Question 1

The aggregate demand curve is best defined as depicting the

Accepted Answer

A) quantity of goods and services demanded during a given time period at different interest rates 
B) quantity of goods and services demanded at different price levels during different time periods 
C) quantity of goods and services demanded at different price levels during a given time period,other things held constant 
D) quantity of goods and services that the economy is capable of producing during a given time period 
E) final quantity of goods and services actually produced by the economy during a given time period 
A) quantity of goods and services demanded during a given time period at different interest rates 
B) quantity of goods and services demanded at different price levels during different time periods 
C) quantity of goods and services demanded at different price levels during a given time period,other things held constant 
D) quantity of goods and services that the economy is capable of producing during a given time period 
E) final quantity of goods and services actually produced by the economy during a given time period C

Question 2

Which of the following is true of the aggregate supply curve?

Accepted Answer

A) It portrays an inverse relationship between the price level and quantity of aggregate output. 
B) Resource utilization is constant along the curve. 
C) A decrease in the price level encourages firms to expand production because the cost of production decreases. 
D) The curve is upward-sloping. 
E) As average prices in the United States rise relative to average prices in other countries,U.S.producers find export markets more attractive than domestic markets. 
A) It portrays an inverse relationship between the price level and quantity of aggregate output. 
B) Resource utilization is constant along the curve. 
C) A decrease in the price level encourages firms to expand production because the cost of production decreases. 
D) The curve is upward-sloping. 
E) As average prices in the United States rise relative to average prices in other countries,U.S.producers find export markets more attractive than domestic markets. D

Question 3

If the wealth of consumers increases substantially,this would shift

Accepted Answer

A) the aggregate supply curve outward 
B) the aggregate demand curve outward 
C) the aggregate demand curve inward 
D) the aggregate supply curve inward 
E) both the aggregate demand and supply curves inward 
A) the aggregate supply curve outward 
B) the aggregate demand curve outward 
C) the aggregate demand curve inward 
D) the aggregate supply curve inward 
E) both the aggregate demand and supply curves inward B

Question 4

Confidence in Keynesian economics

Accepted Answer

A) diminished in the 1960s as the unemployment rate fell 
B) flourished in the 1960s despite two major recessions 
C) diminished in the 1960s as unemployment increased 
D) diminished in the 1970s as inflation occurred simultaneously with two recessions 
E) flourished through the 1980s despite Reagan's supply-side policies 
A) diminished in the 1960s as the unemployment rate fell 
B) flourished in the 1960s despite two major recessions 
C) diminished in the 1960s as unemployment increased 
D) diminished in the 1970s as inflation occurred simultaneously with two recessions 
E) flourished through the 1980s despite Reagan's supply-side policies

Question 5

Long-term growth in production can be partially explained by

Accepted Answer

A) trade surpluses that lead to accumulations of precious metals 
B) a gradual but consistent increase in the price level 
C) general optimism about the future and the pioneering spirit of America 
D) improvements in technology 
E) federal government budget deficits 
A) trade surpluses that lead to accumulations of precious metals 
B) a gradual but consistent increase in the price level 
C) general optimism about the future and the pioneering spirit of America 
D) improvements in technology 
E) federal government budget deficits

Question 6

Exhibit 5-1    
-In Exhibit 5-1 in period 4,the price level starts at ______ and ends up at ______ when the aggregate supply curve shifts from AS' to AS''.

Accepted Answer

A) 4; 2 
B) 2; 3 
C) 2; 2 
D) 3; 1 
E) 2; 4 
A) 4; 2 
B) 2; 3 
C) 2; 2 
D) 3; 1 
E) 2; 4

Question 7

Exhibit 5-2  
-Refer to Exhibit 5-2.Which line or point represents aggregate supply?

Accepted Answer

A) line a 
B) line b 
C) line c 
D) line d 
E) point e 
A) line a 
B) line b 
C) line c 
D) line d 
E) point e

Question 8

The aggregate demand curve reflects the direct relationship between the price level and the quantity of aggregate output demanded.

