Question 1

A decrease in the price level

Accepted Answer

A)  shifts the SRAS curve to the right. 
B)  shifts the SRAS curve to the left. 
C)  causes an upward movement along the existing SRAS curve. 
D)  causes a downward movement along the existing SRAS curve. 
E)  none of the above 
A)  shifts the SRAS curve to the right. 
B)  shifts the SRAS curve to the left. 
C)  causes an upward movement along the existing SRAS curve. 
D)  causes a downward movement along the existing SRAS curve. 
E)  none of the above

Question 2

Which set of changes is definitely predicted to raise Real GDP in the short run?

Accepted Answer

A)  Wealth increases and there is an adverse supply shock. 
B)  Individuals expect higher (future) incomes and wage rates fall. 
C)  Business taxes rise and wage rates fall. 
D)  The U.S. dollar appreciates and there is a beneficial supply shock. 
E)  none of the above 
A)  Wealth increases and there is an adverse supply shock. 
B)  Individuals expect higher (future) incomes and wage rates fall. 
C)  Business taxes rise and wage rates fall. 
D)  The U.S. dollar appreciates and there is a beneficial supply shock. 
E)  none of the above

Question 3

An adverse supply shock results in an increase in the price level and an increase in Real GDP.

Accepted Answer

A) True 
 B)False

Question 4

As the price level falls,

Accepted Answer

A)  the purchasing power of cash holdings rises. 
B)  the purchasing power of cash holdings falls. 
C)  the purchasing power of cash holdings remains constant. 
D)  cash holdings turn into dollar-denominated assets. 
E)  none of the above 
A)  the purchasing power of cash holdings rises. 
B)  the purchasing power of cash holdings falls. 
C)  the purchasing power of cash holdings remains constant. 
D)  cash holdings turn into dollar-denominated assets. 
E)  none of the above

Question 5

Personal income taxes rise.This lowers __________,which lowers __________ and the __________ curve shifts __________.

Accepted Answer

A)  net exports; aggregate demand (A
D) ; AD; leftward 
B)  consumption; short-run aggregate supply (SRAS); SRAS; rightward 
C)  government revenue; net exports; AD; rightward 
D)  consumption; aggregate demand (A
D) ; AD; leftward 
E)  none of the above 
A)  net exports; aggregate demand (A
D) ; AD; leftward 
B)  consumption; short-run aggregate supply (SRAS); SRAS; rightward 
C)  government revenue; net exports; AD; rightward 
D)  consumption; aggregate demand (A
D) ; AD; leftward 
E)  none of the above

Question 6

There is a rise in labor productivity in the economy.As a result,in the short run Real GDP __________ and the price level __________.

Accepted Answer

A)  rises; falls 
B)  falls; rises 
C)  falls; falls 
D)  rises; rises 
E)  remains constant; remains constant 
A)  rises; falls 
B)  falls; rises 
C)  falls; falls 
D)  rises; rises 
E)  remains constant; remains constant

Question 7

If foreign input prices increase and the United States purchases those inputs,then the U.S.

Accepted Answer

A)  AD curve will shift leftward and U.S. prices will fall. 
B)  AD curve will shift rightward and U.S. prices will rise. 
C)  SRAS curve will shift leftward and U.S. prices will rise. 
D)  SRAS curve will shift rightward and U.S. prices will fall 
A)  AD curve will shift leftward and U.S. prices will fall. 
B)  AD curve will shift rightward and U.S. prices will rise. 
C)  SRAS curve will shift leftward and U.S. prices will rise. 
D)  SRAS curve will shift rightward and U.S. prices will fall

Question 8

Which of the following statements is false?

Accepted Answer

A)  If the SRAS curve shifts rightward, the price level falls in the short run. 
B)  If AD rises and SRAS is constant, the price level rises in the short run. 
C)  If both SRAS and AD decline, Real GDP falls in the short run. 
D)  If both SRAS and AD increase, the price level necessarily rises in the short run. 
E)  none of the above 
A)  If the SRAS curve shifts rightward, the price level falls in the short run. 
B)  If AD rises and SRAS is constant, the price level rises in the short run. 
C)  If both SRAS and AD decline, Real GDP falls in the short run. 
D)  If both SRAS and AD increase, the price level necessarily rises in the short run. 
E)  none of the above

Exam 8: Aggregate Demand and Aggregate Supply

A decrease in the price level

Which set of changes is definitely predicted to raise Real GDP in the short run?

An adverse supply shock results in an increase in the price level and an increase in Real GDP.

As the price level falls,

Personal income taxes rise.This lowers __________,which lowers __________ and the __________ curve shifts __________.

There is a rise in labor productivity in the economy.As a result,in the short run Real GDP __________ and the price level __________.

If foreign input prices increase and the United States purchases those inputs,then the U.S.

Which of the following statements is false?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

Personal income taxes rise.This lowers ,which lowers and the curve shifts .

There is a rise in labor productivity in the economy.As a result,in the short run Real GDP and the price level .