Question 1

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

Accepted Answer

A)  an increase in either technology or the human capital stock. 
B)  an increase in human capital but not technology. 
C)  an increase in technology, but not the human capital stock. 
D)  neither an increase in technology nor the human capital stock. 
A)  an increase in either technology or the human capital stock. 
B)  an increase in human capital but not technology. 
C)  an increase in technology, but not the human capital stock. 
D)  neither an increase in technology nor the human capital stock.

Question 2

The model of aggregate demand and aggregate supply explains the relationship between

Accepted Answer

A)  the price and quantity of a particular good. 
B)  unemployment and output. 
C)  wages and employment. 
D)  real GDP and the price level. 
A)  the price and quantity of a particular good. 
B)  unemployment and output. 
C)  wages and employment. 
D)  real GDP and the price level.

Question 3

The model of short-run economic fluctuations focuses on

Accepted Answer

A)  the price level and real GDP. 
B)  productivity and economic growth. 
C)  the neutrality of money and inflation. 
D)  None of the above is correct. 
A)  the price level and real GDP. 
B)  productivity and economic growth. 
C)  the neutrality of money and inflation. 
D)  None of the above is correct.

Question 4

During recessions employment typically

Accepted Answer

A)  falls substantially. As the recession ends, employment rises rapidly. 
B)  rises substantially. As the recession ends, employment declines gradually. 
C)  falls substantially. As the recession ends, employment rises gradually. 
D)  rises substantially. As the recession ends, employment declines rapidly. 
A)  falls substantially. As the recession ends, employment rises rapidly. 
B)  rises substantially. As the recession ends, employment declines gradually. 
C)  falls substantially. As the recession ends, employment rises gradually. 
D)  rises substantially. As the recession ends, employment declines rapidly.

Question 5

When the dollar depreciates, each dollar buys

Accepted Answer

A)  more foreign currency, and so buys more foreign goods. 
B)  more foreign currency, and so buys fewer foreign goods. 
C)  less foreign currency, and so buys more foreign goods. 
D)  less foreign currency, and so buys fewer foreign goods. 
A)  more foreign currency, and so buys more foreign goods. 
B)  more foreign currency, and so buys fewer foreign goods. 
C)  less foreign currency, and so buys more foreign goods. 
D)  less foreign currency, and so buys fewer foreign goods.

Question 6

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

Accepted Answer

A) True 
 B)False

Question 7

The price level rises in the short run if

Accepted Answer

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

Question 8

Suppose the economy is in long-run equilibrium. Concerns about pollution cause the government to significantly restrict the production of electricity. At the same time, taxes fall. In the short-run

Accepted Answer

A)  real GDP will rise, and the price level might rise, fall, or stay the same. 
B)  real GDP will fall, and the price level might rise, fall, or stay the same. 
C)  the price level will rise, and real GDP might rise, fall, or stay the same. 
D)  the price level will fall, and real GDP might rise, fall, or stay the same. 
A)  real GDP will rise, and the price level might rise, fall, or stay the same. 
B)  real GDP will fall, and the price level might rise, fall, or stay the same. 
C)  the price level will rise, and real GDP might rise, fall, or stay the same. 
D)  the price level will fall, and real GDP might rise, fall, or stay the same.

Question 9

In the mid-1970s the price of oil rose dramatically. This

Accepted Answer

A)  shifted aggregate supply left, the price level rose, and real GDP fell. 
B)  caused U.S. prices to fall, and real GDP rose. 
C)  caused an increase in U.S. prices and real GDP. 
D)  caused a decrease in U.S. prices and real GDP. 
A)  shifted aggregate supply left, the price level rose, and real GDP fell. 
B)  caused U.S. prices to fall, and real GDP rose. 
C)  caused an increase in U.S. prices and real GDP. 
D)  caused a decrease in U.S. prices and real GDP.

Question 10

Which of the following is a lesson concerning shifts in aggregate demand?

Accepted Answer

A)  they contribute to fluctuations in output. 
B)  in the long-run they change real output, but not the price level. 
C)  policymakers are unable to mitigate the severity of economic fluctuations. 
D)  All of the above are correct. 
A)  they contribute to fluctuations in output. 
B)  in the long-run they change real output, but not the price level. 
C)  policymakers are unable to mitigate the severity of economic fluctuations. 
D)  All of the above are correct.