Accepted Answer

A) True 
 B)False

Question 9

In the 1960s,government policy makers believed that they could

Accepted Answer

A) stabilize the economy by letting the market system solve all problems 
B) reduce unemployment by running federal budget surpluses 
C) eliminate government's role in stabilization policy 
D) use changes in the money supply to virtually eliminate business cycles 
E) use taxation and government spending to fine-tune the economy 
A) stabilize the economy by letting the market system solve all problems 
B) reduce unemployment by running federal budget surpluses 
C) eliminate government's role in stabilization policy 
D) use changes in the money supply to virtually eliminate business cycles 
E) use taxation and government spending to fine-tune the economy

Question 10

The Keynesian approach to fiscal policy calls for

Accepted Answer

A) budget deficits during periods of inflationary pressure 
B) budget surpluses during periods of high unemployment 
C) a balanced budget despite the state of the economy 
D) tax cuts during recession 
E) spending increases during inflation 
A) budget deficits during periods of inflationary pressure 
B) budget surpluses during periods of high unemployment 
C) a balanced budget despite the state of the economy 
D) tax cuts during recession 
E) spending increases during inflation

Question 11

One explanation for the negative slope of the aggregate demand curve is that

Accepted Answer

A) as prices rise,nominal income falls and so does the demand for real goods and services 
B) falling prices make people feel poorer and reduce spending 
C) as prices rise,government spends less to drive the price level back down 
D) businesses increase spending when inflation is high and rising 
E) as prices rise,domestic goods become more expensive relative to foreign goods,which reduces exports 
A) as prices rise,nominal income falls and so does the demand for real goods and services 
B) falling prices make people feel poorer and reduce spending 
C) as prices rise,government spends less to drive the price level back down 
D) businesses increase spending when inflation is high and rising 
E) as prices rise,domestic goods become more expensive relative to foreign goods,which reduces exports

Question 12

Exhibit 5-3  
-In Exhibit 5-3 AD1 and AS1 represent the initial aggregate demand and aggregate supply.The initial equilibrium is at point A.Suppose that the price level in Mexico rises,what will the new equilibrium be?

Accepted Answer

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

Question 13

Since the Great Depression,business fluctuations have become more severe and longer in duration.

Accepted Answer

A) True 
 B)False

Question 14

During the Great Depression,President Hoover

Accepted Answer

A) correctly called for an increase in taxes 
B) incorrectly called for an increase in taxes 
C) incorrectly called for a decrease in taxes 
D) correctly called for a decrease in government spending 
E) incorrectly called for an increase in government spending 
A) correctly called for an increase in taxes 
B) incorrectly called for an increase in taxes 
C) incorrectly called for a decrease in taxes 
D) correctly called for a decrease in government spending 
E) incorrectly called for an increase in government spending

Question 15

If the U.S.price level increased relative to price levels in foreign countries,what would be the impact on domestic aggregate supply and aggregate demand curves?

Accepted Answer

A) the aggregate supply curve would shift outward and the aggregate demand curve would remain unchanged 
B) the aggregate supply curve would shift inward and the aggregate demand curve would remain unchanged 
C) the aggregate demand curve would shift outward and the aggregate supply curve would remain unchanged 
D) the aggregate demand curve would shift inward and the aggregate supply curve would remain unchanged 
E) the domestic aggregate demand and supply curves would remain unchanged 
A) the aggregate supply curve would shift outward and the aggregate demand curve would remain unchanged 
B) the aggregate supply curve would shift inward and the aggregate demand curve would remain unchanged 
C) the aggregate demand curve would shift outward and the aggregate supply curve would remain unchanged 
D) the aggregate demand curve would shift inward and the aggregate supply curve would remain unchanged 
E) the domestic aggregate demand and supply curves would remain unchanged

Question 16

If the government owes $3,500 billion and then borrows $300 billion more this year,

Accepted Answer

A) the debt is $300 billion and the deficit is $3.8 trillion 
B) the debt is $3,800 billion and the deficit is $300 billion 
C) the debt is $4,100 billion 
D) the deficit is $3,800 billion 
E) both the debt and the deficit are $3.8 trillion 
A) the debt is $300 billion and the deficit is $3.8 trillion 
B) the debt is $3,800 billion and the deficit is $300 billion 
C) the debt is $4,100 billion 
D) the deficit is $3,800 billion 
E) both the debt and the deficit are $3.8 trillion

Question 17

Which of the following is a reason why the aggregate demand curve slopes downward?

