Question 1

If the economy were initially in equilibrium and the aggregate demand curve shifted to the left,

Accepted Answer

A) employment would fall 
B) the price level would rise 
C) the aggregate supply curve would shift rightward 
D) the aggregate supply curve would shift leftward 
E) the economy would experience an expansion period 
A) employment would fall 
B) the price level would rise 
C) the aggregate supply curve would shift rightward 
D) the aggregate supply curve would shift leftward 
E) the economy would experience an expansion period

Question 2

For a given aggregate supply curve,the price level and output both rise when aggregate demand decreases.

Accepted Answer

A) True 
 B)False

Question 3

The Employment Act of 1946

Accepted Answer

A) guaranteed full employment 
B) obliged the federal government to hire as many people as it could to achieve full employment 
C) gave the federal government the power to levy an income tax 
D) imposed a responsibility on the federal government to foster full employment 
E) obligated the federal government to run budget surpluses to achieve full employment 
A) guaranteed full employment 
B) obliged the federal government to hire as many people as it could to achieve full employment 
C) gave the federal government the power to levy an income tax 
D) imposed a responsibility on the federal government to foster full employment 
E) obligated the federal government to run budget surpluses to achieve full employment

Question 4

The aggregate demand curve slopes downward because households feel poorer after a decrease in the price level.

Accepted Answer

A) True 
 B)False

Question 5

Keynes believed that the best method for ending the Great Depression was to

Accepted Answer

A) increase the money supply so that individuals would have more to spend 
B) cut government spending and increase taxes to reduce or even eliminate the government's deficit 
C) increase government spending and cut taxes so that consumers could spend more 
D) cut both government spending and taxes so that government would not be such a large part of the economy 
E) increase both government spending and taxes to increase the role government played in the economy 
A) increase the money supply so that individuals would have more to spend 
B) cut government spending and increase taxes to reduce or even eliminate the government's deficit 
C) increase government spending and cut taxes so that consumers could spend more 
D) cut both government spending and taxes so that government would not be such a large part of the economy 
E) increase both government spending and taxes to increase the role government played in the economy

Question 6

The global financial panic in September 2008 which led to a sharp fall in business investment spending and consumer spending can be viewed as

Accepted Answer

A) a sharp decrease in aggregate supply 
B) a sharp decrease in aggregate demand 
C) a sharp decrease in both aggregate supply and aggregate demand 
D) a modest increase in aggregate supply 
E) no change in either aggregate supply or aggregate demand 
A) a sharp decrease in aggregate supply 
B) a sharp decrease in aggregate demand 
C) a sharp decrease in both aggregate supply and aggregate demand 
D) a modest increase in aggregate supply 
E) no change in either aggregate supply or aggregate demand

Question 7

Which of the following explains why the aggregate demand curve slopes downward?

Accepted Answer

A) If the price level increases,we feel poorer and therefore buy less. 
B) If the price level increases,we feel richer and therefore buy more. 
C) If domestic prices increase,we substitute domestic goods for imported ones. 
D) If the price of a particular good increases,we substitute away from that good. 
E) A decrease in the price of a particular good is like an increase in income and therefore we buy more. 
A) If the price level increases,we feel poorer and therefore buy less. 
B) If the price level increases,we feel richer and therefore buy more. 
C) If domestic prices increase,we substitute domestic goods for imported ones. 
D) If the price of a particular good increases,we substitute away from that good. 
E) A decrease in the price of a particular good is like an increase in income and therefore we buy more.

Question 8

Keynes proposed that government should shock the economy out of the Great Depression by

Accepted Answer

A) increasing aggregate supply 
B) increasing aggregate demand 
C) raising prices so that firms could earn higher profits and employ more people 
D) reducing prices so that people could afford to buy more goods and services 
E) subsidizing firms that wanted to buy stocks after the crash 
A) increasing aggregate supply 
B) increasing aggregate demand 
C) raising prices so that firms could earn higher profits and employ more people 
D) reducing prices so that people could afford to buy more goods and services 
E) subsidizing firms that wanted to buy stocks after the crash

Question 9

On an aggregate demand and aggregate supply graph,the stagflation of the 1970s can be represented as a

Accepted Answer

A) leftward shift of the aggregate supply curve 
B) rightward shift of the aggregate supply curve 
C) rise in the price level that caused an excess demand for output 
D) rightward shift of the aggregate demand curve 
E) decrease in the price level that caused an excess supply of output 
A) leftward shift of the aggregate supply curve 
B) rightward shift of the aggregate supply curve 
C) rise in the price level that caused an excess demand for output 
D) rightward shift of the aggregate demand curve 
E) decrease in the price level that caused an excess supply of output

Question 10

If spending by the federal government exceeds revenue,

Accepted Answer

A) the price level tends to fall 
B) the money supply must increase 
C) the aggregate demand curve shifts leftward 
D) the aggregate supply curve shifts rightward 
E) there is a federal budget deficit 
A) the price level tends to fall 
B) the money supply must increase 
C) the aggregate demand curve shifts leftward 
D) the aggregate supply curve shifts rightward 
E) there is a federal budget deficit

Question 11

Which of the following is not true about recessions?

Accepted Answer

A) They are milder than depressions. 
B) They last less than six months on average. 
C) They typically are shorter than periods of expansion. 
D) They begin after an expansion has peaked. 
E) They continue until the economy reaches a trough. 
A) They are milder than depressions. 
B) They last less than six months on average. 
C) They typically are shorter than periods of expansion. 
D) They begin after an expansion has peaked. 
E) They continue until the economy reaches a trough.

