Question 1

If net exports are negative, then aggregate demand will be less than the sum of consumption, investment, and government purchases.

Accepted Answer

A) True 
 B)False  True

Question 2

The SRAS is ____; the LRAS is ____.

Accepted Answer

A) ​upward sloping; upward sloping 
B) ​upward sloping; vertical 
C) ​vertical; upward sloping 
D) ​vertical; vertical 
A) ​upward sloping; upward sloping 
B) ​upward sloping; vertical 
C) ​vertical; upward sloping 
D) ​vertical; vertical B

Question 3

Which of the following will cause consumption, and as a result, aggregate demand, to decrease?

Accepted Answer

A) ​a tax cut 
B) ​a decrease in consumer confidence 
C) ​increased population 
D) ​an optimistic forecast of future income growth 
A) ​a tax cut 
B) ​a decrease in consumer confidence 
C) ​increased population 
D) ​an optimistic forecast of future income growth B

Question 4

Ceteris paribus, which of the following would cause the aggregate demand curve to shift to the left?

Accepted Answer

A) ​lower personal taxes 
B) ​a rise in consumer confidence 
C) ​greater stock market wealth 
D) ​a reduction in transfer payments 
A) ​lower personal taxes 
B) ​a rise in consumer confidence 
C) ​greater stock market wealth 
D) ​a reduction in transfer payments

Question 5

In the analysis of the interest rate effect, when the price level changes, the quantity of money households and firms' want to hold and interest rates move in the ____ direction as the change in the price level, while investment and the quantity RGDP demanded move in the ____ direction as the change in the price level.

Accepted Answer

A) ​Same, same 
B) ​Same, opposite 
C) ​Opposite, same 
D) ​opposite, opposite 
A) ​Same, same 
B) ​Same, opposite 
C) ​Opposite, same 
D) ​opposite, opposite

Question 6

The short-run aggregate supply curve is drawn with:

Accepted Answer

A) ​the price level on the vertical axis and real GDP on the horizontal axis. 
B) ​the price level on the vertical axis and nominal GDP on the horizontal axis. 
C) ​nominal GDP on the vertical axis and real GDP on the horizontal axis. 
D) ​real GDP on the horizontal axis and the rate of unemployment on the vertical axis. 
A) ​the price level on the vertical axis and real GDP on the horizontal axis. 
B) ​the price level on the vertical axis and nominal GDP on the horizontal axis. 
C) ​nominal GDP on the vertical axis and real GDP on the horizontal axis. 
D) ​real GDP on the horizontal axis and the rate of unemployment on the vertical axis.

Question 7

Aggregate demand includes:

Accepted Answer

A) ​the demand for intermediate goods and final goods. 
B) ​all monetary and nonmonetary transactions. 
C) ​the demand for investment, including stocks, bonds, and gold. 
D) ​the demand for final goods and services. 
A) ​the demand for intermediate goods and final goods. 
B) ​all monetary and nonmonetary transactions. 
C) ​the demand for investment, including stocks, bonds, and gold. 
D) ​the demand for final goods and services.

Question 8

A decrease in the U.S. price level will:

Accepted Answer

A) ​decrease U.S.imports. 
B) ​decrease U.S.exports. 
C) ​decrease the quantity of RGDP demanded in the United States. 
D) ​both (a) and (c) 
A) ​decrease U.S.imports. 
B) ​decrease U.S.exports. 
C) ​decrease the quantity of RGDP demanded in the United States. 
D) ​both (a) and (c)

Question 9

​Exhibit 14-1  
-Refer to Exhibit 14-1. Which of the following would be illustrated by a shift in aggregate demand from AD0 to AD2?

