Question 1

Which of the following would cause prices to fall and output to rise in the short run?

Accepted Answer

A)  short-run aggregate supply shifts right 
B)  short-run aggregate supply shifts left 
C)  aggregate demand shifts right 
D)  aggregate demand shifts left 
A)  short-run aggregate supply shifts right 
B)  short-run aggregate supply shifts left 
C)  aggregate demand shifts right 
D)  aggregate demand shifts left

Question 2

When taxes decrease, consumption

Accepted Answer

A)  decreases as shown by a movement to the left along a given aggregate-demand curve. 
B)  decreases as shown by a shift of the aggregate demand curve to the left. 
C)  increases as shown by a movement to the right along a given aggregate-demand curve. 
D)  increases as shown by a shift of the aggregate demand curve to the right. 
A)  decreases as shown by a movement to the left along a given aggregate-demand curve. 
B)  decreases as shown by a shift of the aggregate demand curve to the left. 
C)  increases as shown by a movement to the right along a given aggregate-demand curve. 
D)  increases as shown by a shift of the aggregate demand curve to the right.

Question 3

Other things the same, what happens in the long run to the price level and quantity of output after a contraction in aggregate demand?

Accepted Answer

The price level decr

Question 4

The long-run aggregate supply curve shifts right if

Accepted Answer

A)  immigration from abroad increases. 
B)  the capital stock increases. 
C)  technology advances. 
D)  All of the above are correct. 
A)  immigration from abroad increases. 
B)  the capital stock increases. 
C)  technology advances. 
D)  All of the above are correct.

Question 5

Other things the same, when the price level falls, interest rates

Accepted Answer

A)  rise, which means consumers will want to spend more on homebuilding. 
B)  rise, which means consumers will want to spend less on homebuilding. 
C)  fall, which means consumers will want to spend more on homebuilding. 
D)  fall, which means consumers will want to spend less on homebuilding. 
A)  rise, which means consumers will want to spend more on homebuilding. 
B)  rise, which means consumers will want to spend less on homebuilding. 
C)  fall, which means consumers will want to spend more on homebuilding. 
D)  fall, which means consumers will want to spend less on homebuilding.

Question 6

Which of the following shifts the short-run aggregate supply curve to the right?

Accepted Answer

A)  a decrease in the actual price level 
B)  an increase in the actual price level 
C)  a decrease in the expected price level 
D)  an increase in the expected price level 
A)  a decrease in the actual price level 
B)  an increase in the actual price level 
C)  a decrease in the expected price level 
D)  an increase in the expected price level

Question 7

Which of the following is included in the aggregate demand for goods and services?

Accepted Answer

A)  consumption demand 
B)  investment demand 
C)  net exports 
D)  All of the above are correct. 
A)  consumption demand 
B)  investment demand 
C)  net exports 
D)  All of the above are correct.

Question 8

A relatively mild period of falling incomes and rising unemployment is called an)

Accepted Answer

A)  depression. 
B)  recession. 
C)  expansion. 
D)  business cycle. 
A)  depression. 
B)  recession. 
C)  expansion. 
D)  business cycle.

Question 9

As the price level rises, the interest rate

Accepted Answer

A)  falls, so the supply of dollars in the market for foreign currency exchange shifts left. 
B)  falls, so the supply of dollars in the market for foreign currency exchange shifts right. 
C)  rises, so the supply of dollars in the market for foreign currency exchange shifts left. 
D)  rises, so the supply of dollars in the market for foreign currency exchange shifts right. 
A)  falls, so the supply of dollars in the market for foreign currency exchange shifts left. 
B)  falls, so the supply of dollars in the market for foreign currency exchange shifts right. 
C)  rises, so the supply of dollars in the market for foreign currency exchange shifts left. 
D)  rises, so the supply of dollars in the market for foreign currency exchange shifts right.

Question 10

The wealth effect, interest-rate effect, and exchange-rate effect are all explanations for

Accepted Answer

A)  the slope of short-run aggregate supply. 
B)  the slope of long-run aggregate supply. 
C)  the slope of the aggregate-demand curve. 
D)  everything that makes the aggregate-demand curve shift. 
A)  the slope of short-run aggregate supply. 
B)  the slope of long-run aggregate supply. 
C)  the slope of the aggregate-demand curve. 
D)  everything that makes the aggregate-demand curve shift.

Question 11

Which of the following is correct?

Accepted Answer

A)  Real GDP is the variable most commonly used to measure short-run economic fluctuations. These fluctuations can be predicted with some accuracy. 
B)  Real GDP is the variable most commonly used to measure short-run economic fluctuations. It is almost impossible to predict these fluctuations with much accuracy. 
C)  Nominal GDP is the variable most commonly used to measure short-run economic fluctuations. These fluctuations can be predicted with some accuracy. 
D)  Nominal GDP is the variable most commonly used to measure short-run economic fluctuations. It is almost impossible to predict these fluctuations with much accuracy. 
A)  Real GDP is the variable most commonly used to measure short-run economic fluctuations. These fluctuations can be predicted with some accuracy. 
B)  Real GDP is the variable most commonly used to measure short-run economic fluctuations. It is almost impossible to predict these fluctuations with much accuracy. 
C)  Nominal GDP is the variable most commonly used to measure short-run economic fluctuations. These fluctuations can be predicted with some accuracy. 
D)  Nominal GDP is the variable most commonly used to measure short-run economic fluctuations. It is almost impossible to predict these fluctuations with much accuracy.

Question 12

List the three reasons for why the aggregate-demand curve slopes downward.

Accepted Answer

The wealth effect, t

Question 13

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

Accepted Answer

A) True 
 B)False

Question 14

A decrease in the price level makes consumers feel wealthier, so they purchase more. This logic helps explain why the aggregate demand curve slopes downward.

