Question 1

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 2

Changes in the price of oil

Accepted Answer

A)  can only lead to recessions. 
B)  have not contributed much to output fluctuations in the United States. 
C)  change the economy principally by changing aggregate demand. 
D)  created both inflation and recession in the United States in the 1970s. 
A)  can only lead to recessions. 
B)  have not contributed much to output fluctuations in the United States. 
C)  change the economy principally by changing aggregate demand. 
D)  created both inflation and recession in the United States in the 1970s.

Question 3

If the government repeals an investment tax credit and increases income taxes,

Accepted Answer

A)  real GDP rises, and the price level could rise, fall, or stay the same. 
B)  real GDP falls, and the price level could rise, fall, or stay the same. 
C)  real GDP and the price level rise. 
D)  real GDP and the price level fall. 
A)  real GDP rises, and the price level could rise, fall, or stay the same. 
B)  real GDP falls, and the price level could rise, fall, or stay the same. 
C)  real GDP and the price level rise. 
D)  real GDP and the price level fall.

Question 4

Most economists use the aggregate demand and aggregate supply model primarily to analyze

Accepted Answer

A)  short-run fluctuations in the economy. 
B)  the effects of macroeconomic policy on the prices of individual goods. 
C)  the long-run effects of international trade policies. 
D)  productivity and economic growth. 
A)  short-run fluctuations in the economy. 
B)  the effects of macroeconomic policy on the prices of individual goods. 
C)  the long-run effects of international trade policies. 
D)  productivity and economic growth.

Question 5

Which of the following is correct?

Accepted Answer

A)  Economic fluctuations are easily predicted by competent economists. 
B)  Recessions have never occurred very close together. 
C)  Spending, income, and production do not fluctuate closely with real GDP. 
D)  None of the above is correct. 
A)  Economic fluctuations are easily predicted by competent economists. 
B)  Recessions have never occurred very close together. 
C)  Spending, income, and production do not fluctuate closely with real GDP. 
D)  None of the above is correct.

Question 6

The long-run aggregate supply curve shifts left if

Accepted Answer

A)  the capital stock increases. 
B)  there is a natural disaster. 
C)  the government removes some environmental regulations that limit production methods. 
D)  None of the above is correct. 
A)  the capital stock increases. 
B)  there is a natural disaster. 
C)  the government removes some environmental regulations that limit production methods. 
D)  None of the above is correct.

Question 7

During the last half of 2012, the U.S. unemployment rate was just under 8 percent. Historical experience suggests that this is

Accepted Answer

A)  above the natural rate, so real GDP growth was likely low. 
B)  above the natural rate, so real GDP growth was likely high. 
C)  below the natural rate, so real GDP growth was likely low. 
D)  below the natural rate, so real GDP growth was likely high. 
A)  above the natural rate, so real GDP growth was likely low. 
B)  above the natural rate, so real GDP growth was likely high. 
C)  below the natural rate, so real GDP growth was likely low. 
D)  below the natural rate, so real GDP growth was likely high.

Question 8

Figure 33-4  
-Refer to Figure 33-4. If the economy starts at A and there is a fall in aggregate demand, the economy moves

Accepted Answer

A)  back to A in the long run. 
B)  to B in the long run. 
C)  to C in the long run. 
D)  to D in the long run. 
A)  back to A in the long run. 
B)  to B in the long run. 
C)  to C in the long run. 
D)  to D in the long run.

Question 9

If the economy is initially at long-run equilibrium and aggregate demand declines, then in the long run the price level

Accepted Answer

A)  and output are higher than in the original long-run equilibrium. 
B)  and output are lower than in the original long-run equilibrium. 
C)  is lower and output is the same as the original long-run equilibrium. 
D)  is the same and output is lower than in the original long-run equilibrium. 
A)  and output are higher than in the original long-run equilibrium. 
B)  and output are lower than in the original long-run equilibrium. 
C)  is lower and output is the same as the original long-run equilibrium. 
D)  is the same and output is lower than in the original long-run equilibrium.

Question 10

If aggregate demand shifts right, then eventually price level expectations rise. This increase in price level expectations causes the aggregate demand curve to shift to the left back to its original position.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)  rises, and interest rates rise. 
B)  rises, and interest rates fall. 
C)  falls, and interest rates rise. 
D)  falls, and interest rates fall. 
A)  rises, and interest rates rise. 
B)  rises, and interest rates fall. 
C)  falls, and interest rates rise. 
D)  falls, and interest rates fall.

