Question 1

An aggregate demand (AD)curve shows the

Accepted Answer

A)  amount of a particular good people are willing and able to buy at a particular price, ceteris paribus. 
B)  real output (Real GDP) people are willing and able to sell at different price levels, ceteris paribus. 
C)  real output (Real (GDP) people are willing and able to buy and to sell at different price levels, ceteris paribus. 
D)  real output (Real GDP) people are willing and able to buy at different price levels, ceteris paribus. 
A)  amount of a particular good people are willing and able to buy at a particular price, ceteris paribus. 
B)  real output (Real GDP) people are willing and able to sell at different price levels, ceteris paribus. 
C)  real output (Real (GDP) people are willing and able to buy and to sell at different price levels, ceteris paribus. 
D)  real output (Real GDP) people are willing and able to buy at different price levels, ceteris paribus.

Question 2

Suppose the real exchange rate of 115 Japanese yen to the dollar moves to 105 yen to the dollar.The dollar has __________,making Japanese goods __________ expensive for Americans.

Accepted Answer

A)  appreciated; less 
B)  appreciated; more 
C)  depreciated; less 
D)  depreciated; more 
A)  appreciated; less 
B)  appreciated; more 
C)  depreciated; less 
D)  depreciated; more

Question 3

An increase in the interest rate __________ purchases of consumer __________.

Accepted Answer

A)  increases; durables 
B)  increases; nondurables 
C)  reduces; durables 
D)  reduces; nondurables 
A)  increases; durables 
B)  increases; nondurables 
C)  reduces; durables 
D)  reduces; nondurables

Question 4

Starting from short-run equilibrium,the following occurs: individuals expect higher (future)incomes and wage rates rise.What is the effect on the price level and Real GDP in the short run?

Accepted Answer

A)  The price level rises and Real GDP rises. 
B)  The price level falls and Real GDP falls. 
C)  The price level rises, but the effect on Real GDP cannot be determined. 
D)  Real GDP rises, but the effect on the price level cannot be determined. 
E)  Real GDP falls, but the effect on the price level cannot be determined. 
A)  The price level rises and Real GDP rises. 
B)  The price level falls and Real GDP falls. 
C)  The price level rises, but the effect on Real GDP cannot be determined. 
D)  Real GDP rises, but the effect on the price level cannot be determined. 
E)  Real GDP falls, but the effect on the price level cannot be determined.

Question 5

If wage rates fall at the same time that labor productivity increases,what is the effect on short-run aggregate supply (SRAS)?

Accepted Answer

A)  SRAS falls. 
B)  SRAS remains constant. 
C)  SRAS rises. 
D)  SRAS may rise, fall, or remain constant. 
A)  SRAS falls. 
B)  SRAS remains constant. 
C)  SRAS rises. 
D)  SRAS may rise, fall, or remain constant.

Question 6

As the U.S.dollar appreciates and the Japanese yen depreciates,

Accepted Answer

A)  U.S.-produced goods become more expensive for the Japanese and Japanese-produced goods become cheaper for Americans. 
B)  U.S.-produced goods become cheaper for the Japanese and Japanese-produced goods become more expensive for Americans. 
C)  U.S.-produced goods become cheaper for both the Japanese and Americans. 
D)  Japanese-produced goods become more expensive for both the Japanese and Americans. 
E)  none of the above 
A)  U.S.-produced goods become more expensive for the Japanese and Japanese-produced goods become cheaper for Americans. 
B)  U.S.-produced goods become cheaper for the Japanese and Japanese-produced goods become more expensive for Americans. 
C)  U.S.-produced goods become cheaper for both the Japanese and Americans. 
D)  Japanese-produced goods become more expensive for both the Japanese and Americans. 
E)  none of the above

Question 7

As interest rates drop,households tend to borrow more and businesses tend to borrow less.

Accepted Answer

A) True 
 B)False

Question 8

Aggregate demand curves are

Accepted Answer

A)  downward sloping. 
B)  upward sloping. 
C)  horizontal. 
D)  vertical. 
A)  downward sloping. 
B)  upward sloping. 
C)  horizontal. 
D)  vertical.

