Question 1

Which of the following affected aggregate demand during the recession of 2008-2009?

Accepted Answer

A)  a decline in residential construction and a decrease in lending 
B)  a decline in residential construction but not a decrease in lending 
C)  a decrease in lending but not a decline in residential construction 
D)  neither a decrease in residential construction nor a decrease in lending 
A)  a decline in residential construction and a decrease in lending 
B)  a decline in residential construction but not a decrease in lending 
C)  a decrease in lending but not a decline in residential construction 
D)  neither a decrease in residential construction nor a decrease in lending

Question 2

The long-run aggregate supply curve shifts right if

Accepted Answer

A)  the price level rises. 
B)  the price level falls. 
C)  the capital stock increases. 
D)  the capital stock decreases. 
A)  the price level rises. 
B)  the price level falls. 
C)  the capital stock increases. 
D)  the capital stock decreases.

Question 3

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

Accepted Answer

When the price level increases, the purc

Question 4

Changes in what four variables will shift the long run aggregate supply curve?

Accepted Answer

Labor, capital, natu

Question 5

Figure 33-10.  
-Refer to Figure 33-10. If the economy starts at point A, a short-run fall in output would be consistent with a movement to point

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 6

When the dollar depreciates, U.S.

Accepted Answer

A)  net exports rise, which increases the aggregate quantity of goods and services demanded. 
B)  net exports rise, which decreases the aggregate quantity of goods and services demanded. 
C)  net exports fall, which increases the aggregate quantity of goods and services demanded. 
D)  net exports fall, which decreases the aggregate quantity of goods and services demanded. 
A)  net exports rise, which increases the aggregate quantity of goods and services demanded. 
B)  net exports rise, which decreases the aggregate quantity of goods and services demanded. 
C)  net exports fall, which increases the aggregate quantity of goods and services demanded. 
D)  net exports fall, which decreases the aggregate quantity of goods and services demanded.

Question 7

A recession with inflation is known by what term?

Accepted Answer

The answer of A recession with inflation is known by...

Question 8

Optimism
Imagine that the economy is in long-run equilibrium. Then, perhaps because of improved international relations and increased confidence in policy makers, people become more optimistic about the future and stay this way for some time.
-Refer to Optimism. What happens to the expected price level and what's the result for wage bargaining?

Accepted Answer

A)  The expected price level falls. Bargains are struck for higher wages. 
B)  The expected price level falls. Bargains are struck for lower wages. 
C)  The expected price level rises. Bargains are struck for higher wages. 
D)  The expected price level rises. Bargains are struck for lower wages. 
A)  The expected price level falls. Bargains are struck for higher wages. 
B)  The expected price level falls. Bargains are struck for lower wages. 
C)  The expected price level rises. Bargains are struck for higher wages. 
D)  The expected price level rises. Bargains are struck for lower wages.

Question 9

Explain how a change in the expected price level would shift the short-run and long-run aggregate-supply curves.

Accepted Answer

Expected price level changes w

Question 10

Sticky nominal wages can result in

Accepted Answer

A)  lower profits for firms when the price level is lower than expected. 
B)  a decrease in real wages when the price level is lower than expected. 
C)  a short-run aggregate-supply curve that is vertical. 
D)  a long-run aggregate-supply curve that is upward-sloping. 
A)  lower profits for firms when the price level is lower than expected. 
B)  a decrease in real wages when the price level is lower than expected. 
C)  a short-run aggregate-supply curve that is vertical. 
D)  a long-run aggregate-supply curve that is upward-sloping.

Question 11

Stagflation results from continued decreases in aggregate demand.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following explains why production rises in most years?

Accepted Answer

A)  increases in the labor force 
B)  increases in the capital stock 
C)  advances in technological knowledge 
D)  All of the above are correct. 
A)  increases in the labor force 
B)  increases in the capital stock 
C)  advances in technological knowledge 
D)  All of the above are correct.

Question 13

According to the aggregate demand and aggregate supply model, in the long run a decrease in the money supply leads to

Accepted Answer

A)  decreases in both the price level and real GDP. 
B)  an increase in real GDP and an increase in the price level. 
C)  a decrease in the price level but does not change real GDP. 
D)  an increase in the price level but does not change real GDP. 
A)  decreases in both the price level and real GDP. 
B)  an increase in real GDP and an increase in the price level. 
C)  a decrease in the price level but does not change real GDP. 
D)  an increase in the price level but does not change real GDP.

Question 14

If speculators bid up the value of the dollar in the market for foreign-currency exchange, U.S. aggregate demand would shift to the left.