Question 12

If spending by the federal government exceeds tax revenues,aggregate demand decreases.

Accepted Answer

A) True 
 B)False

Question 13

The aim of supply-side economics is to

Accepted Answer

A) increase government spending to stimulate aggregate supply 
B) stimulate exports to increase the balance of payments 
C) decrease wages to make production cheaper 
D) lower taxes to increase the supply of resources 
E) reduce both the inflation and unemployment problems through an increase in taxes 
A) increase government spending to stimulate aggregate supply 
B) stimulate exports to increase the balance of payments 
C) decrease wages to make production cheaper 
D) lower taxes to increase the supply of resources 
E) reduce both the inflation and unemployment problems through an increase in taxes

Question 14

Which of the following statements regarding Gross Domestic Product is not true?

Accepted Answer

A) It is a stock variable. 
B) It is measured for a particular time period,usually one year. 
C) It is perhaps the most effective means of viewing the same economy over time. 
D) It is a measure of the economy's performance. 
E) It is a flow variable,not a stock variable. 
A) It is a stock variable. 
B) It is measured for a particular time period,usually one year. 
C) It is perhaps the most effective means of viewing the same economy over time. 
D) It is a measure of the economy's performance. 
E) It is a flow variable,not a stock variable.

Question 15

An increase in government spending,other things constant,would cause a

Accepted Answer

A) leftward shift of the aggregate supply curve 
B) rightward shift of the aggregate supply curve 
C) leftward shift of the aggregate demand curve 
D) rightward shift of the aggregate demand curve 
E) movement toward equilibrium,along curves that do not shift 
A) leftward shift of the aggregate supply curve 
B) rightward shift of the aggregate supply curve 
C) leftward shift of the aggregate demand curve 
D) rightward shift of the aggregate demand curve 
E) movement toward equilibrium,along curves that do not shift

Question 16

Keynesian policies are ineffective at combating stagflation because stagflation is caused by

Accepted Answer

A) budget surpluses 
B) decreases in aggregate supply 
C) trade deficits 
D) trade surpluses 
E) budget deficits 
A) budget surpluses 
B) decreases in aggregate supply 
C) trade deficits 
D) trade surpluses 
E) budget deficits

Question 17

Supply-side economists argue that a cut in personal income tax rates would

Accepted Answer

A) decrease government revenues 
B) increase government revenues 
C) have no impact on government revenues 
D) increase unemployment 
E) decrease economic growth 
A) decrease government revenues 
B) increase government revenues 
C) have no impact on government revenues 
D) increase unemployment 
E) decrease economic growth

Question 18

If firms expect greater demand for their products,invest in more capital and hire more labor,

Accepted Answer

A) there will likely be an increase in inflation and a rise in taxation 
B) the business cycle is likely to be moving from peak to trough 
C) their behavior may encourage the very prosperity that they expect 
D) government will probably have to spend more and tax less to offset the economic impacts of these business decisions 
E) consumers will probably spend less in anticipation of a decline in economic activity 
A) there will likely be an increase in inflation and a rise in taxation 
B) the business cycle is likely to be moving from peak to trough 
C) their behavior may encourage the very prosperity that they expect 
D) government will probably have to spend more and tax less to offset the economic impacts of these business decisions 
E) consumers will probably spend less in anticipation of a decline in economic activity

Question 19

If the U.S.price level decreases,the aggregate quantity of U.S.output demanded

Accepted Answer

A) decreases because U.S.products become cheaper relative to foreign products 
B) decreases because U.S.products become more expensive relative to foreign products 
C) increases because U.S.products become cheaper relative to foreign products 
D) increases because U.S.products become more expensive relative to foreign products 
E) decreases because household wealth and spending decrease 
A) decreases because U.S.products become cheaper relative to foreign products 
B) decreases because U.S.products become more expensive relative to foreign products 
C) increases because U.S.products become cheaper relative to foreign products 
D) increases because U.S.products become more expensive relative to foreign products 
E) decreases because household wealth and spending decrease

Question 20

If both aggregate demand and aggregate supply increase,then employment will increase.

Accepted Answer

A) True 
 B)False

Exam 5: Introduction to Macroeconomics

If the economy were initially in equilibrium and the aggregate demand curve shifted to the left,

For a given aggregate supply curve,the price level and output both rise when aggregate demand decreases.

The Employment Act of 1946

The aggregate demand curve slopes downward because households feel poorer after a decrease in the price level.

Keynes believed that the best method for ending the Great Depression was to

The global financial panic in September 2008 which led to a sharp fall in business investment spending and consumer spending can be viewed as

Which of the following explains why the aggregate demand curve slopes downward?

Keynes proposed that government should shock the economy out of the Great Depression by

On an aggregate demand and aggregate supply graph,the stagflation of the 1970s can be represented as a

If spending by the federal government exceeds revenue,

Which of the following is not true about recessions?

If spending by the federal government exceeds tax revenues,aggregate demand decreases.

The aim of supply-side economics is to

Which of the following statements regarding Gross Domestic Product is not true?

An increase in government spending,other things constant,would cause a

Keynesian policies are ineffective at combating stagflation because stagflation is caused by

Supply-side economists argue that a cut in personal income tax rates would

If firms expect greater demand for their products,invest in more capital and hire more labor,

If the U.S.price level decreases,the aggregate quantity of U.S.output demanded

If both aggregate demand and aggregate supply increase,then employment will increase.

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

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