Accepted Answer

A) ​an increase in investment, combined with an increase in imports 
B) ​a reduction in business expectations, combined with the imposition of new tariffs by major trading partners 
C) ​the discovery of new profitable technological investment opportunities, combined with inventory levels that have fallen below desired levels 
D) ​faster growth rates by a major trading partner, combined with an increase in stock market wealth 
A) ​an increase in investment, combined with an increase in imports 
B) ​a reduction in business expectations, combined with the imposition of new tariffs by major trading partners 
C) ​the discovery of new profitable technological investment opportunities, combined with inventory levels that have fallen below desired levels 
D) ​faster growth rates by a major trading partner, combined with an increase in stock market wealth

Question 10

An increase in business tax rates, combined with a decrease in consumer confidence, would have what effect on aggregate demand?

Accepted Answer

A) ​AD would increase. 
B) ​AD would decrease. 
C) ​AD would stay the same. 
D) ​AD could either increase or decrease, depending on which change was of a greater magnitude. 
A) ​AD would increase. 
B) ​AD would decrease. 
C) ​AD would stay the same. 
D) ​AD could either increase or decrease, depending on which change was of a greater magnitude.

Question 11

Aggregate demand does not include:

Accepted Answer

A) ​Purchases of intermediate goods and final goods. 
B) ​Purchases of used goods and services. 
C) ​Purchases of stocks and bonds. 
D) ​Aggregate demand does not include any of the above. 
A) ​Purchases of intermediate goods and final goods. 
B) ​Purchases of used goods and services. 
C) ​Purchases of stocks and bonds. 
D) ​Aggregate demand does not include any of the above.

Question 12

Cost-push inflation is caused by:

Accepted Answer

A) ​an increase in aggregate demand. 
B) ​a decrease in aggregate demand. 
C) ​an increase in short-run aggregate supply. 
D) ​a decrease in short-run aggregate supply. 
A) ​an increase in aggregate demand. 
B) ​a decrease in aggregate demand. 
C) ​an increase in short-run aggregate supply. 
D) ​a decrease in short-run aggregate supply.

Question 13

The economy is in long-run equilibrium only when the short run aggregate supply curve intersects the aggregate demand curve along the long run aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 14

A reduction in the price level will cause the aggregate demand curve to shift to the left.

Accepted Answer

A) True 
 B)False

Question 15

The LRAS curve is ____ with real output levels that ____.

Accepted Answer

A) ​upward sloping; vary positively with the price level 
B) ​upward sloping; vary negatively with the price level 
C) ​vertical; are equal to the natural level of real output at all price levels 
D) ​vertical; can be either greater than or less than the natural level of real output 
A) ​upward sloping; vary positively with the price level 
B) ​upward sloping; vary negatively with the price level 
C) ​vertical; are equal to the natural level of real output at all price levels 
D) ​vertical; can be either greater than or less than the natural level of real output

Question 16

When there is a recessionary gap:

Accepted Answer

A) ​Unemployment exceeds the natural rate of unemployment. 
B) ​Unemployment equals the natural rate of unemployment. 
C) ​Unemployment is less than the natural rate of unemployment. 
D) ​Any of the above is possible. 
A) ​Unemployment exceeds the natural rate of unemployment. 
B) ​Unemployment equals the natural rate of unemployment. 
C) ​Unemployment is less than the natural rate of unemployment. 
D) ​Any of the above is possible.

Question 17

An economic boom in China is likely to lead to a(n):

Accepted Answer

A) ​decrease in U.S.exports and U.S.aggregate demand. 
B) ​increase in U.S.exports and U.S.aggregate demand. 
C) ​decrease in U.S.imports and U.S.aggregate demand. 
D) ​increase in U.S.imports and U.S.aggregate demand. 
A) ​decrease in U.S.exports and U.S.aggregate demand. 
B) ​increase in U.S.exports and U.S.aggregate demand. 
C) ​decrease in U.S.imports and U.S.aggregate demand. 
D) ​increase in U.S.imports and U.S.aggregate demand.