Accepted Answer

A) At a higher price level,fewer goods and services are available. 
B) Periods when the price level is rising are usually times of swift declines in economic activity. 
C) Households feel poorer with an increase in average prices. 
D) If the U.S.price level rises,foreigners will buy more U.S.goods,leaving fewer U.S.goods for domestic consumers. 
E) As the price level rises,business leaders become pessimistic about the future and reduce production. 
A) At a higher price level,fewer goods and services are available. 
B) Periods when the price level is rising are usually times of swift declines in economic activity. 
C) Households feel poorer with an increase in average prices. 
D) If the U.S.price level rises,foreigners will buy more U.S.goods,leaving fewer U.S.goods for domestic consumers. 
E) As the price level rises,business leaders become pessimistic about the future and reduce production.

Question 18

According to Keynes,if private-sector demand is insufficient to maintain full employment,the government should

Accepted Answer

A) act to make the economy's natural transition to the lower level of employment as easy as possible 
B) shock the economy with an increase in aggregate demand 
C) reduce aggregate supply to reduce inflation 
D) print money to promote consumer spending 
E) act to make the economy's natural transition back to full employment as easy as possible 
A) act to make the economy's natural transition to the lower level of employment as easy as possible 
B) shock the economy with an increase in aggregate demand 
C) reduce aggregate supply to reduce inflation 
D) print money to promote consumer spending 
E) act to make the economy's natural transition back to full employment as easy as possible

Question 19

Given the aggregate demand curve,an increase in aggregate supply lowers the price level and decreases output.

Accepted Answer

A) True 
 B)False

Question 20

A period of sustained growth of output in the economy is referred to as a(n)

Accepted Answer

A) expansion 
B) contraction 
C) peak 
D) trough 
E) recession 
A) expansion 
B) contraction 
C) peak 
D) trough 
E) recession

Exam 5: Introduction to Macroeconomics

The aggregate demand curve is best defined as depicting the

Which of the following is true of the aggregate supply curve?

If the wealth of consumers increases substantially,this would shift

Confidence in Keynesian economics

Long-term growth in production can be partially explained by

Exhibit 5-1 -In Exhibit 5-1 in period 4,the price level starts at ______ and ends up at ______ when the aggregate supply curve shifts from AS' to AS''.

Exhibit 5-2 -Refer to Exhibit 5-2.Which line or point represents aggregate supply?

The aggregate demand curve reflects the direct relationship between the price level and the quantity of aggregate output demanded.

In the 1960s,government policy makers believed that they could

The Keynesian approach to fiscal policy calls for

One explanation for the negative slope of the aggregate demand curve is that

Exhibit 5-3 -In Exhibit 5-3 AD1 and AS1 represent the initial aggregate demand and aggregate supply.The initial equilibrium is at point A.Suppose that the price level in Mexico rises,what will the new equilibrium be?

Since the Great Depression,business fluctuations have become more severe and longer in duration.

During the Great Depression,President Hoover

If the U.S.price level increased relative to price levels in foreign countries,what would be the impact on domestic aggregate supply and aggregate demand curves?

If the government owes $3,500 billion and then borrows $300 billion more this year,

Which of the following is a reason why the aggregate demand curve slopes downward?

According to Keynes,if private-sector demand is insufficient to maintain full employment,the government should

Given the aggregate demand curve,an increase in aggregate supply lowers the price level and decreases output.

A period of sustained growth of output in the economy is referred to as a(n)

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

Filters

Exhibit 5-1 -In Exhibit 5-1 in period 4,the price level starts at and ends up at when the aggregate supply curve shifts from AS' to AS''.

Exhibit 5-3 -In Exhibit 5-3 AD₁ and AS₁ represent the initial aggregate demand and aggregate supply.The initial equilibrium is at point A.Suppose that the price level in Mexico rises,what will the new equilibrium be?