Question 11

Real GDP

Accepted Answer

A)  is the current dollar value of all goods produced by the citizens of an economy within a given time. 
B)  measures economic activity and income. 
C)  is used primarily to measure long-run changes rather than short-run fluctuations. 
D)  All of the above are correct. 
A)  is the current dollar value of all goods produced by the citizens of an economy within a given time. 
B)  measures economic activity and income. 
C)  is used primarily to measure long-run changes rather than short-run fluctuations. 
D)  All of the above are correct.

Question 12

Which of the following will both make people buy more?

Accepted Answer

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

Question 13

The primary purpose of the aggregate demand and aggregate supply model is to demonstrate the classical dichotomy.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following both shift aggregate demand left?

Accepted Answer

A)  a decrease in taxes and at a given price level consumers feel more wealthy 
B)  a decrease in taxes and at a given price level consumers feel less wealthy 
C)  an increase in taxes and at a given price level consumers feel more wealthy 
D)  an increase in taxes and at a given price level consumers feel less wealthy 
A)  a decrease in taxes and at a given price level consumers feel more wealthy 
B)  a decrease in taxes and at a given price level consumers feel less wealthy 
C)  an increase in taxes and at a given price level consumers feel more wealthy 
D)  an increase in taxes and at a given price level consumers feel less wealthy

Question 15

Figure 33-3.  
-Refer to Figure 33-3. The natural rate of output occurs at

Accepted Answer

A)  Y1. 
B)  Y2. 
C)  Y3. 
D)  both Y1 and Y3. 
A)  Y1. 
B)  Y2. 
C)  Y3. 
D)  both Y1 and Y3.

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. What happens to the price level and real GDP in the short run?

Accepted Answer

A)  both the price level and real GDP rise 
B)  the price level rises and real GDP falls 
C)  the price level falls and real GDP rises 
D)  both the price level and real GDP fall 
A)  both the price level and real GDP rise 
B)  the price level rises and real GDP falls 
C)  the price level falls and real GDP rises 
D)  both the price level and real GDP fall

Question 17

Who wrote the 1936 book titled The General Theory of Employment, Interest, and Money?

Accepted Answer

The answer of Who wrote the 1936 book titled The...

Question 18

Other things the same, when the price level falls, interest rates

Accepted Answer

A)  rise, which means consumers will want to spend more on homebuilding. 
B)  rise, which means consumers will want to spend less on homebuilding. 
C)  fall, which means consumers will want to spend more on homebuilding. 
D)  fall, which means consumers will want to spend less on homebuilding. 
A)  rise, which means consumers will want to spend more on homebuilding. 
B)  rise, which means consumers will want to spend less on homebuilding. 
C)  fall, which means consumers will want to spend more on homebuilding. 
D)  fall, which means consumers will want to spend less on homebuilding.

Question 19

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 Optimism. In the short run what happens to the price level and real GDP?

Accepted Answer

A)  both the price level and real GDP rise. 
B)  both the price level and real GDP fall. 
C)  the price level rises and real GDP falls. 
D)  the price level falls and real GDP rises. 
A)  both the price level and real GDP rise. 
B)  both the price level and real GDP fall. 
C)  the price level rises and real GDP falls. 
D)  the price level falls and real GDP rises.

Question 20

The equation: quantity of output supplied = natural rate of output + aactual price level - expected price level), where a is a positive number, represents

Accepted Answer

A)  an upward-sloping short-run aggregate supply curve 
B)  a vertical short-run aggregate supply curve 
C)  a downward-sloping aggregate demand curve 
D)  None of the above is correct. 
A)  an upward-sloping short-run aggregate supply curve 
B)  a vertical short-run aggregate supply curve 
C)  a downward-sloping aggregate demand curve 
D)  None of the above is correct.

Exam 23: Aggregate Demand and Aggregate Supply

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

The model of aggregate demand and aggregate supply explains the relationship between

The model of short-run economic fluctuations focuses on

During recessions employment typically

When the dollar depreciates, each dollar buys

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

The price level rises in the short run if

Suppose the economy is in long-run equilibrium. Concerns about pollution cause the government to significantly restrict the production of electricity. At the same time, taxes fall. In the short-run

In the mid-1970s the price of oil rose dramatically. This

Which of the following is a lesson concerning shifts in aggregate demand?

Real GDP

Which of the following will both make people buy more?

The primary purpose of the aggregate demand and aggregate supply model is to demonstrate the classical dichotomy.

Which of the following both shift aggregate demand left?

Figure 33-3. -Refer to Figure 33-3. The natural rate of output occurs at

Who wrote the 1936 book titled The General Theory of Employment, Interest, and Money?

Other things the same, when the price level falls, interest rates

The equation: quantity of output supplied = natural rate of output + aactual price level - expected price level), where a is a positive number, represents

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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