Question 1

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 2

During World War II government expenditures increased almost five-fold and output almost doubled.

Accepted Answer

A) True 
 B)False

Question 3

The initial impact of the repeal of an investment tax credit is to 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 4

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)  the Federal Reserve buys bonds. 
B)  a decrease in net exports due to something other than a change in domestic prices. 
C)  an increase in household saving. 
D)  All of the above are correct. 
A)  the Federal Reserve buys bonds. 
B)  a decrease in net exports due to something other than a change in domestic prices. 
C)  an increase in household saving. 
D)  All of the above are correct.

Question 5

A decrease in the availability of an important major resource such as oil shifts

Accepted Answer

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

Question 6

Using the aggregate demand and aggregate supply model, an increase in what curve is by itself consistent with the changes in prices and output that occurred during World War II?

Accepted Answer

The answer of Using the aggregate demand and aggregate supply...

Question 7

As the price level falls,

Accepted Answer

A)  the exchange rate falls, so net exports fall. 
B)  the exchange rate falls, so net exports rise. 
C)  the exchange rate rises, so net exports fall. 
D)  the exchange rate rises, so net exports rise. 
A)  the exchange rate falls, so net exports fall. 
B)  the exchange rate falls, so net exports rise. 
C)  the exchange rate rises, so net exports fall. 
D)  the exchange rate rises, so net exports rise.

Question 8

Other things the same, if technology increases, then in the long run

Accepted Answer

A)  both output and prices are higher. 
B)  output is higher and prices are lower. 
C)  output is lower and prices are higher. 
D)  both output and prices are lower. 
A)  both output and prices are higher. 
B)  output is higher and prices are lower. 
C)  output is lower and prices are higher. 
D)  both output and prices are lower.

Question 9

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U. S. Which pair of GDP growth rates and unemployment rates is realistic?

Accepted Answer

A)  5 percent, 1 percent 
B)  3 percent, 5 percent 
C)  -1 percent, 3 percent 
D)  -2 percent, 4 percent 
A)  5 percent, 1 percent 
B)  3 percent, 5 percent 
C)  -1 percent, 3 percent 
D)  -2 percent, 4 percent

Question 10

Which of the following typically rises during a recession?

Accepted Answer

A)  investment. 
B)  unemployment. 
C)  tax revenues. 
D)  new home construction. 
A)  investment. 
B)  unemployment. 
C)  tax revenues. 
D)  new home construction.

Question 11

The wealth effect helps explain what feature in the aggregate demand and aggregate supply model?

Accepted Answer

why the ag

Question 12

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 13

Other things the same, if the U.S. price level rises, then

Accepted Answer

A)  the supply of dollars in the market for foreign-currency exchange increases, and net exports fall. 
B)  the supply of dollars in the market for foreign-currency exchange increases, and net exports rise. 
C)  the supply of dollars in the market for foreign-currency exchange decreases, and net exports fall. 
D)  the supply of dollars in the market for foreign-currency exchange decreases, and net exports rise. 
A)  the supply of dollars in the market for foreign-currency exchange increases, and net exports fall. 
B)  the supply of dollars in the market for foreign-currency exchange increases, and net exports rise. 
C)  the supply of dollars in the market for foreign-currency exchange decreases, and net exports fall. 
D)  the supply of dollars in the market for foreign-currency exchange decreases, and net exports rise.

Question 14

According to the classical model, which of the following would double if the quantity of money doubled?

Accepted Answer

A)  prices but not nominal income 
B)  nominal income but not prices 
C)  both prices and nominal income 
D)  neither prices nor nominal income 
A)  prices but not nominal income 
B)  nominal income but not prices 
C)  both prices and nominal income 
D)  neither prices nor nominal income

Question 15

If not all prices adjust instantly to changing economic circumstances, an unexpected fall in the price level leaves some firms with higher-than-desired prices, and these higher-than-desired prices depress sales and induce firms to reduce the quantity of goods and services they produce.

Accepted Answer

A) True 
 B)False

Question 16

During a recession the economy experiences

Accepted Answer

A)  rising employment and income. 
B)  rising employment and falling income. 
C)  rising income and falling employment. 
D)  falling employment and income. 
A)  rising employment and income. 
B)  rising employment and falling income. 
C)  rising income and falling employment. 
D)  falling employment and income.

Question 17

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 18

Aggregate demand shifts right if

Accepted Answer

A)  government purchases increase and shifts left if stock prices rise. 
B)  government purchases increase and shifts left if stock prices fall. 
C)  government purchases decrease and shifts left if stock prices rise. 
D)  government purchases decrease and shifts left is stock prices fall. 
A)  government purchases increase and shifts left if stock prices rise. 
B)  government purchases increase and shifts left if stock prices fall. 
C)  government purchases decrease and shifts left if stock prices rise. 
D)  government purchases decrease and shifts left is stock prices fall.

Question 19

Other things the same, if the price level is lower than expected, then some firms believe that the relative price of what they produce has

Accepted Answer

A)  decreased, so they increase production. 
B)  decreased, so they decrease production. 
C)  increased, so they increase production. 
D)  increased, so they decrease production. 
A)  decreased, so they increase production. 
B)  decreased, so they decrease production. 
C)  increased, so they increase production. 
D)  increased, so they decrease production.

Question 20

Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to

Accepted Answer

A)  rise. This rise in price expectations shifts the short-run aggregate supply curve to the right. 
B)  rise. This rise in price expectations shifts the short-run aggregate supply curve to the left. 
C)  fall. This fall in price expectations shifts the short-run aggregate supply curve to the right. 
D)  fall. This fall in price expectations shifts the short-run aggregate supply curve to the left. 
A)  rise. This rise in price expectations shifts the short-run aggregate supply curve to the right. 
B)  rise. This rise in price expectations shifts the short-run aggregate supply curve to the left. 
C)  fall. This fall in price expectations shifts the short-run aggregate supply curve to the right. 
D)  fall. This fall in price expectations shifts the short-run aggregate supply curve to the left.

Exam 23: Aggregate Demand and Aggregate Supply

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

During World War II government expenditures increased almost five-fold and output almost doubled.

The initial impact of the repeal of an investment tax credit is to shift

Which of the following shifts aggregate demand to the right?

A decrease in the availability of an important major resource such as oil shifts

Using the aggregate demand and aggregate supply model, an increase in what curve is by itself consistent with the changes in prices and output that occurred during World War II?

As the price level falls,

Other things the same, if technology increases, then in the long run

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U. S. Which pair of GDP growth rates and unemployment rates is realistic?

Which of the following typically rises during a recession?

The wealth effect helps explain what feature in the aggregate demand and aggregate supply model?

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, if the U.S. price level rises, then

According to the classical model, which of the following would double if the quantity of money doubled?

If not all prices adjust instantly to changing economic circumstances, an unexpected fall in the price level leaves some firms with higher-than-desired prices, and these higher-than-desired prices depress sales and induce firms to reduce the quantity of goods and services they produce.

During a recession the economy experiences

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?

Aggregate demand shifts right if

Other things the same, if the price level is lower than expected, then some firms believe that the relative price of what they produce has

Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to

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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