Question 1

Write the mathematical expression that summarizes the three alternative explanations for the upward slope of the short run aggregate supply curve.

Accepted Answer

Quantity of output s

Question 2

Which of the following shifts both the short-run and long-run aggregate supply right?

Accepted Answer

A)  an increase in the actual price level 
B)  an increase in the expected price level 
C)  an increase in the capital stock 
D)  None of the above is correct. 
A)  an increase in the actual price level 
B)  an increase in the expected price level 
C)  an increase in the capital stock 
D)  None of the above is correct.

Question 3

Suppose a recession overseas reduces a country's exports. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Accepted Answer

The aggregate-demand

Question 4

Most economist agree that money changes real GDP in both the short and long run.

Accepted Answer

A) True 
 B)False

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 Financial Crisis. In the long run, if the Fed does not respond, the change in price expectations created by the crisis shifts

Accepted Answer

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

Question 6

Other things the same, the aggregate quantity of goods demanded in the U.S. increases if

Accepted Answer

A)  real wealth falls. 
B)  the interest rate rises. 
C)  the dollar depreciates. 
D)  None of the above is correct. 
A)  real wealth falls. 
B)  the interest rate rises. 
C)  the dollar depreciates. 
D)  None of the above is correct.

Question 7

Which of the following is most commonly used to monitor short-run changes in economic activity?

Accepted Answer

A)  the inflation rate. 
B)  real GDP. 
C)  interest rates. 
D)  value of the U.S. dollar in the foreign exchange market. 
A)  the inflation rate. 
B)  real GDP. 
C)  interest rates. 
D)  value of the U.S. dollar in the foreign exchange market.

Question 8

During World War II, the economy's production increased about

Accepted Answer

A)  25 percent and prices rose about 5 percent. 
B)  50 percent and prices rose about 10 percent. 
C)  75 percent and prices rose about 15 percent. 
D)  100 percent and prices rose about 20 percent. 
A)  25 percent and prices rose about 5 percent. 
B)  50 percent and prices rose about 10 percent. 
C)  75 percent and prices rose about 15 percent. 
D)  100 percent and prices rose about 20 percent.

Question 9

List the three alternative explanations for the upward slope of the short run aggregate supply curve.

Accepted Answer

Sticky wages, sticky

Question 10

When the price level rises unexpectedly, some businesses may mistake part of the increase for an increase in the price of their product relative to others and so decrease their production.

Accepted Answer

A) True 
 B)False

Question 11

Explain how a recession differs from a depression.

Accepted Answer

Recessions are relatively mild

Question 12

Other things the same, if prices fell when firms and workers were expecting them to rise, then

Accepted Answer

A)  employment and production would rise. 
B)  employment would rise and production would fall. 
C)  employment would fall and production would rise. 
D)  employment and production would fall. 
A)  employment and production would rise. 
B)  employment would rise and production would fall. 
C)  employment would fall and production would rise. 
D)  employment and production would fall.

Question 13

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 14

When production costs rise,

Accepted Answer

A)  the short-run aggregate supply curve shifts to the right. 
B)  the short-run aggregate supply curve shifts to the left. 
C)  the aggregate demand curve shifts to the right. 
D)  the aggregate demand curve shifts to the left. 
A)  the short-run aggregate supply curve shifts to the right. 
B)  the short-run aggregate supply curve shifts to the left. 
C)  the aggregate demand curve shifts to the right. 
D)  the aggregate demand curve shifts to the left.

Question 15

The classical dichotomy refers to the separation of

Accepted Answer

A)  prices and nominal interest rates. 
B)  taxes and government spending. 
C)  decisions made by the public and decisions made by the government. 
D)  real and nominal variables. 
A)  prices and nominal interest rates. 
B)  taxes and government spending. 
C)  decisions made by the public and decisions made by the government. 
D)  real and nominal variables.

Question 16

Which of the following will reduce the price level and real output in the short run?

Accepted Answer

A)  an increase in government purchases. 
B)  an decrease in oil prices 
C)  a decrease in the money supply 
D)  technical progress 
A)  an increase in government purchases. 
B)  an decrease in oil prices 
C)  a decrease in the money supply 
D)  technical progress

Question 17

Suppose a country offers a new investment tax credit. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Accepted Answer

The aggregate-demand

Question 18

The saying "Money is a veil." means that

Accepted Answer

A)  while nominal variables are the first thing we may observe about an economy, what's important are the real variables and the forces that determine them. 
B)  money is the principal medium of exchange in most economies. 
C)  the primary determinant of short-run economic fluctuations is not real variables, but rather changes in the money supply. 
D)  in the long run money is of no importance to the determination of either real or nominal variables. 
A)  while nominal variables are the first thing we may observe about an economy, what's important are the real variables and the forces that determine them. 
B)  money is the principal medium of exchange in most economies. 
C)  the primary determinant of short-run economic fluctuations is not real variables, but rather changes in the money supply. 
D)  in the long run money is of no importance to the determination of either real or nominal variables.

Question 19

If aggregate demand and aggregate supply both shift right, we can be sure that the price level is higher in the short run.

Accepted Answer

A) True 
 B)False

Question 20

As the price level falls

Accepted Answer

A)  people will want to hold more money, so the interest rate rises. 
B)  people will want to hold more money, so the interest rate falls. 
C)  people will want to hold less money, so the interest rate falls. 
D)  people will want to hold less money, so the interest rate rises. 
A)  people will want to hold more money, so the interest rate rises. 
B)  people will want to hold more money, so the interest rate falls. 
C)  people will want to hold less money, so the interest rate falls. 
D)  people will want to hold less money, so the interest rate rises.

Exam 23: Aggregate Demand and Aggregate Supply

Write the mathematical expression that summarizes the three alternative explanations for the upward slope of the short run aggregate supply curve.

Which of the following shifts both the short-run and long-run aggregate supply right?

Suppose a recession overseas reduces a country's exports. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Most economist agree that money changes real GDP in both the short and long run.

Other things the same, the aggregate quantity of goods demanded in the U.S. increases if

Which of the following is most commonly used to monitor short-run changes in economic activity?

During World War II, the economy's production increased about

List the three alternative explanations for the upward slope of the short run aggregate supply curve.

When the price level rises unexpectedly, some businesses may mistake part of the increase for an increase in the price of their product relative to others and so decrease their production.

Explain how a recession differs from a depression.

Other things the same, if prices fell when firms and workers were expecting them to rise, then

The long-run aggregate supply curve shifts right if

When production costs rise,

The classical dichotomy refers to the separation of

Which of the following will reduce the price level and real output in the short run?

Suppose a country offers a new investment tax credit. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

The saying "Money is a veil." means that

If aggregate demand and aggregate supply both shift right, we can be sure that the price level is higher in the short run.

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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