Question 1

Stagflation could be caused solely by a shift in the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 2

If your wages are indexed so that they automatically adjust for inflation, in a period of continued high inflation, the cost of the goods and services you buy ____ and your nominal income ____.

Accepted Answer

A) ​decreases, decreases 
B) ​increases, increases 
C) ​decreases, remains the same 
D) ​increases, remains the same 
A) ​decreases, decreases 
B) ​increases, increases 
C) ​decreases, remains the same 
D) ​increases, remains the same

Question 3

In the short run, an increase in the price level:

Accepted Answer

A) ​increases output prices relative to input prices. 
B) ​increases the profit margins of many producers. 
C) ​increases RGDP supplied. 
D) ​all of the above 
A) ​increases output prices relative to input prices. 
B) ​increases the profit margins of many producers. 
C) ​increases RGDP supplied. 
D) ​all of the above

Question 4

A reduction in business expectations, combined with the imposition of new tariffs by major trading partners, 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 5

The SRAS 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 6

If there was no profit effect, but there was a misperception effect in the short run, then SRAS is ____ and 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

Question 7

The short run aggregate supply curve refers to a period in which input prices have not yet had time to adjust to changes in aggregate demand.

Accepted Answer

A) True 
 B)False

Question 8

How will firms react to rising output price levels? What reactions can they expect from their employees and suppliers over time?

Accepted Answer

Firms have an incentive to increase real

Question 9

An increase in investment combined with a decrease in education would have an indeterminate effect on both short run and long run aggregate supply.

Accepted Answer

A) True 
 B)False

Question 10

At a given price level, anything that changes the amount of total purchases in the economy will cause the aggregate demand curve to shift.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following will not cause consumption, and as a result, aggregate demand, to increase?

Accepted Answer

A) ​an optimistic business forecast of future income growth 
B) ​a tax cut 
C) ​an increase in consumer confidence 
D) ​a tax increase 
A) ​an optimistic business forecast of future income growth 
B) ​a tax cut 
C) ​an increase in consumer confidence 
D) ​a tax increase

Question 12

When there is a recessionary gap, one is likely to see an increase in overtime work and more hours worked by part-time workers.

Accepted Answer

A) True 
 B)False

Question 13

​Exhibit 14-1  
-Refer to Exhibit 14-1. Which of the following would be illustrated by a shift in aggregate demand from AD0 to AD1?

Accepted Answer

A) ​an increase in government purchases, combined with a decrease in investment 
B) ​an increase in consumption, combined with an increase in exports 
C) ​an increase in business tax rates, combined with a decrease in consumer confidence 
D) ​faster growth rates by a major trading partner, combined with a decrease in stock market wealth 
A) ​an increase in government purchases, combined with a decrease in investment 
B) ​an increase in consumption, combined with an increase in exports 
C) ​an increase in business tax rates, combined with a decrease in consumer confidence 
D) ​faster growth rates by a major trading partner, combined with a decrease in stock market wealth

Question 14

In an open economy, the real level of U.S. exports and the quantity of RGDP demanded ______ the price level.

Accepted Answer

A) ​Move in the same direction as 
B) ​Move in the opposite direction from 
C) ​Are not affected by 
D) ​Have an indeterminate relationship with 
A) ​Move in the same direction as 
B) ​Move in the opposite direction from 
C) ​Are not affected by 
D) ​Have an indeterminate relationship with

Question 15

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

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 16

The quantity of RGDP supplied will decrease in both the short run and long run when the price level falls.

Accepted Answer

A) True 
 B)False

Question 17

When the price level rises as a result of a decrease in aggregate supply, it is called cost-push inflation.

Accepted Answer

A) True 
 B)False

Question 18

Describe the difference between a microeconomic demand curve and an aggregate demand curve.

Accepted Answer

A microeconomic demand curve shows the r

Question 19

Which of the following are likely to increase investment and as a result, aggregate demand?

Accepted Answer

A) ​decreased demand for investment goods 
B) ​falling real interest rates 
C) ​rising real interest rates 
D) ​increased business taxes 
A) ​decreased demand for investment goods 
B) ​falling real interest rates 
C) ​rising real interest rates 
D) ​increased business taxes

Question 20

​Exhibit 14-2  
-In Exhibit 14-2, which curve represents short-run aggregate supply?

Accepted Answer

A) ​A 
B) ​B 
C) ​C 
D) ​none of the above 
A) ​A 
B) ​B 
C) ​C 
D) ​none of the above

Exam 14: Monopolistic Competition and Product Differentiation

Stagflation could be caused solely by a shift in the aggregate demand curve.

If your wages are indexed so that they automatically adjust for inflation, in a period of continued high inflation, the cost of the goods and services you buy ____ and your nominal income ____.

In the short run, an increase in the price level:

A reduction in business expectations, combined with the imposition of new tariffs by major trading partners, would have what effect on aggregate demand?

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

If there was no profit effect, but there was a misperception effect in the short run, then SRAS is ____ and LRAS is ____.

The short run aggregate supply curve refers to a period in which input prices have not yet had time to adjust to changes in aggregate demand.

How will firms react to rising output price levels? What reactions can they expect from their employees and suppliers over time?

An increase in investment combined with a decrease in education would have an indeterminate effect on both short run and long run aggregate supply.

At a given price level, anything that changes the amount of total purchases in the economy will cause the aggregate demand curve to shift.

Which of the following will not cause consumption, and as a result, aggregate demand, to increase?

When there is a recessionary gap, one is likely to see an increase in overtime work and more hours worked by part-time workers.

​Exhibit 14-1 -Refer to Exhibit 14-1. Which of the following would be illustrated by a shift in aggregate demand from AD0 to AD1?

In an open economy, the real level of U.S. exports and the quantity of RGDP demanded ______ the price level.

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

The quantity of RGDP supplied will decrease in both the short run and long run when the price level falls.

When the price level rises as a result of a decrease in aggregate supply, it is called cost-push inflation.

Describe the difference between a microeconomic demand curve and an aggregate demand curve.

Which of the following are likely to increase investment and as a result, aggregate demand?

​Exhibit 14-2 -In Exhibit 14-2, which curve represents short-run aggregate supply?

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

If your wages are indexed so that they automatically adjust for inflation, in a period of continued high inflation, the cost of the goods and services you buy and your nominal income .

The SRAS curve is with real output levels that .

If there was no profit effect, but there was a misperception effect in the short run, then SRAS is and 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 AD₁?

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

Exhibit 14-2 -In Exhibit 14-2, which curve represents short-run aggregate supply?