Question 1

In the short-run an increase in the costs of production makes

Accepted Answer

A)  output and prices rise. 
B)  output rise and prices fall. 
C)  output fall and prices rise. 
D)  output and prices fall. 
A)  output and prices rise. 
B)  output rise and prices fall. 
C)  output fall and prices rise. 
D)  output and prices fall.

Question 2

Microeconomic substitution is impossible for the economy as a whole because

Accepted Answer

A)  money is a veil. 
B)  real GDP measures the total quantity of goods and services produced by all firms in all markets. 
C)  the prices of some goods and services adjust sluggishly in response to changing economic conditions. 
D)  a lower price level increases real wealth, which stimulates spending by consumers and vice-versa. 
A)  money is a veil. 
B)  real GDP measures the total quantity of goods and services produced by all firms in all markets. 
C)  the prices of some goods and services adjust sluggishly in response to changing economic conditions. 
D)  a lower price level increases real wealth, which stimulates spending by consumers and vice-versa.

Question 3

Increased optimism about the future leads to rising prices and falling unemployment in the short run.

Accepted Answer

A) True 
 B)False

Question 4

Refer to Political Instability Abroad. What would the change in the exchange rate make happen to U.S. net exports and U.S. aggregate demand?

Accepted Answer

A)  Net exports would rise which by itself would increase U.S. aggregate demand. 
B)  Net exports would rise which by itself would decrease U.S. aggregate demand. 
C)  Net exports would fall which by itself would increase U.S. aggregate demand. 
D)  Net exports would fall which by itself would decrease U.S. aggregate demand. 
A)  Net exports would rise which by itself would increase U.S. aggregate demand. 
B)  Net exports would rise which by itself would decrease U.S. aggregate demand. 
C)  Net exports would fall which by itself would increase U.S. aggregate demand. 
D)  Net exports would fall which by itself would decrease U.S. aggregate demand.

Question 5

Which of the following did the Fed do during the recession of 2008-2009?

Accepted Answer

A)  lowered the federal funds rate and sold securities and loans 
B)  lowered the federal funds rate and purchased securities and loans 
C)  raised the federal funds rate and sold securities and loans 
D)  raised the federal funds rate and purchased securities and loans 
A)  lowered the federal funds rate and sold securities and loans 
B)  lowered the federal funds rate and purchased securities and loans 
C)  raised the federal funds rate and sold securities and loans 
D)  raised the federal funds rate and purchased securities and loans

Question 6

An increase in the money supply causes output to rise in the long run.

Accepted Answer

A) True 
 B)False

Question 7

According to classical macroeconomic theory, changes in the money supply affect

Accepted Answer

A)  variables measured in terms of money and variables measured in terms of quantities or relative prices 
B)  variables measured in terms of money but not variables measured in terms of quantities or relative prices 
C)  variables measured in terms of quantities or relative prices, but not variables measured in terms of money 
D)  neither variables measured in terms of money nor variables measured in terms of quantities or relative prices 
A)  variables measured in terms of money and variables measured in terms of quantities or relative prices 
B)  variables measured in terms of money but not variables measured in terms of quantities or relative prices 
C)  variables measured in terms of quantities or relative prices, but not variables measured in terms of money 
D)  neither variables measured in terms of money nor variables measured in terms of quantities or relative prices

Question 8

An increase in household saving causes consumption to

Accepted Answer

A)  rise and aggregate demand to increase. 
B)  rise and aggregate demand to decrease. 
C)  fall and aggregate demand to increase. 
D)  fall and aggregate demand to decrease. 
A)  rise and aggregate demand to increase. 
B)  rise and aggregate demand to decrease. 
C)  fall and aggregate demand to increase. 
D)  fall and aggregate demand to decrease.

Question 9

According to classical macroeconomic theory, changes in the money supply affect

Accepted Answer

A)  nominal variables and real variables. 
B)  nominal variables, but not real variables. 
C)  real variables, but not nominal variables. 
D)  neither nominal nor real variables. 
A)  nominal variables and real variables. 
B)  nominal variables, but not real variables. 
C)  real variables, but not nominal variables. 
D)  neither nominal nor real variables.

Question 10

As the price level rises

Accepted Answer

A)  people will want to buy more bonds, so the interest rate rises. 
B)  people will want to buy fewer bonds, so the interest rate falls. 
C)  people will want to buy more bonds, so the interest rate falls. 
D)  people will want to buy fewer bonds, so the interest rate rises. 
A)  people will want to buy more bonds, so the interest rate rises. 
B)  people will want to buy fewer bonds, so the interest rate falls. 
C)  people will want to buy more bonds, so the interest rate falls. 
D)  people will want to buy fewer bonds, so the interest rate rises.

Question 11

Historically, the change in real GDP during recessions has been

Accepted Answer

A)  mostly a change in investment spending. 
B)  mostly a change in consumption spending. 
C)  about equally divided between consumption and investment spending. 
D)  sometimes mostly a change in consumption and sometimes mostly a change in investment. 
A)  mostly a change in investment spending. 
B)  mostly a change in consumption spending. 
C)  about equally divided between consumption and investment spending. 
D)  sometimes mostly a change in consumption and sometimes mostly a change in investment.

Question 12

Which of the following correctly describes actions of the U.S. government during the recession of 2008-2009?

Accepted Answer

A)  It refused to provide banks funding and made no significant changes in government spending. 
B)  It refused to provide banks funding but made a large increase in government spending. 
C)  It became part owner of some banks but made no significant change in government spending 
D)  It became part owner of some banks and made a large increase in government spending. 
A)  It refused to provide banks funding and made no significant changes in government spending. 
B)  It refused to provide banks funding but made a large increase in government spending. 
C)  It became part owner of some banks but made no significant change in government spending 
D)  It became part owner of some banks and made a large increase in government spending.

