Question 1

The short-run aggregate supply curve:

Accepted Answer

A) ​has the same slope as the LRAS. 
B) ​shifts only when the LRAS shifts in the same direction. 
C) ​normally slopes upward to the right because the costs of labor and other inputs are relatively fixed in the short run. 
D) ​normally has a slope of zero, meaning the curve is horizontal. 
A) ​has the same slope as the LRAS. 
B) ​shifts only when the LRAS shifts in the same direction. 
C) ​normally slopes upward to the right because the costs of labor and other inputs are relatively fixed in the short run. 
D) ​normally has a slope of zero, meaning the curve is horizontal.

Question 2

Investment will increase if business taxes ____, real interest rates ____, or if business confidence ____.

Accepted Answer

A) ​increase, increases, increases 
B) ​decrease, decrease, decreases 
C) ​increase, increases, decreases 
D) ​decrease, decrease, increases 
A) ​increase, increases, increases 
B) ​decrease, decrease, decreases 
C) ​increase, increases, decreases 
D) ​decrease, decrease, increases

Question 3

If the overall price level increases, it will cause a decrease in the quantity of real goods and services demanded but not a change in aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 4

What is the natural level of output?

Accepted Answer

​It is the level of output in the long r

Question 5

The four major components of aggregate demand are consumption, investment, government purchases of goods and services, and net exports.

Accepted Answer

A) True 
 B)False

Question 6

The long run equilibrium level of real output increases whenever:

Accepted Answer

A) ​AD increases. 
B) ​SRAS increases. 
C) ​LRAS increases. 
D) ​Any of the above occurs. 
A) ​AD increases. 
B) ​SRAS increases. 
C) ​LRAS increases. 
D) ​Any of the above occurs.

Question 7

Jason has been holding his retirement savings in a safe in his house. Currently the economy is experiencing a falling price level. He can conclude that:

Accepted Answer

A) ​the real purchasing power of his money is remaining constant. 
B) ​the real value of his savings is increasing as long as the price level is falling. 
C) ​the real value of his savings is decreasing as long as the price level is falling. 
D) ​none of the above are true. 
A) ​the real purchasing power of his money is remaining constant. 
B) ​the real value of his savings is increasing as long as the price level is falling. 
C) ​the real value of his savings is decreasing as long as the price level is falling. 
D) ​none of the above are true.

Question 8

An unexpected increase in aggregate demand results in a decrease in real wages in the short run.

Accepted Answer

A) True 
 B)False

Question 9

In the short run, a decrease in the price level:

Accepted Answer

A) ​decreases output prices relative to input prices. 
B) ​increases the profit margins of many producers. 
C) ​decreases RGDP supplied. 
D) ​both (a) and (c) 
A) ​decreases output prices relative to input prices. 
B) ​increases the profit margins of many producers. 
C) ​decreases RGDP supplied. 
D) ​both (a) and (c)

Question 10

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

Accepted Answer

A) ​an optimistic business forecast of future income growth 
B) ​increased consumer wealth 
C) ​an increase in consumer confidence 
D) ​all of the above 
A) ​an optimistic business forecast of future income growth 
B) ​increased consumer wealth 
C) ​an increase in consumer confidence 
D) ​all of the above

Question 11

The long-run level of RGDP changes whenever the aggregate demand curve shifts.

Accepted Answer

A) True 
 B)False

Question 12

As the price level increases, the quantity of RGDP demanded in the economy ____, and when the price level decreases, the quantity of RGDP demanded in the economy ____.

Accepted Answer

A) ​decreases, decreases 
B) ​increases, increases 
C) ​increases, decreases 
D) ​decreases, increases 
A) ​decreases, decreases 
B) ​increases, increases 
C) ​increases, decreases 
D) ​decreases, increases

Question 13

Technological advances:

Accepted Answer

A) ​Shift only the short run aggregate supply curve to the right. 
B) ​Shift only the long run aggregate supply curve to the right. 
C) ​Shift both short run and long run aggregate supply curves to the right. 
D) ​Do none of the above 
A) ​Shift only the short run aggregate supply curve to the right. 
B) ​Shift only the long run aggregate supply curve to the right. 
C) ​Shift both short run and long run aggregate supply curves to the right. 
D) ​Do none of the above

Question 14

If a large fraction of the capital stock in the U.S. stopped functioning, it would:

Accepted Answer

A) ​Shift the short run aggregate supply curve to the left. 
B) ​Shift the long run aggregate supply curve to the left. 
C) ​Shift both the short run aggregate supply curve and long run aggregate supply curves to the left. 
D) ​Do none of the above 
A) ​Shift the short run aggregate supply curve to the left. 
B) ​Shift the long run aggregate supply curve to the left. 
C) ​Shift both the short run aggregate supply curve and long run aggregate supply curves to the left. 
D) ​Do none of the above

Question 15

The interest rate effect helps explain why a lower price level will reduce the quantity of real goods and services demanded as an economy moves down along its aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 16

What role do imports play in aggregate demand? Under which conditions will changes in imports expand aggregate demand? Reduce aggregate demand?

Accepted Answer

Global markets have become increasingly

Question 17

Increases in the capital stock:

Accepted Answer

A) ​Shift the short run aggregate supply curve to the right. 
B) ​Shift the long run aggregate supply curve to the right. 
C) ​Shift both short run and long run aggregate supply curves to the right. 
D) ​Do none of the above 
A) ​Shift the short run aggregate supply curve to the right. 
B) ​Shift the long run aggregate supply curve to the right. 
C) ​Shift both short run and long run aggregate supply curves to the right. 
D) ​Do none of the above

Question 18

The real wealth and the real interest rate effects are both causes of the downward slope of the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 19

An increase in the U.S. price level will:

Accepted Answer

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

Question 20

Long term contracts for inputs can lead to the slow adjustment of input prices in response to changes in aggregate demand.

Accepted Answer

A) True 
 B)False

Exam 14: Monopolistic Competition and Product Differentiation

The short-run aggregate supply curve:

Investment will increase if business taxes ____, real interest rates ____, or if business confidence ____.

If the overall price level increases, it will cause a decrease in the quantity of real goods and services demanded but not a change in aggregate demand curve.

What is the natural level of output?

The four major components of aggregate demand are consumption, investment, government purchases of goods and services, and net exports.

The long run equilibrium level of real output increases whenever:

Jason has been holding his retirement savings in a safe in his house. Currently the economy is experiencing a falling price level. He can conclude that:

An unexpected increase in aggregate demand results in a decrease in real wages in the short run.

In the short run, a decrease in the price level:

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

The long-run level of RGDP changes whenever the aggregate demand curve shifts.

As the price level increases, the quantity of RGDP demanded in the economy ____, and when the price level decreases, the quantity of RGDP demanded in the economy ____.

Technological advances:

If a large fraction of the capital stock in the U.S. stopped functioning, it would:

The interest rate effect helps explain why a lower price level will reduce the quantity of real goods and services demanded as an economy moves down along its aggregate demand curve.

What role do imports play in aggregate demand? Under which conditions will changes in imports expand aggregate demand? Reduce aggregate demand?

Increases in the capital stock:

The real wealth and the real interest rate effects are both causes of the downward slope of the aggregate demand curve.

An increase in the U.S. price level will:

Long term contracts for inputs can lead to the slow adjustment of input prices in response to changes in aggregate demand.

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

Investment will increase if business taxes , real interest rates , or if business confidence .

As the price level increases, the quantity of RGDP demanded in the economy , and when the price level decreases, the quantity of RGDP demanded in the economy .