Question 12

Refer to U.S. Financial Crisis. U.S. net exports would

Accepted Answer

A)  rise which by itself would increase aggregate demand. 
B)  rise which by itself would decrease aggregate demand. 
C)  fall which by itself would increase aggregate demand. 
D)  fall which by itself would decrease aggregate demand. 
A)  rise which by itself would increase aggregate demand. 
B)  rise which by itself would decrease aggregate demand. 
C)  fall which by itself would increase aggregate demand. 
D)  fall which by itself would decrease aggregate demand.

Question 13

The quantity of money has no real impact on things people really care about like whether or not they have a job. Most economists would agree that this statement is appropriate concerning

Accepted Answer

A)  both the short run and the long run. 
B)  the short run, but not the long run. 
C)  the long run, but not the short run. 
D)  neither the long run nor the short run. 
A)  both the short run and the long run. 
B)  the short run, but not the long run. 
C)  the long run, but not the short run. 
D)  neither the long run nor the short run.

Question 14

During periods of stagflation, what happens to output and prices in the economy?

Accepted Answer

Output fal

Question 15

When the actual change in the price level differs from its expected change, which of the following can explain why firms might change their production?

Accepted Answer

A)  both menu costs and mistaking a price level change for a change in relative prices 
B)  menu costs but not mistaking a price level change for a change in relative prices 
C)  mistaking a price level change for a change in relative price but not menu costs 
D)  neither menu costs nor mistaking a price level change for a change in relative prices 
A)  both menu costs and mistaking a price level change for a change in relative prices 
B)  menu costs but not mistaking a price level change for a change in relative prices 
C)  mistaking a price level change for a change in relative price but not menu costs 
D)  neither menu costs nor mistaking a price level change for a change in relative prices

Question 16

Suppose a nation experiences increased immigration from abroad. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Accepted Answer

The short run and lo

Question 17

When the price level falls

Accepted Answer

A)  households want to lend less. 
B)  the interest rate rises. 
C)  firms want to spend less on investment goods. 
D)  None of the above are correct. 
A)  households want to lend less. 
B)  the interest rate rises. 
C)  firms want to spend less on investment goods. 
D)  None of the above are correct.

Question 18

As the price level falls

Accepted Answer

A)  people will want to buy more bonds, so the interest rate rises. 
B)  people will want to buy fewer bonds, so the interest rate falls. 
C)  people will want to buy more bonds, so the interest rate falls. 
D)  people will want to buy fewer bonds, so the interest rate rises. 
A)  people will want to buy more bonds, so the interest rate rises. 
B)  people will want to buy fewer bonds, so the interest rate falls. 
C)  people will want to buy more bonds, so the interest rate falls. 
D)  people will want to buy fewer bonds, so the interest rate rises.

Question 19

Who said about classical economic theory: "the long run is a misleading guide to current affairs. In the long run we are all dead"?

Accepted Answer

The answer of Who said about classical economic theory: "the...

Question 20

During the 2008-2009 recession real GDP fell by about

Accepted Answer

A)  2% 
B)  4% 
C)  6% 
D)  8% 
A)  2% 
B)  4% 
C)  6% 
D)  8%

Exam 23: Aggregate Demand and Aggregate Supply

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

Changes in the price of oil

If the government repeals an investment tax credit and increases income taxes,

Most economists use the aggregate demand and aggregate supply model primarily to analyze

Which of the following is correct?

The long-run aggregate supply curve shifts left if

During the last half of 2012, the U.S. unemployment rate was just under 8 percent. Historical experience suggests that this is

Figure 33-4 -Refer to Figure 33-4. If the economy starts at A and there is a fall in aggregate demand, the economy moves

If the economy is initially at long-run equilibrium and aggregate demand declines, then in the long run the price level

If aggregate demand shifts right, then eventually price level expectations rise. This increase in price level expectations causes the aggregate demand curve to shift to the left back to its original position.

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

Refer to U.S. Financial Crisis. U.S. net exports would

The quantity of money has no real impact on things people really care about like whether or not they have a job. Most economists would agree that this statement is appropriate concerning

During periods of stagflation, what happens to output and prices in the economy?

When the actual change in the price level differs from its expected change, which of the following can explain why firms might change their production?

Suppose a nation experiences increased immigration from abroad. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

When the price level falls

As the price level falls

Who said about classical economic theory: "the long run is a misleading guide to current affairs. In the long run we are all dead"?

During the 2008-2009 recession real GDP fell by about

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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