Accepted Answer

A) True 
 B)False

Question 15

Imagine two economies that are identical except that for a long time, economy A has had a money supply of $1,000 billion while economy B has had a money supply of $500 billion. It follows that

Accepted Answer

A)  real GDP and the price level are lower in country B. 
B)  real GDP, but not the price level, is lower in country B. 
C)  the price level, but not real GDP is lower in country B. 
D)  neither the price level or real GDP is lower in country B. 
A)  real GDP and the price level are lower in country B. 
B)  real GDP, but not the price level, is lower in country B. 
C)  the price level, but not real GDP is lower in country B. 
D)  neither the price level or real GDP is lower in country B.

Question 16

Figure 33-5.  
-Refer to Figure 33-5. The shift of the short-run aggregate-supply curve from SRAS1 to SRAS2

Accepted Answer

A)  could be caused by an outbreak of war in the Middle East. 
B)  could be caused by a decrease in the expected price level. 
C)  causes the economy to experience an increase in the unemployment rate. 
D)  causes the economy to experience stagflation. 
A)  could be caused by an outbreak of war in the Middle East. 
B)  could be caused by a decrease in the expected price level. 
C)  causes the economy to experience an increase in the unemployment rate. 
D)  causes the economy to experience stagflation.

Question 17

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)  both an investment tax credit and a decrease in income tax rates 
B)  an investment tax credit but not a decrease in income tax rates 
C)  a decrease in income tax rates but not an investment tax credit 
D)  neither an investment tax credit nor a decrease in income tax rates 
A)  both an investment tax credit and a decrease in income tax rates 
B)  an investment tax credit but not a decrease in income tax rates 
C)  a decrease in income tax rates but not an investment tax credit 
D)  neither an investment tax credit nor a decrease in income tax rates

Question 18

From 2001 to 2005 there was a dramatic rise in the price of houses. If this rise made people feel wealthier, then it would have shifted

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 19

Other things the same, when the price level rises more than expected, some firms will have

Accepted Answer

A)  higher than desired prices, which increases their sales. 
B)  higher than desired prices, which depresses their sales. 
C)  lower than desired prices, which increases their sales. 
D)  lower than desired prices, which depresses their sales. 
A)  higher than desired prices, which increases their sales. 
B)  higher than desired prices, which depresses their sales. 
C)  lower than desired prices, which increases their sales. 
D)  lower than desired prices, which depresses their sales.

Question 20

Which of the following would both shift aggregate demand right?

Accepted Answer

A)  the price level decreases and government expenditures increase. 
B)  the price level decreases and the government repeals an investment tax credit. 
C)  taxes decrease and government expenditures increase. 
D)  None of the above are correct. 
A)  the price level decreases and government expenditures increase. 
B)  the price level decreases and the government repeals an investment tax credit. 
C)  taxes decrease and government expenditures increase. 
D)  None of the above are correct.

Which of the following would cause prices to fall and output to rise in the short run?

When taxes decrease, consumption

Other things the same, what happens in the long run to the price level and quantity of output after a contraction in aggregate demand?

The long-run aggregate supply curve shifts right if

Other things the same, when the price level falls, interest rates

Which of the following shifts the short-run aggregate supply curve to the right?

Which of the following is included in the aggregate demand for goods and services?

A relatively mild period of falling incomes and rising unemployment is called an)

As the price level rises, the interest rate

The wealth effect, interest-rate effect, and exchange-rate effect are all explanations for

Which of the following is correct?

List the three reasons for why the aggregate-demand curve slopes downward.

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

A decrease in the price level makes consumers feel wealthier, so they purchase more. This logic helps explain why the aggregate demand curve slopes downward.

Imagine two economies that are identical except that for a long time, economy A has had a money supply of $1,000 billion while economy B has had a money supply of $500 billion. It follows that

Figure 33-5. -Refer to Figure 33-5. The shift of the short-run aggregate-supply curve from SRAS1 to SRAS2

Which of the following shifts aggregate demand to the right?

From 2001 to 2005 there was a dramatic rise in the price of houses. If this rise made people feel wealthier, then it would have shifted

Other things the same, when the price level rises more than expected, some firms will have

Which of the following would both shift aggregate demand right?

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

Exam 15: Aggregate Demand and Aggregate Supply

Which of the following would cause prices to fall and output to rise in the short run?

When taxes decrease, consumption

Other things the same, what happens in the long run to the price level and quantity of output after a contraction in aggregate demand?

The long-run aggregate supply curve shifts right if

Other things the same, when the price level falls, interest rates

Which of the following shifts the short-run aggregate supply curve to the right?

Which of the following is included in the aggregate demand for goods and services?

A relatively mild period of falling incomes and rising unemployment is called an)

As the price level rises, the interest rate

The wealth effect, interest-rate effect, and exchange-rate effect are all explanations for

Which of the following is correct?

List the three reasons for why the aggregate-demand curve slopes downward.

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

A decrease in the price level makes consumers feel wealthier, so they purchase more. This logic helps explain why the aggregate demand curve slopes downward.

Imagine two economies that are identical except that for a long time, economy A has had a money supply of $1,000 billion while economy B has had a money supply of $500 billion. It follows that

Figure 33-5. -Refer to Figure 33-5. The shift of the short-run aggregate-supply curve from SRAS1 to SRAS2

Which of the following shifts aggregate demand to the right?

From 2001 to 2005 there was a dramatic rise in the price of houses. If this rise made people feel wealthier, then it would have shifted

Other things the same, when the price level rises more than expected, some firms will have

Which of the following would both shift aggregate demand right?

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