Question 18

An economic slowdown in Europe is likely to lead to a(n):

Accepted Answer

A) ​decrease in U.S.exports and U.S.aggregate demand. 
B) ​increase in U.S.exports and U.S.aggregate demand. 
C) ​decrease in U.S.imports and U.S.aggregate demand. 
D) ​increase in U.S.imports and U.S.aggregate demand. 
A) ​decrease in U.S.exports and U.S.aggregate demand. 
B) ​increase in U.S.exports and U.S.aggregate demand. 
C) ​decrease in U.S.imports and U.S.aggregate demand. 
D) ​increase in U.S.imports and U.S.aggregate demand.

Question 19

Which of the following is true when there is a recessionary gap?

Accepted Answer

A) ​Real output exceeds the natural level of real output. 
B) ​Unemployment exceeds the natural rate of unemployment. 
C) ​Employment exceeds full employment. 
D) ​All of the above are true when there is a recessionary gap. 
A) ​Real output exceeds the natural level of real output. 
B) ​Unemployment exceeds the natural rate of unemployment. 
C) ​Employment exceeds full employment. 
D) ​All of the above are true when there is a recessionary gap.

Question 20

Either a cut in business taxes or an increase in real interest rates would increase investment and aggregate demand, other things equal.

Accepted Answer

A) True 
 B)False

If net exports are negative, then aggregate demand will be less than the sum of consumption, investment, and government purchases.

The SRAS is ; the LRAS is .

Which of the following will cause consumption, and as a result, aggregate demand, to decrease?

Ceteris paribus, which of the following would cause the aggregate demand curve to shift to the left?

The short-run aggregate supply curve is drawn with:

Aggregate demand includes:

A decrease in the U.S. price level will:

Exhibit 14-1 -Refer to Exhibit 14-1. Which of the following would be illustrated by a shift in aggregate demand from AD₀ to AD₂?

An increase in business tax rates, combined with a decrease in consumer confidence, would have what effect on aggregate demand?

Aggregate demand does not include:

Cost-push inflation is caused by:

The economy is in long-run equilibrium only when the short run aggregate supply curve intersects the aggregate demand curve along the long run aggregate supply curve.

A reduction in the price level will cause the aggregate demand curve to shift to the left.

The LRAS curve is with real output levels that .

When there is a recessionary gap:

An economic boom in China is likely to lead to a(n):

An economic slowdown in Europe is likely to lead to a(n):

Which of the following is true when there is a recessionary gap?

Either a cut in business taxes or an increase in real interest rates would increase investment and aggregate demand, other things equal.

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Exam 14: Monopolistic Competition and Product Differentiation

If net exports are negative, then aggregate demand will be less than the sum of consumption, investment, and government purchases.

The SRAS is ____; the LRAS is ____.

Which of the following will cause consumption, and as a result, aggregate demand, to decrease?

Ceteris paribus, which of the following would cause the aggregate demand curve to shift to the left?

The short-run aggregate supply curve is drawn with:

Aggregate demand includes:

A decrease in the U.S. price level will:

​Exhibit 14-1 -Refer to Exhibit 14-1. Which of the following would be illustrated by a shift in aggregate demand from AD0 to AD2?

An increase in business tax rates, combined with a decrease in consumer confidence, would have what effect on aggregate demand?

Aggregate demand does not include:

Cost-push inflation is caused by:

The economy is in long-run equilibrium only when the short run aggregate supply curve intersects the aggregate demand curve along the long run aggregate supply curve.

A reduction in the price level will cause the aggregate demand curve to shift to the left.

The LRAS curve is ____ with real output levels that ____.

When there is a recessionary gap:

An economic boom in China is likely to lead to a(n):

An economic slowdown in Europe is likely to lead to a(n):

Which of the following is true when there is a recessionary gap?

Either a cut in business taxes or an increase in real interest rates would increase investment and aggregate demand, other things equal.

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

The SRAS is ; the LRAS is .

Exhibit 14-1 -Refer to Exhibit 14-1. Which of the following would be illustrated by a shift in aggregate demand from AD₀ to AD₂?

The LRAS curve is with real output levels that .