Question 13

When the Fed buys bonds

Accepted Answer

A)  the supply of money increases and so aggregate demand shifts right. 
B)  the supply of money decreases and so aggregate demand shifts left. 
C)  the supply of money decreases and so aggregate demand shifts right. 
D)  the supply of money increases and so aggregate demand shifts left. 
A)  the supply of money increases and so aggregate demand shifts right. 
B)  the supply of money decreases and so aggregate demand shifts left. 
C)  the supply of money decreases and so aggregate demand shifts right. 
D)  the supply of money increases and so aggregate demand shifts left.

Question 14

Recessions in Canada and Mexico would cause

Accepted Answer

A)  the U.S. price level and real GDP to rise. 
B)  the U.S. price level and real GDP to fall. 
C)  the U.S. price level to rise and real GDP to fall. 
D)  the U.S. price level to fall and real GDP to rise. 
A)  the U.S. price level and real GDP to rise. 
B)  the U.S. price level and real GDP to fall. 
C)  the U.S. price level to rise and real GDP to fall. 
D)  the U.S. price level to fall and real GDP to rise.

Question 15

Suppose people anticipate an increase in the expected price level. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Accepted Answer

The short-run aggreg

Question 16

Suppose a country experiences a change in weather patterns that makes farming more difficult. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Accepted Answer

The short-run and lo

Question 17

The short-run effects of an increase in the expected price level include

Accepted Answer

A)  a lower level of output and a lower price level. 
B)  a lower level of output and a higher price level. 
C)  a higher level of output and a lower price level. 
D)  a higher level of output and a higher price level. 
A)  a lower level of output and a lower price level. 
B)  a lower level of output and a higher price level. 
C)  a higher level of output and a lower price level. 
D)  a higher level of output and a higher price level.

Question 18

Which of the following adjust to bring aggregate supply and demand into balance?

Accepted Answer

A)  the price level and real output 
B)  the real rate of interest and the money supply 
C)  government expenditures and taxes 
D)  the saving rate and net exports 
A)  the price level and real output 
B)  the real rate of interest and the money supply 
C)  government expenditures and taxes 
D)  the saving rate and net exports

Question 19

If the economy is initially at long-run equilibrium and aggregate demand declines, then in the long run the price level

Accepted Answer

A)  and output are higher than in the original long-run equilibrium. 
B)  and output are lower than in the original long-run equilibrium. 
C)  is lower and output is the same as the original long-run equilibrium. 
D)  is the same and output is lower than in the original long-run equilibrium. 
A)  and output are higher than in the original long-run equilibrium. 
B)  and output are lower than in the original long-run equilibrium. 
C)  is lower and output is the same as the original long-run equilibrium. 
D)  is the same and output is lower than in the original long-run equilibrium.

Question 20

The sticky-price theory implies that

Accepted Answer

A)  the short-run aggregate-supply curve is upward-sloping. 
B)  an unexpected fall in the price level induces firms to reduce the quantity of goods and services they produce. 
C)  menu costs influence the speed of adjustment of prices. 
D)  All of the above are correct. 
A)  the short-run aggregate-supply curve is upward-sloping. 
B)  an unexpected fall in the price level induces firms to reduce the quantity of goods and services they produce. 
C)  menu costs influence the speed of adjustment of prices. 
D)  All of the above are correct.

In the short-run an increase in the costs of production makes

Microeconomic substitution is impossible for the economy as a whole because

Increased optimism about the future leads to rising prices and falling unemployment in the short run.

Refer to Political Instability Abroad. What would the change in the exchange rate make happen to U.S. net exports and U.S. aggregate demand?

Which of the following did the Fed do during the recession of 2008-2009?

An increase in the money supply causes output to rise in the long run.

According to classical macroeconomic theory, changes in the money supply affect

An increase in household saving causes consumption to

According to classical macroeconomic theory, changes in the money supply affect

As the price level rises

Historically, the change in real GDP during recessions has been

Which of the following correctly describes actions of the U.S. government during the recession of 2008-2009?

When the Fed buys bonds

Recessions in Canada and Mexico would cause

Suppose people anticipate an increase in the expected price level. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Suppose a country experiences a change in weather patterns that makes farming more difficult. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

The short-run effects of an increase in the expected price level include

Which of the following adjust to bring aggregate supply and demand into balance?

If the economy is initially at long-run equilibrium and aggregate demand declines, then in the long run the price level

The sticky-price theory implies that

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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Exam 15: Aggregate Demand and Aggregate Supply

In the short-run an increase in the costs of production makes

Microeconomic substitution is impossible for the economy as a whole because

Increased optimism about the future leads to rising prices and falling unemployment in the short run.

Refer to Political Instability Abroad. What would the change in the exchange rate make happen to U.S. net exports and U.S. aggregate demand?

Which of the following did the Fed do during the recession of 2008-2009?

An increase in the money supply causes output to rise in the long run.

According to classical macroeconomic theory, changes in the money supply affect

An increase in household saving causes consumption to

According to classical macroeconomic theory, changes in the money supply affect

As the price level rises

Historically, the change in real GDP during recessions has been

Which of the following correctly describes actions of the U.S. government during the recession of 2008-2009?

When the Fed buys bonds

Recessions in Canada and Mexico would cause

Suppose people anticipate an increase in the expected price level. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Suppose a country experiences a change in weather patterns that makes farming more difficult. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

The short-run effects of an increase in the expected price level include

Which of the following adjust to bring aggregate supply and demand into balance?

If the economy is initially at long-run equilibrium and aggregate demand declines, then in the long run the price level

The sticky-price theory implies that

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters