Question 1

Holding all other things constant, when the price level falls, interest rates:

Accepted Answer

A) ​rise and firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. 
B) ​rise and firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding. 
C) ​falls and firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding. 
D) ​falls and firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. 
A) ​rise and firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. 
B) ​rise and firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding. 
C) ​falls and firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding. 
D) ​falls and firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding.

Question 2

If the price level in the United States decreases, domestic goods will become relatively cheaper than foreign goods, the demand for U.S.-made goods will increase, and the quantity of RGDP demanded will increase.

Accepted Answer

A) True 
 B)False

Question 3

The SRAS curve is vertical at the natural level of real output.

Accepted Answer

A) True 
 B)False

Question 4

The SRAS would be vertical:

Accepted Answer

A) ​if there was no profit effect. 
B) ​if there was no misperception effect. 
C) ​if there was no profit effect or misperception effect. 
D) ​under no conceivable set of circumstances. 
A) ​if there was no profit effect. 
B) ​if there was no misperception effect. 
C) ​if there was no profit effect or misperception effect. 
D) ​under no conceivable set of circumstances.

Question 5

A short run equilibrium:

Accepted Answer

A) ​Will be at a greater output level than the natural level of real output. 
B) ​Will be at the natural level of real output. 
C) ​Will be at a smaller output level than the natural level of real output. 
D) ​Short-run equilibrium could be at any of the above levels of output. 
A) ​Will be at a greater output level than the natural level of real output. 
B) ​Will be at the natural level of real output. 
C) ​Will be at a smaller output level than the natural level of real output. 
D) ​Short-run equilibrium could be at any of the above levels of output.

Question 6

Greater and more extensive government regulations of safety standards and environmental controls will have what effect on short-run and long-run aggregate supply?

Accepted Answer

Increased government regulation, limits,

Question 7

​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 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 an increase 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 an increase in stock market wealth

Question 8

A change that shifted the long-run aggregate supply curve to the right would also shift the short-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 9

If private consumption in the United States was 69 percent of GDP, investment was 18 percent, government purchases were 18 percent, exports were 9 percent, and imports were 14 percent, net exports were equal to ____ percent of GDP.

Accepted Answer

A) ​-5 
B) ​5 
C) ​-23 
D) ​23 
A) ​-5 
B) ​5 
C) ​-23 
D) ​23

Question 10

In long-run equilibrium, employment is at full employment and unemployment is at the natural rate of unemployment.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following would lead to an increase in aggregate demand?

Accepted Answer

A) ​an increase in consumer confidence 
B) ​a decrease in the overall price level 
C) ​an increase in input prices 
D) ​all of the above 
A) ​an increase in consumer confidence 
B) ​a decrease in the overall price level 
C) ​an increase in input prices 
D) ​all of the above

Question 12

If there were no real wealth or interest rate effect, the aggregate demand curve would still be downward sloping.

Accepted Answer

A) True 
 B)False

Question 13

Pierre is French Canadian, and like many Canadians he is experiencing booming good economic times. His good fortune is likely to impact U.S. aggregate demand in what way?

Accepted Answer

A) ​Positively, because he prefers to make all his purchases in Canada from Canadian firms. 
B) ​Negatively, because he prefers to make all his purchases in Canada from Canadian firms. 
C) ​Negatively, since we are all members of North American Free Trade Zone. 
D) ​Positively, since he will be in a better position to purchase U.S.-made goods. 
A) ​Positively, because he prefers to make all his purchases in Canada from Canadian firms. 
B) ​Negatively, because he prefers to make all his purchases in Canada from Canadian firms. 
C) ​Negatively, since we are all members of North American Free Trade Zone. 
D) ​Positively, since he will be in a better position to purchase U.S.-made goods.

Question 14

Discuss some of the reasons behind downward stickiness of wages and prices.

Accepted Answer

Empirical evidence supports several expl

Question 15

A trade deficit means that net exports are positive.