Accepted Answer

A) True 
 B)False

Question 15

If aggregate demand shifts right then in the short run

Accepted Answer

A)  firms will increase production. In the long run increased price expectations shift the short-run aggregate supply curve to the right. 
B)  firms will increase production. In the long run increased price expectations shift the short-run aggregate supply curve to the left. 
C)  firms will decrease production. In the long run increased price expectations shift the short-run aggregate supply curve to the right. 
D)  firms will decrease production. In the long run increased price expectations shift the short-run aggregate supply curve to the left. 
A)  firms will increase production. In the long run increased price expectations shift the short-run aggregate supply curve to the right. 
B)  firms will increase production. In the long run increased price expectations shift the short-run aggregate supply curve to the left. 
C)  firms will decrease production. In the long run increased price expectations shift the short-run aggregate supply curve to the right. 
D)  firms will decrease production. In the long run increased price expectations shift the short-run aggregate supply curve to the left.

Question 16

The aggregate-demand curve shows that a decrease in the price level

Accepted Answer

A)  decreases the dollar value of goods and services demanded in the economy. 
B)  decreases the real value of goods and services demanded in the economy. 
C)  increases the dollar value of goods and services demanded in the economy. 
D)  increases the real value of goods and services demanded in the economy. 
A)  decreases the dollar value of goods and services demanded in the economy. 
B)  decreases the real value of goods and services demanded in the economy. 
C)  increases the dollar value of goods and services demanded in the economy. 
D)  increases the real value of goods and services demanded in the economy.

Question 17

Keynes believed that economies experiencing high unemployment should adopt policies to

Accepted Answer

A)  reduce the money supply. 
B)  reduce government expenditures. 
C)  increase aggregate demand. 
D)  increase aggregate supply. 
A)  reduce the money supply. 
B)  reduce government expenditures. 
C)  increase aggregate demand. 
D)  increase aggregate supply.

Question 18

An increase in the actual price level does not shift the short-run aggregate supply curve, but an expected increase in the price level shifts the short-run aggregate supply curve to the left.

Accepted Answer

A) True 
 B)False

Question 19

If businesses in general decide that they have overbuilt and so now have too much capital, their response to this would initially shift

Accepted Answer

A)  aggregate demand right. 
B)  aggregate demand left. 
C)  aggregate supply right. 
D)  aggregate supply left. 
A)  aggregate demand right. 
B)  aggregate demand left. 
C)  aggregate supply right. 
D)  aggregate supply left.

Question 20

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.
-Refer to Pessimism. How is the new long-run equilibrium different from the original one?

Accepted Answer

A)  both price and real GDP are higher. 
B)  both price and real GDP are lower. 
C)  the price level is the same and GDP is lower. 
D)  the price level is lower and real GDP is the same. 
A)  both price and real GDP are higher. 
B)  both price and real GDP are lower. 
C)  the price level is the same and GDP is lower. 
D)  the price level is lower and real GDP is the same.

Which of the following affected aggregate demand during the recession of 2008-2009?

The long-run aggregate supply curve shifts right if

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

Changes in what four variables will shift the long run aggregate supply curve?

Figure 33-10. -Refer to Figure 33-10. If the economy starts at point A, a short-run fall in output would be consistent with a movement to point

When the dollar depreciates, U.S.

A recession with inflation is known by what term?

Explain how a change in the expected price level would shift the short-run and long-run aggregate-supply curves.

Sticky nominal wages can result in

Stagflation results from continued decreases in aggregate demand.

Which of the following explains why production rises in most years?

According to the aggregate demand and aggregate supply model, in the long run a decrease in the money supply leads to

If speculators bid up the value of the dollar in the market for foreign-currency exchange, U.S. aggregate demand would shift to the left.

If aggregate demand shifts right then in the short run

The aggregate-demand curve shows that a decrease in the price level

Keynes believed that economies experiencing high unemployment should adopt policies to

An increase in the actual price level does not shift the short-run aggregate supply curve, but an expected increase in the price level shifts the short-run aggregate supply curve to the left.

If businesses in general decide that they have overbuilt and so now have too much capital, their response to this would initially shift

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

Which of the following affected aggregate demand during the recession of 2008-2009?

The long-run aggregate supply curve shifts right if

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

Changes in what four variables will shift the long run aggregate supply curve?

Figure 33-10. -Refer to Figure 33-10. If the economy starts at point A, a short-run fall in output would be consistent with a movement to point

When the dollar depreciates, U.S.

A recession with inflation is known by what term?

Explain how a change in the expected price level would shift the short-run and long-run aggregate-supply curves.

Sticky nominal wages can result in

Stagflation results from continued decreases in aggregate demand.

Which of the following explains why production rises in most years?

According to the aggregate demand and aggregate supply model, in the long run a decrease in the money supply leads to

If speculators bid up the value of the dollar in the market for foreign-currency exchange, U.S. aggregate demand would shift to the left.

If aggregate demand shifts right then in the short run

The aggregate-demand curve shows that a decrease in the price level

Keynes believed that economies experiencing high unemployment should adopt policies to

An increase in the actual price level does not shift the short-run aggregate supply curve, but an expected increase in the price level shifts the short-run aggregate supply curve to the left.

If businesses in general decide that they have overbuilt and so now have too much capital, their response to this would initially shift

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