreased consumption,which shifts the aggregate-demand curve right. 
D) decreased consumption,which shifts the aggregate-demand curve left.

Question 6

When interest rates fall

Accepted Answer

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

Question 7

Other things the same,an increase in the price level induces people to hold

Accepted Answer

A) less money,so they lend less,and the interest rate rises. 
B) less money,so they lend more,and the interest rate falls. 
C) more money,so they lend more,and the interest rate falls. 
D) more money,so they lend less,and the interest rate rises. 
A) less money,so they lend less,and the interest rate rises. 
B) less money,so they lend more,and the interest rate falls. 
C) more money,so they lend more,and the interest rate falls. 
D) more money,so they lend less,and the interest rate rises.

Question 8

The wealth effect,interest-rate effect,and exchange-rate effect are all explanations for

Accepted Answer

A) the slope of short-run aggregate supply. 
B) the slope of long-run aggregate supply. 
C) the slope of the aggregate-demand curve. 
D) everything that makes the aggregate-demand curve shift. 
A) the slope of short-run aggregate supply. 
B) the slope of long-run aggregate supply. 
C) the slope of the aggregate-demand curve. 
D) everything that makes the aggregate-demand curve shift.

Question 9

Other things the same,a decrease in the price level makes the dollars people hold worth

Accepted Answer

A) more,so they can buy more. 
B) more,so they can buy less. 
C) less,so they can buy more. 
D) less,so they can buy less. 
A) more,so they can buy more. 
B) more,so they can buy less. 
C) less,so they can buy more. 
D) less,so they can buy less.

Question 10

When the dollar depreciates,U.S.

Accepted Answer

A) net exports rise,which increases the aggregate quantity of goods and services demanded. 
B) net exports rise,which decreases the aggregate quantity of goods and services demanded. 
C) net exports fall,which increases the aggregate quantity of goods and services demanded. 
D) net exports fall,which decreases the aggregate quantity of goods and services demanded. 
A) net exports rise,which increases the aggregate quantity of goods and services demanded. 
B) net exports rise,which decreases the aggregate quantity of goods and services demanded. 
C) net exports fall,which increases the aggregate quantity of goods and services demanded. 
D) net exports fall,which decreases the aggregate quantity of goods and services demanded.

Question 11

Part of the explanation for why the aggregate-demand curve slopes downward is that a decrease in the price level

Accepted Answer

A) decreases the real value of money. 
B) increases the real value of the dollar in foreign exchange markets. 
C) decreases the interest rate. 
D) All of the above are correct. 
A) decreases the real value of money. 
B) increases the real value of the dollar in foreign exchange markets. 
C) decreases the interest rate. 
D) All of the above are correct.

Question 12

As the price level falls,

Accepted Answer

A) the exchange rate falls,so net exports fall. 
B) the exchange rate falls,so net exports rise. 
C) the exchange rate rises,so net exports fall. 
D) the exchange rate rises,so net exports rise. 
A) the exchange rate falls,so net exports fall. 
B) the exchange rate falls,so net exports rise. 
C) the exchange rate rises,so net exports fall. 
D) the exchange rate rises,so net exports rise.

Question 13

The Central Bank of Wiknam increases the money supply at the same time the Parliament of Wiknam passes a new investment tax credit.Which of these policies shift aggregate demand to the right?

Accepted Answer

A) both the money supply increase and the investment tax credit 
B) the money supply increase but not the investment tax credit 
C) the investment tax credit but not the money supply increase 
D) neither the investment tax credit nor the money supply increase 
A) both the money supply increase and the investment tax credit 
B) the money supply increase but not the investment tax credit 
C) the investment tax credit but not the money supply increase 
D) neither the investment tax credit nor the money supply increase

Question 14

Other things the same,a decrease in the price level causes real wealth to

Accepted Answer

A) fall,interest rates to fall,and the dollar to appreciate. 
B) fall,interest rates to rise,and the dollar to depreciate. 
C) rise,interest rates to rise,and the dollar to appreciate. 
D) rise,interest rates to fall,and the dollar to depreciate. 
A) fall,interest rates to fall,and the dollar to appreciate. 
B) fall,interest rates to rise,and the dollar to depreciate. 
C) rise,interest rates to rise,and the dollar to appreciate. 
D) rise,interest rates to fall,and the dollar to depreciate.

Question 15

Which of the following shifts aggregate demand to the right?

Accepted Answer

A) a decrease in the money supply 
B) increases in the profitability of capital due perhaps to technological progress. 
C) the repeal of an investment tax credit 
D) a decrease in the price level 
A) a decrease in the money supply 
B) increases in the profitability of capital due perhaps to technological progress. 
C) the repeal of an investment tax credit 
D) a decrease in the price level

Question 16

Which of the following lists includes only changes that shift aggregate demand to the right?

Accepted Answer

A) repeal of an investment tax credit,an increase in the money supply 
B) repeal of an investment tax credit,a decrease in the money supply 
C) passing of an investment tax credit,an increase in the money supply 
D) passing of an investment tax credit,a decrease in the money supply 
A) repeal of an investment tax credit,an increase in the money supply 
B) repeal of an investment tax credit,a decrease in the money supply 
C) passing of an investment tax credit,an increase in the money supply 
D) passing of an investment tax credit,a decrease in the money supply

Question 17

As the price level falls

Accepted Answer

A) people will want to hold more money,so the interest rate rises. 
B) people will want to hold more money,so the interest rate falls. 
C) people will want to hold less money,so the interest rate falls. 
D) people will want to hold less money,so the interest rate rises. 
A) people will want to hold more money,so the interest rate rises. 
B) people will want to hold more money,so the interest rate falls. 
C) people will want to hold less money,so the interest rate falls. 
D) people will want to hold less money,so the interest rate rises.

Question 18

Aggregate demand shifts right when the Federal Reserve

Accepted Answer

A) raises personal income taxes. 
B) increases the money supply. 
C) institutes an investment tax credit. 
D) All of the above are correct. 
A) raises personal income taxes. 
B) increases the money supply. 
C) institutes an investment tax credit. 
D) All of the above are correct.

Question 19

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 20

Other things the same,as the price level falls,

Accepted Answer

A) the money supply falls. 
B) interest rates rise. 
C) a dollar buys more domestic goods. 
D) the aggregate-demand curve shifts right. 
A) the money supply falls. 
B) interest rates rise. 
C) a dollar buys more domestic goods. 
D) the aggregate-demand curve shifts right.

Exam 20: Aggregate Demand and Aggregate Supply: The Aggregate-Demand Curve

Other things the same,an increase in the price level induces less spending on

Which of the following shifts aggregate demand to the left?

Which of the following would help explain why the aggregate demand curve slopes downward?

Other things the same,if the U.S.price level rises,then

Suppose a stock market boom makes people feel wealthier.The increase in wealth would cause people to desire

When interest rates fall

Other things the same,an increase in the price level induces people to hold

The wealth effect,interest-rate effect,and exchange-rate effect are all explanations for

Other things the same,a decrease in the price level makes the dollars people hold worth

When the dollar depreciates,U.S.

Part of the explanation for why the aggregate-demand curve slopes downward is that a decrease in the price level

As the price level falls,

The Central Bank of Wiknam increases the money supply at the same time the Parliament of Wiknam passes a new investment tax credit.Which of these policies shift aggregate demand to the right?

Other things the same,a decrease in the price level causes real wealth to

Which of the following shifts aggregate demand to the right?

Which of the following lists includes only changes that shift aggregate demand to the right?

As the price level falls

Aggregate demand shifts right when the Federal Reserve

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

Other things the same,as the price level falls,

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion