Question 1

"Money is a veil" best describes the

Accepted Answer

A)  new-Keynesian view. 
B)  Keynesian view. 
C)  classical view. 
D)  economy in the short run but not the long run. 
A)  new-Keynesian view. 
B)  Keynesian view. 
C)  classical view. 
D)  economy in the short run but not the long run.

Question 2

The logic of the exchange-rate effect begins with a change in the price level changing the interest rate.

Accepted Answer

A) True 
 B)False

Question 3

The economic boom of the early 1940s resulted mostly from

Accepted Answer

A)  increased government expenditures. 
B)  falling prices of oil and other natural resources. 
C)  an increase in the growth rate of the money supply. 
D)  rapid developments in transportation, electronics, and communication. 
A)  increased government expenditures. 
B)  falling prices of oil and other natural resources. 
C)  an increase in the growth rate of the money supply. 
D)  rapid developments in transportation, electronics, and communication.

Question 4

The sticky-price theory helps explain what feature of the aggregate demand and aggregate supply model?

Accepted Answer

why the short run ag

Question 5

Financial Crisis
Suppose that banks are less able to raise funds and so lend less. Consequently, because people and households are less able to borrow, they spend less at any given price level than they would otherwise. The crisis is persistent so lending should remain depressed 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.

Question 6

Name two macroeconomic variables that decline when an economy goes into recession, and name one macroeconomic variable that rises.

Accepted Answer

Real GDP and investm

Question 7

Aggregate demand shifts right when the government

Accepted Answer

A)  decreases taxes. 
B)  cuts military expenditures. 
C)  repeals an investment tax credit. 
D)  None of the above is correct. 
A)  decreases taxes. 
B)  cuts military expenditures. 
C)  repeals an investment tax credit. 
D)  None of the above is correct.

Question 8

Other things the same, a decrease in the price level causes the interest rate to

Accepted Answer

A)  increase, the dollar to appreciate, and net exports to increase. 
B)  increase, the dollar to depreciate, and net exports to decrease. 
C)  decrease, the dollar to depreciate, and net exports to increase. 
D)  decrease, the dollar to appreciate, and net exports to decrease. 
A)  increase, the dollar to appreciate, and net exports to increase. 
B)  increase, the dollar to depreciate, and net exports to decrease. 
C)  decrease, the dollar to depreciate, and net exports to increase. 
D)  decrease, the dollar to appreciate, and net exports to decrease.

Question 9

In 2009 Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right?

Accepted Answer

A)  only the increased funding for states 
B)  only the tax cuts 
C)  both the increased funding for states and the tax cuts 
D)  neither the increased funding for states nor the tax cuts 
A)  only the increased funding for states 
B)  only the tax cuts 
C)  both the increased funding for states and the tax cuts 
D)  neither the increased funding for states nor the tax cuts

Question 10

Which of the following rises when the U.S. price level falls?

Accepted Answer

A)  interest rates 
B)  the value of the dollar in the market for foreign-currency exchange 
C)  real wealth 
D)  All of the above are correct. 
A)  interest rates 
B)  the value of the dollar in the market for foreign-currency exchange 
C)  real wealth 
D)  All of the above are correct.

Question 11

If the dollar depreciates because of speculation or government policy, U.S.

Accepted Answer

A)  aggregate demand shifts left. U.S. aggregate demand also shifts left if other countries experience an increase in real GDP. 
B)  aggregate demand shifts left. U.S. aggregate demand shifts right if other countries experience an increase in real GDP. 
C)  aggregate demand shifts right. U.S. aggregate demand also shifts right if other countries experience a decrease in real GDP. 
D)  aggregate demand shifts right. U.S. aggregate demand shifts left if other countries experience a decrease in real GDP. 
A)  aggregate demand shifts left. U.S. aggregate demand also shifts left if other countries experience an increase in real GDP. 
B)  aggregate demand shifts left. U.S. aggregate demand shifts right if other countries experience an increase in real GDP. 
C)  aggregate demand shifts right. U.S. aggregate demand also shifts right if other countries experience a decrease in real GDP. 
D)  aggregate demand shifts right. U.S. aggregate demand shifts left if other countries experience a decrease in real GDP.

Question 12

The discovery of a large amount of previously-undiscovered oil in the U.S. would shift

Accepted Answer

A)  the long-run aggregate-supply curve to the right. 
B)  the long-run aggregate-supply curve to the left. 
C)  the aggregate-demand curve to the left. 
D)  None of the above is correct. 
A)  the long-run aggregate-supply curve to the right. 
B)  the long-run aggregate-supply curve to the left. 
C)  the aggregate-demand curve to the left. 
D)  None of the above is correct.

Question 13

An increase in the expected price level shifts the short-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 14

Since the end of World War II, the U.S. has almost always had rising prices and an upward trend in real GDP. This can be explained

Accepted Answer

A)  only by technological progress. 
B)  only by money supply growth. 
C)  by technological progress and money supply growth. 
D)  None of the above is correct. 
A)  only by technological progress. 
B)  only by money supply growth. 
C)  by technological progress and money supply growth. 
D)  None of the above is correct.

Question 15

Over the last fifty years both real GDP and prices have trended upward in most countries. Continuing real GDP growth and inflation can be explained by

Accepted Answer

A)  continuing technological progress alone. 
B)  continuing increases in the money supply alone. 
C)  continued technological progress and continuing increases in the money supply. 
D)  None of the above can explain continuing real GDP growth and inflation. 
A)  continuing technological progress alone. 
B)  continuing increases in the money supply alone. 
C)  continued technological progress and continuing increases in the money supply. 
D)  None of the above can explain continuing real GDP growth and inflation.

Question 16

Financial Crisis
Suppose that banks are less able to raise funds and so lend less. Consequently, because people and households are less able to borrow, they spend less at any given price level than they would otherwise. The crisis is persistent so lending should remain depressed for some time.
-Refer to Financial Crisis. 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.

Question 17

As the price level rises, the exchange rate

Accepted Answer

A)  falls, so exports rise and imports fall. 
B)  falls, so exports fall and imports rise. 
C)  rises, so exports rise and imports fall. 
D)  rises, so exports fall and imports rise. 
A)  falls, so exports rise and imports fall. 
B)  falls, so exports fall and imports rise. 
C)  rises, so exports rise and imports fall. 
D)  rises, so exports fall and imports rise.

Question 18

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

Accepted Answer

A)  both investment and consumption 
B)  consumption but not investment 
C)  investment but not consumption 
D)  neither investment nor consumption 
A)  both investment and consumption 
B)  consumption but not investment 
C)  investment but not consumption 
D)  neither investment nor consumption

Question 19

Compare changes in the price level for a recession resulting from a shift in aggregate demand to that of a recession resulting from a shift in short run aggregate supply.

Accepted Answer

the price level decreases when

Question 20

Other things the same, as the price level falls,

Accepted Answer

A)  the dollar depreciates. 
B)  the interest rate rises. 
C)  people feel less wealthy. 
D)  All of the above are correct. 
A)  the dollar depreciates. 
B)  the interest rate rises. 
C)  people feel less wealthy. 
D)  All of the above are correct.

Exam 23: Aggregate Demand and Aggregate Supply

"Money is a veil" best describes the

The logic of the exchange-rate effect begins with a change in the price level changing the interest rate.

The economic boom of the early 1940s resulted mostly from

The sticky-price theory helps explain what feature of the aggregate demand and aggregate supply model?

Name two macroeconomic variables that decline when an economy goes into recession, and name one macroeconomic variable that rises.

Aggregate demand shifts right when the government

Other things the same, a decrease in the price level causes the interest rate to

In 2009 Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right?

Which of the following rises when the U.S. price level falls?

If the dollar depreciates because of speculation or government policy, U.S.

The discovery of a large amount of previously-undiscovered oil in the U.S. would shift

An increase in the expected price level shifts the short-run aggregate supply curve to the right.

Since the end of World War II, the U.S. has almost always had rising prices and an upward trend in real GDP. This can be explained

Over the last fifty years both real GDP and prices have trended upward in most countries. Continuing real GDP growth and inflation can be explained by

As the price level rises, the exchange rate

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

Compare changes in the price level for a recession resulting from a shift in aggregate demand to that of a recession resulting from a shift in short run aggregate supply.

Other things the same, as the price level falls,

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Costs of Production

Firms in Competitive Markets

Monopoly

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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