Question 1

If output is above its natural rate, then according to sticky-wage theory

Accepted Answer

A)  workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve right. 
B)  workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve left. 
C)  workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve right. 
D)  workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve left. 
A)  workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve right. 
B)  workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve left. 
C)  workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve right. 
D)  workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve left.

Question 2

If a central bank is independent,

Accepted Answer

A)  it has the ability to alter taxes. 
B)  it allocates savings to firms. 
C)  it restricts trade to increase domestic employment. 
D)  it operations are not controlled by the political process. 
A)  it has the ability to alter taxes. 
B)  it allocates savings to firms. 
C)  it restricts trade to increase domestic employment. 
D)  it operations are not controlled by the political process.

Question 3

Other things the same, as the price level rises, the real value of money

Accepted Answer

A)  and the exchange rate rise. 
B)  and the exchange rate fall. 
C)  rises and the exchange rate falls. 
D)  falls and the exchange rate rises. 
A)  and the exchange rate rise. 
B)  and the exchange rate fall. 
C)  rises and the exchange rate falls. 
D)  falls and the exchange rate rises.

Question 4

From 2006 to 2008 there was a dramatic fall in the price of houses. If this fall made people feel less wealthy, 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 5

Figure 33-12.  
-Refer to Figure 33-12. Identify periods 1 and 2.

Accepted Answer

Period 1 is the Grea

Question 6

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 7

Explain the short-run effects on output and the price level from a decrease in the aggregate-demand curve.

Accepted Answer

The price

Question 8

The curve that shows the quantity of goods and services that firms produce and sell

Accepted Answer

A)  as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-demand curve. 
B)  as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-supply curve. 
C)  as it relates to the overall price level is called the aggregate-demand curve. 
D)  as it relates to the overall price level is called the aggregate-supply curve. 
A)  as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-demand curve. 
B)  as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-supply curve. 
C)  as it relates to the overall price level is called the aggregate-demand curve. 
D)  as it relates to the overall price level is called the aggregate-supply curve.

Question 9

Which of the following would not be included in aggregate demand?

Accepted Answer

A)  an increase in firms' inventories. 
B)  purchases of goods by households. 
C)  firms' purchases of newly produced machinery. 
D)  government's tax collections. 
A)  an increase in firms' inventories. 
B)  purchases of goods by households. 
C)  firms' purchases of newly produced machinery. 
D)  government's tax collections.

Question 10

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

Accepted Answer

A)  an increase in the price level 
B)  an increase in the minimum wage 
C)  a decrease in the price of oil 
D)  more people migrate abroad than immigrate from abroad 
A)  an increase in the price level 
B)  an increase in the minimum wage 
C)  a decrease in the price of oil 
D)  more people migrate abroad than immigrate from abroad

Question 11

If countries that imported goods and services from the United States went into recession, we would expect that U.S. net exports would

Accepted Answer

A)  rise, making aggregate demand shift right. 
B)  rise, making aggregate demand shift left. 
C)  fall, making aggregate demand shift right. 
D)  fall, making aggregate demand shift left. 
A)  rise, making aggregate demand shift right. 
B)  rise, making aggregate demand shift left. 
C)  fall, making aggregate demand shift right. 
D)  fall, making aggregate demand shift left.

Question 12

Who is credited for the original development of the model of aggregate demand and aggregate supply?

Accepted Answer

The answer of Who is credited for the original development...

Question 13

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,

Accepted Answer

A)  production is more profitable and employment rises. 
B)  production is more profitable and employment falls. 
C)  production is less profitable and employment rises. 
D)  production is less profitable and employment falls. 
A)  production is more profitable and employment rises. 
B)  production is more profitable and employment falls. 
C)  production is less profitable and employment rises. 
D)  production is less profitable and employment falls.

Question 14

Briefly state the three key facts about economic fluctuations.

Accepted Answer

1) Economic fluctuations are i

Question 15

Which of the following statements concerning the aggregate demand and aggregate supply model is correct?

Accepted Answer

A)  The aggregate demand and aggregate supply model is nothing more than a large version of the model of market demand and supply. 
B)  The price level and quantity of output adjust to bring aggregate demand and supply into balance. 
C)  The aggregate supply curve shows the quantity of goods and services that households, firms, and the government want to buy at each price. 
D)  All of the above are correct. 
A)  The aggregate demand and aggregate supply model is nothing more than a large version of the model of market demand and supply. 
B)  The price level and quantity of output adjust to bring aggregate demand and supply into balance. 
C)  The aggregate supply curve shows the quantity of goods and services that households, firms, and the government want to buy at each price. 
D)  All of the above are correct.

Question 16

Figure 33-4  
-Refer to Figure 33-4. The economy would be moving to long-run equilibrium if it started at

Accepted Answer

A)  A and moved to B. 
B)  C and moved to B. 
C)  D and moved to C. 
D)  None of the above is correct. 
A)  A and moved to B. 
B)  C and moved to B. 
C)  D and moved to C. 
D)  None of the above is correct.

Question 17

Although wages, incomes, and interest rates are most often discussed in nominal terms, what matters most are their real values.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following correctly describes actions of the U.S. government during the recession of 2008-2009?

Accepted Answer

A)  It refused to provide banks funding and made no significant changes in government spending. 
B)  It refused to provide banks funding but made a large increase in government spending. 
C)  It became part owner of some banks but made no significant change in government spending 
D)  It became part owner of some banks and made a large increase in government spending. 
A)  It refused to provide banks funding and made no significant changes in government spending. 
B)  It refused to provide banks funding but made a large increase in government spending. 
C)  It became part owner of some banks but made no significant change in government spending 
D)  It became part owner of some banks and made a large increase in government spending.

Question 19

According to the "In the News" article, macroprudential tools

Accepted Answer

A)  allow a central bank to alter lending for specific industries. 
B)  allow a central bank to alter taxes. 
C)  limit a central bank's power to act independently of the political process. 
D)  limit the policy tools available to a central bank. 
A)  allow a central bank to alter lending for specific industries. 
B)  allow a central bank to alter taxes. 
C)  limit a central bank's power to act independently of the political process. 
D)  limit the policy tools available to a central bank.

Question 20

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.

Exam 23: Aggregate Demand and Aggregate Supply

If output is above its natural rate, then according to sticky-wage theory

If a central bank is independent,

Other things the same, as the price level rises, the real value of money

From 2006 to 2008 there was a dramatic fall in the price of houses. If this fall made people feel less wealthy, then it would have shifted

Figure 33-12. -Refer to Figure 33-12. Identify periods 1 and 2.

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.

Explain the short-run effects on output and the price level from a decrease in the aggregate-demand curve.

The curve that shows the quantity of goods and services that firms produce and sell

Which of the following would not be included in aggregate demand?

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

If countries that imported goods and services from the United States went into recession, we would expect that U.S. net exports would

Who is credited for the original development of the model of aggregate demand and aggregate supply?

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,

Briefly state the three key facts about economic fluctuations.

Which of the following statements concerning the aggregate demand and aggregate supply model is correct?

Figure 33-4 -Refer to Figure 33-4. The economy would be moving to long-run equilibrium if it started at

Although wages, incomes, and interest rates are most often discussed in nominal terms, what matters most are their real values.

Which of the following correctly describes actions of the U.S. government during the recession of 2008-2009?

According to the "In the News" article, macroprudential tools

When taxes decrease, consumption

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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