Question 9

In the short run,an increase in investment,ceteris paribus,shifts the

Accepted Answer

A)  AD curve to the right, causing equilibrium price level to rise and equilibrium Real GDP to increase. 
B)  AD curve to the left, causing equilibrium price level to fall and equilibrium Real GDP to decrease. 
C)  SRAS curve to the right, causing equilibrium price level to fall and equilibrium Real GDP to increase. 
D)  SRAS curve to the left, causing equilibrium price level to rise and equilibrium Real GDP to decrease. 
A)  AD curve to the right, causing equilibrium price level to rise and equilibrium Real GDP to increase. 
B)  AD curve to the left, causing equilibrium price level to fall and equilibrium Real GDP to decrease. 
C)  SRAS curve to the right, causing equilibrium price level to fall and equilibrium Real GDP to increase. 
D)  SRAS curve to the left, causing equilibrium price level to rise and equilibrium Real GDP to decrease.

Question 10

Which of the following best describes the international trade effect?

Accepted Answer

A)  The price level in the U.S. falls relative to foreign price levels, U.S. goods become relatively less expensive than foreign goods, and both Americans and foreigners buy more U.S. goods. 
B)  The price level in the U.S. falls relative to foreign price levels, U.S. goods become relatively more expensive than foreign goods, and both Americans and foreigners buy more U.S. goods. 
C)  The price level in the U.S. rises relative to foreign price levels, U.S. goods become relatively more expensive than foreign goods, and both Americans and foreigners buy fewer U.S. goods. 
D)  The price level in the U.S. rises relative to foreign price levels, U.S. goods become relatively more expensive than foreign goods, and both Americans and foreigners buy more U.S. goods. 
E)  a and c 
A)  The price level in the U.S. falls relative to foreign price levels, U.S. goods become relatively less expensive than foreign goods, and both Americans and foreigners buy more U.S. goods. 
B)  The price level in the U.S. falls relative to foreign price levels, U.S. goods become relatively more expensive than foreign goods, and both Americans and foreigners buy more U.S. goods. 
C)  The price level in the U.S. rises relative to foreign price levels, U.S. goods become relatively more expensive than foreign goods, and both Americans and foreigners buy fewer U.S. goods. 
D)  The price level in the U.S. rises relative to foreign price levels, U.S. goods become relatively more expensive than foreign goods, and both Americans and foreigners buy more U.S. goods. 
E)  a and c

Question 11

Suppose the real exchange rate of 10 Mexican pesos to the dollar moves to 9 pesos to the dollar.The dollar has __________________,making American goods __________ expensive for Mexicans.

Accepted Answer

A)  appreciated; less 
B)  appreciated; more 
C)  depreciated; less 
D)  depreciated; more 
A)  appreciated; less 
B)  appreciated; more 
C)  depreciated; less 
D)  depreciated; more

Question 12

Which of the following is an example of an adverse supply shock?

Accepted Answer

A)  a nationwide drought lasting for many months 
B)  an outbreak of war among several of the Middle Eastern oil-producing countries 
C)  an influenza virus that affects 50 percent of the labor force for two weeks 
D)  a, b, and c 
E)  a and c 
A)  a nationwide drought lasting for many months 
B)  an outbreak of war among several of the Middle Eastern oil-producing countries 
C)  an influenza virus that affects 50 percent of the labor force for two weeks 
D)  a, b, and c 
E)  a and c

Question 13

If labor productivity rises at the same time that there is a beneficial supply shock,what is the effect on short-run aggregate supply (SRAS)?

Accepted Answer

A)  SRAS rises. 
B)  SRAS falls. 
C)  SRAS remains constant. 
D)  SRAS may rise, fall, or remain constant. 
A)  SRAS rises. 
B)  SRAS falls. 
C)  SRAS remains constant. 
D)  SRAS may rise, fall, or remain constant.

Question 14

One reason the AD curve is downward sloping is the __________ effect.

Accepted Answer

A)  wage rate 
B)  productivity 
C)  interest rate 
D)  structural 
E)  none of the above 
A)  wage rate 
B)  productivity 
C)  interest rate 
D)  structural 
E)  none of the above

Question 15

Which of the following statements is true?