Accepted Answer

A) True 
 B)False

Question 16

If some nonprice 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 17

A decrease in the price level will:

Accepted Answer

A) ​increase the quantity of RGDP supplied, but not increase short-run aggregate supply. 
B) ​decrease the quantity of RGDP supplied, but not decrease short-run aggregate supply. 
C) ​increase short-run aggregate supply. 
D) ​decrease short-run aggregate supply. 
A) ​increase the quantity of RGDP supplied, but not increase short-run aggregate supply. 
B) ​decrease the quantity of RGDP supplied, but not decrease short-run aggregate supply. 
C) ​increase short-run aggregate supply. 
D) ​decrease short-run aggregate supply.

Question 18

When there is an inflationary 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 19

Ben N. Jerry prefers to keep his $10,000 retirement savings buried in the backyard. After an increase in the price level, Ben reduces the amount of goods and services he wants to purchase. Ben's rationalization, that now his retirement savings won't buy as much, is consistent with which explanation of the aggregate demand curve's negative slope?

Accepted Answer

A) ​the interest rate effect 
B) ​the open economy effect 
C) ​the inflation effect 
D) ​the wealth effect 
A) ​the interest rate effect 
B) ​the open economy effect 
C) ​the inflation effect 
D) ​the wealth effect

Question 20

Other things equal, an adverse supply shock would

Accepted Answer

A) ​Shift SRAS left 
B) ​Shift LRAS left 
C) ​Shift AD left 
D) ​Do all of the above 
A) ​Shift SRAS left 
B) ​Shift LRAS left 
C) ​Shift AD left 
D) ​Do all of the above

Holding all other things constant, when the price level falls, interest rates:

If the price level in the United States decreases, domestic goods will become relatively cheaper than foreign goods, the demand for U.S.-made goods will increase, and the quantity of RGDP demanded will increase.

The SRAS curve is vertical at the natural level of real output.

The SRAS would be vertical:

A short run equilibrium:

Greater and more extensive government regulations of safety standards and environmental controls will have what effect on short-run and long-run aggregate supply?

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?

A change that shifted the long-run aggregate supply curve to the right would also shift the short-run aggregate supply curve to the right.

If private consumption in the United States was 69 percent of GDP, investment was 18 percent, government purchases were 18 percent, exports were 9 percent, and imports were 14 percent, net exports were equal to ____ percent of GDP.

In long-run equilibrium, employment is at full employment and unemployment is at the natural rate of unemployment.

Which of the following would lead to an increase in aggregate demand?

If there were no real wealth or interest rate effect, the aggregate demand curve would still be downward sloping.

Pierre is French Canadian, and like many Canadians he is experiencing booming good economic times. His good fortune is likely to impact U.S. aggregate demand in what way?

Discuss some of the reasons behind downward stickiness of wages and prices.

A trade deficit means that net exports are positive.

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

A decrease in the price level will:

When there is an inflationary gap:

Other things equal, an adverse supply shock would

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

Holding all other things constant, when the price level falls, interest rates:

If the price level in the United States decreases, domestic goods will become relatively cheaper than foreign goods, the demand for U.S.-made goods will increase, and the quantity of RGDP demanded will increase.

The SRAS curve is vertical at the natural level of real output.

The SRAS would be vertical:

A short run equilibrium:

Greater and more extensive government regulations of safety standards and environmental controls will have what effect on short-run and long-run aggregate supply?

​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?

A change that shifted the long-run aggregate supply curve to the right would also shift the short-run aggregate supply curve to the right.

If private consumption in the United States was 69 percent of GDP, investment was 18 percent, government purchases were 18 percent, exports were 9 percent, and imports were 14 percent, net exports were equal to ____ percent of GDP.

In long-run equilibrium, employment is at full employment and unemployment is at the natural rate of unemployment.

Which of the following would lead to an increase in aggregate demand?

If there were no real wealth or interest rate effect, the aggregate demand curve would still be downward sloping.

Pierre is French Canadian, and like many Canadians he is experiencing booming good economic times. His good fortune is likely to impact U.S. aggregate demand in what way?

Discuss some of the reasons behind downward stickiness of wages and prices.

A trade deficit means that net exports are positive.

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

A decrease in the price level will:

When there is an inflationary gap:

Other things equal, an adverse supply shock would

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

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?