Question 1

When there is a recessionary gap:

Accepted Answer

A) ​Real output exceeds the natural level of real output. 
B) ​Real output equals the natural level of real output. 
C) ​Real output is less than the natural level of real output. 
D) ​Any of the above is possible. 
A) ​Real output exceeds the natural level of real output. 
B) ​Real output equals the natural level of real output. 
C) ​Real output is less than the natural level of real output. 
D) ​Any of the above is possible.

Question 2

Explain why the short-run supply curve is not vertical, but the long-run aggregate supply curve is vertical.

Accepted Answer

Over the short run, suppliers are willin

Question 3

Which of the following is not true when there is an inflationary gap?

Accepted Answer

A) ​Real output exceeds the natural level of real output. 
B) ​Employment exceeds full employment. 
C) ​Unemployment exceeds the natural rate of unemployment. 
D) ​All of the above are not true when there is an inflationary gap. 
A) ​Real output exceeds the natural level of real output. 
B) ​Employment exceeds full employment. 
C) ​Unemployment exceeds the natural rate of unemployment. 
D) ​All of the above are not true when there is an inflationary gap.

Question 4

An unexpected decrease in aggregate demand results in an increase in real interest rates in the short run.

Accepted Answer

A) True 
 B)False

Question 5

An increase in net exports would lead to an increase aggregate demand but would not lead to an increase in aggregate supply.

Accepted Answer

A) True 
 B)False

Question 6

An increase in real interest rates will increase saving and decrease aggregate demand, other things equal.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following will cause consumption to increase and aggregate demand to shift to the left?

Accepted Answer

A) ​an optimistic business forecast of future income growth 
B) ​increased consumer wealth 
C) ​an increase in consumer confidence 
D) ​none of the above 
A) ​an optimistic business forecast of future income growth 
B) ​increased consumer wealth 
C) ​an increase in consumer confidence 
D) ​none of the above

Question 8

If both imports and exports rose,

Accepted Answer

A) ​AD would decrease. 
B) ​AD would increase. 
C) ​AD would decrease if exports rose more than imports. 
D) ​AD would increase if exports rose more than imports. 
A) ​AD would decrease. 
B) ​AD would increase. 
C) ​AD would decrease if exports rose more than imports. 
D) ​AD would increase if exports rose more than imports.

Question 9

Discuss the impact of efficiency wages on unemployment and wage inflexibility.

Accepted Answer

Because the efficiency wage rate is grea

Question 10

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

Accepted Answer

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

Question 11

The real wealth effect is one reason for the negative slope of the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 12

According to the interest rate effect, as the price level decreases, households and firms' holdings of money ____, interest rates ____, investments ____, and the quantity RGDP demanded ____.

Accepted Answer

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

Question 13

What are the major factors that determine investment, and what impact does each have on aggregate demand?

Accepted Answer

Important factors that determine investm

Question 14

Aggregate demand can be defined as:

Accepted Answer

A) ​the total spending by all consumers, business firms, government agencies, and foreigners in the United States. 
B) ​the total amounts that all consumers, business firms, government agencies, and foreigners wish to spend on all final goods and services at various price levels. 
C) ​the total spending by consumers, business firms, and government agencies in one year. 
D) ​the total spending by consumers, business firms, and government agencies on final goods and services. 
A) ​the total spending by all consumers, business firms, government agencies, and foreigners in the United States. 
B) ​the total amounts that all consumers, business firms, government agencies, and foreigners wish to spend on all final goods and services at various price levels. 
C) ​the total spending by consumers, business firms, and government agencies in one year. 
D) ​the total spending by consumers, business firms, and government agencies on final goods and services.

Question 15

The short-run aggregate supply curve slopes:

Accepted Answer

A) ​downward because firms can sell more, and hence, will produce more when prices are lower. 
B) ​downward because firms find it costs less to purchase labor and other inputs when prices are lower and hence, they produce more. 
C) ​upward because firms normally can purchase some labor and other inputs at fixed costs for some period of time. 
D) ​upward because firms find that it costs more to purchase labor and other inputs when prices are higher and hence they must produce and sell more in order to make a profit. 
A) ​downward because firms can sell more, and hence, will produce more when prices are lower. 
B) ​downward because firms find it costs less to purchase labor and other inputs when prices are lower and hence, they produce more. 
C) ​upward because firms normally can purchase some labor and other inputs at fixed costs for some period of time. 
D) ​upward because firms find that it costs more to purchase labor and other inputs when prices are higher and hence they must produce and sell more in order to make a profit.

Question 16

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

Accepted Answer

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

Question 17

If some non-price level determinant causes total spending to decrease, then the effect on aggregate demand will be a:

Accepted Answer

A) ​movement upward along the curve. 
B) ​movement downward along the curve. 
C) ​shift to the left. 
D) ​shift to the right. 
A) ​movement upward along the curve. 
B) ​movement downward along the curve. 
C) ​shift to the left. 
D) ​shift to the right.

Question 18

Discuss the difference between an increase in the aggregate demand curve and an increase in the quantity of real GDP demanded. Include a discussion of how the price level relates to each event.

Accepted Answer

An increase in aggregate demand is depic

Question 19

Which of the following observations will be valid, if major trading partners of the United States experience an economic slowdown?

Accepted Answer

A) ​There will be an increase in U.S.exports to them 
B) ​U.S.aggregate demand will not be affected 
C) ​U.S.net exports will decrease 
D) ​aggregate demand will shift to the right 
A) ​There will be an increase in U.S.exports to them 
B) ​U.S.aggregate demand will not be affected 
C) ​U.S.net exports will decrease 
D) ​aggregate demand will shift to the right

Question 20

Which of the following does not explain why the aggregate demand curve is negatively sloped?

Accepted Answer

A) ​misperception effect 
B) ​open economy effect 
C) ​real wealth effect 
D) ​interest rate effect 
A) ​misperception effect 
B) ​open economy effect 
C) ​real wealth effect 
D) ​interest rate effect

Exam 14: Monopolistic Competition and Product Differentiation

When there is a recessionary gap:

Explain why the short-run supply curve is not vertical, but the long-run aggregate supply curve is vertical.

Which of the following is not true when there is an inflationary gap?

An unexpected decrease in aggregate demand results in an increase in real interest rates in the short run.

An increase in net exports would lead to an increase aggregate demand but would not lead to an increase in aggregate supply.

An increase in real interest rates will increase saving and decrease aggregate demand, other things equal.

Which of the following will cause consumption to increase and aggregate demand to shift to the left?

If both imports and exports rose,

Discuss the impact of efficiency wages on unemployment and wage inflexibility.

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

The real wealth effect is one reason for the negative slope of the aggregate demand curve.

According to the interest rate effect, as the price level decreases, households and firms' holdings of money ____, interest rates ____, investments ____, and the quantity RGDP demanded ____.

What are the major factors that determine investment, and what impact does each have on aggregate demand?

Aggregate demand can be defined as:

The short-run aggregate supply curve slopes:

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

If some non-price level determinant causes total spending to decrease, then the effect on aggregate demand will be a:

Discuss the difference between an increase in the aggregate demand curve and an increase in the quantity of real GDP demanded. Include a discussion of how the price level relates to each event.

Which of the following observations will be valid, if major trading partners of the United States experience an economic slowdown?

Which of the following does not explain why the aggregate demand curve is negatively sloped?

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

According to the interest rate effect, as the price level decreases, households and firms' holdings of money , interest rates , investments , and the quantity RGDP demanded .

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