Accepted Answer

A)  A decrease in wage rates will shift the SRAS curve to the left. 
B)  An adverse supply shock will shift the SRAS curve to the left. 
C)  A fall in the prices of nonlabor inputs will shift the SRAS curve to the left. 
D)  An increase in labor productivity will shift the SRAS curve to the left. 
E)  c and d 
A)  A decrease in wage rates will shift the SRAS curve to the left. 
B)  An adverse supply shock will shift the SRAS curve to the left. 
C)  A fall in the prices of nonlabor inputs will shift the SRAS curve to the left. 
D)  An increase in labor productivity will shift the SRAS curve to the left. 
E)  c and d

Question 16

If investment changes because of a change in a factor other than the price level,then the

Accepted Answer

A)  economy moves from one point on an AD curve to another point on the same curve. 
B)  AD curve shifts. 
C)  economy moves from one point on a short-run aggregate supply (SRAS) curve to another point on the same curve. 
D)  SRAS curve shifts. 
E)  none of the above 
A)  economy moves from one point on an AD curve to another point on the same curve. 
B)  AD curve shifts. 
C)  economy moves from one point on a short-run aggregate supply (SRAS) curve to another point on the same curve. 
D)  SRAS curve shifts. 
E)  none of the above

Question 17

Unusually good weather that improves crop production and a major oil discovery are both examples of a beneficial supply shock.

Accepted Answer

A) True 
 B)False

Question 18

The dollar appreciates in value.This makes foreign-produced goods __________ for Americans and U.S.-produced goods __________ for foreigners.As a result,U.S.__________ fall and U.S.__________ rise.

Accepted Answer

A)  more expensive; cheaper; imports; exports 
B)  cheaper; more expensive; exports; imports 
C)  cheaper; more expensive; imports; exports 
D)  more expensive; cheaper; exports; imports 
A)  more expensive; cheaper; imports; exports 
B)  cheaper; more expensive; exports; imports 
C)  cheaper; more expensive; imports; exports 
D)  more expensive; cheaper; exports; imports

Question 19

A change in labor productivity affects __________ and a change in the exchange rate affects __________.

Accepted Answer

A)  SRAS; SRAS 
B)  AD; AD 
C)  SRAS; AD 
D)  AD; SRAS 
E)  none of the above 
A)  SRAS; SRAS 
B)  AD; AD 
C)  SRAS; AD 
D)  AD; SRAS 
E)  none of the above

Question 20

Exhibit 8-1
  
-Refer to Exhibit 8-1. Assume the economy is originally in equilibrium at point A. If wage rates rise,at which point is the economy most likely to end up in the short run?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Exam 8: Aggregate Demand and Aggregate Supply

An aggregate demand (AD)curve shows the

Suppose the real exchange rate of 115 Japanese yen to the dollar moves to 105 yen to the dollar.The dollar has __________,making Japanese goods __________ expensive for Americans.

An increase in the interest rate __________ purchases of consumer __________.

Starting from short-run equilibrium,the following occurs: individuals expect higher (future)incomes and wage rates rise.What is the effect on the price level and Real GDP in the short run?

If wage rates fall at the same time that labor productivity increases,what is the effect on short-run aggregate supply (SRAS)?

As the U.S.dollar appreciates and the Japanese yen depreciates,

As interest rates drop,households tend to borrow more and businesses tend to borrow less.

Aggregate demand curves are

In the short run,an increase in investment,ceteris paribus,shifts the

Which of the following best describes the international trade effect?

Suppose the real exchange rate of 10 Mexican pesos to the dollar moves to 9 pesos to the dollar.The dollar has __________________,making American goods __________ expensive for Mexicans.

Which of the following is an example of an adverse supply shock?

If labor productivity rises at the same time that there is a beneficial supply shock,what is the effect on short-run aggregate supply (SRAS)?

One reason the AD curve is downward sloping is the __________ effect.

Which of the following statements is true?

If investment changes because of a change in a factor other than the price level,then the

Unusually good weather that improves crop production and a major oil discovery are both examples of a beneficial supply shock.

The dollar appreciates in value.This makes foreign-produced goods __________ for Americans and U.S.-produced goods __________ for foreigners.As a result,U.S.__________ fall and U.S.__________ rise.

A change in labor productivity affects __________ and a change in the exchange rate affects __________.

Exhibit 8-1 -Refer to Exhibit 8-1. Assume the economy is originally in equilibrium at point A. If wage rates rise,at which point is the economy most likely to end up in the short run?

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

Suppose the real exchange rate of 115 Japanese yen to the dollar moves to 105 yen to the dollar.The dollar has ,making Japanese goods expensive for Americans.

An increase in the interest rate purchases of consumer .

Suppose the real exchange rate of 10 Mexican pesos to the dollar moves to 9 pesos to the dollar.The dollar has ________,making American goods expensive for Mexicans.

The dollar appreciates in value.This makes foreign-produced goods for Americans and U.S.-produced goods for foreigners.As a result,U.S. fall and U.S. rise.

A change in labor productivity affects and a change in the exchange rate affects .