Question 1

A rise in aggregate demand and a fall in short-run aggregate supply will definitely

Accepted Answer

A)  raise the price level, but there is not enough information to know how Real GDP will change. 
B)  lower Real GDP, but there is not enough information to know how the price level will change. 
C)  raise the price level and Real GDP. 
D)  raise Real GDP, but there is not enough information to know how the price level will change. 
E)  raise the price level and lower Real GDP. 
A)  raise the price level, but there is not enough information to know how Real GDP will change. 
B)  lower Real GDP, but there is not enough information to know how the price level will change. 
C)  raise the price level and Real GDP. 
D)  raise Real GDP, but there is not enough information to know how the price level will change. 
E)  raise the price level and lower Real GDP.

Question 2

If total expenditures fall at a given price level,then the

Accepted Answer

A)  quantity demanded of Real GDP rises. 
B)  quantity demanded of Real GDP falls. 
C)  AD curves shifts to the right. 
D)  AD curve shifts to the left. 
E)  none of the above 
A)  quantity demanded of Real GDP rises. 
B)  quantity demanded of Real GDP falls. 
C)  AD curves shifts to the right. 
D)  AD curve shifts to the left. 
E)  none of the above

Question 3

Explain how aggregate demand and aggregate supply may affect your job prospects after you leave college.Support your answer with an appropriate example.

Accepted Answer

The ability to find a job depe

Question 4

Explain why the short-run aggregate supply curve (SRAS)is upward sloping,while the long-run aggregate supply (LRAS)curve is a vertical line.

Accepted Answer

The SRAS curve slopes upward because of

Question 5

If the price level remains constant but the wage rate increases,then there will be __________ in production and the SRAS curve will shift __________.

Accepted Answer

A)  an increase; rightward 
B)  a decrease; rightward 
C)  an increase; leftward 
D)  a decrease; leftward 
A)  an increase; rightward 
B)  a decrease; rightward 
C)  an increase; leftward 
D)  a decrease; leftward

Question 6

An increase in investment at a given price level

Accepted Answer

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

Question 7

Exhibit 8-2
  
-Refer to Exhibit 8-2. Based on the given change,what word (rises or falls)should go in blank (3)and blank (4),respectively,to summarize the resulting impact on short run equilibrium?

Accepted Answer

A)  rises; rises 
B)  falls; falls 
C)  rises; falls 
D)  falls; rises 
A)  rises; rises 
B)  falls; falls 
C)  rises; falls 
D)  falls; rises

Question 8

Exhibit 8-2
  
-Refer to Exhibit 8-2. Based on the given change,what word (rises or falls)should go in blank (11)and blank (12),respectively,to summarize the resulting impact on short run equilibrium?

Accepted Answer

A)  rises; rises 
B)  falls; falls 
C)  rises; falls 
D)  falls; rises 
A)  rises; rises 
B)  falls; falls 
C)  rises; falls 
D)  falls; rises

Question 9

As the U.S.dollar appreciates,the U.S.____________ curve shifts _____________ resulting in a(n)_________________ in the U.S.price level and a(n)_________________ in Real GDP in the United States.

Accepted Answer

A)  AD; leftward; decrease; decrease 
B)  AD; rightward; increase; increase 
C)  SRAS; rightward; decrease; increase 
D)  SRAS; leftward; increase; decrease 
A)  AD; leftward; decrease; decrease 
B)  AD; rightward; increase; increase 
C)  SRAS; rightward; decrease; increase 
D)  SRAS; leftward; increase; decrease

Question 10

Suppose the real exchange rate of 10 Mexican pesos to the dollar moves to 9 pesos to the dollar.The dollar has ________________,making Mexican 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 11

Business optimism about future sales tends to __________ investment expenditures,shifting the AD curve to the __________.

Accepted Answer

A)  increase; left 
B)  increase; right 
C)  decrease; left 
D)  decrease; right 
A)  increase; left 
B)  increase; right 
C)  decrease; left 
D)  decrease; right

Question 12

Starting from short-run equilibrium,the following occurs: the U.S.dollar depreciates and wage rates rise.Moreover,the effect on the economy from the dollar depreciating is stronger than the effect on the economy from rising wage rates.What is the effect on the price level and Real GDP in the short run?

Accepted Answer

A)  The price level falls and Real GDP falls. 
B)  The price level rises and Real GDP falls. 
C)  The price level falls and Real GDP rises. 
D)  The price level rises and Real GDP rises. 
E)  none of the above 
A)  The price level falls and Real GDP falls. 
B)  The price level rises and Real GDP falls. 
C)  The price level falls and Real GDP rises. 
D)  The price level rises and Real GDP rises. 
E)  none of the above

Question 13

The change in the purchasing power of dollar-denominated assets (such as cash holdings)is the

Accepted Answer

A)  money effect. 
B)  interest rate effect. 
C)  asset effect. 
D)  real balance effect. 
E)  none of the above 
A)  money effect. 
B)  interest rate effect. 
C)  asset effect. 
D)  real balance effect. 
E)  none of the above

Question 14

The interest rate effect,the real balance effect,and the international trade effect all result from a change in the price level.

Accepted Answer

A) True 
 B)False

Question 15

A change in the quantity demanded of Real GDP is graphically represented as a

Accepted Answer

A)  shift in the AD curve. 
B)  movement from one point on the AD curve to another point on the same curve. 
C)  movement from a point on the AD curve to a point on the SRAS curve. 
D)  shift in the real balance effect curve. 
E)  shift in the interest rate effect curve. 
A)  shift in the AD curve. 
B)  movement from one point on the AD curve to another point on the same curve. 
C)  movement from a point on the AD curve to a point on the SRAS curve. 
D)  shift in the real balance effect curve. 
E)  shift in the interest rate effect curve.

Question 16

Which of the following statements represents a correct and sequentially accurate economic explanation?

Accepted Answer

A)  Business taxes rise, investment falls, total expenditures on goods and services falls, AD rises, and the AD curve shifts rightward. 
B)  The dollar depreciates, net exports rise, total expenditures on goods and services rises, AD rises, and the AD curve shifts rightward. 
C)  The interest rate falls, consumption rises, total expenditures on goods and services rises, AD rises, and the AD curve shifts rightward. 
D)  b and c 
E)  a, b, and c 
A)  Business taxes rise, investment falls, total expenditures on goods and services falls, AD rises, and the AD curve shifts rightward. 
B)  The dollar depreciates, net exports rise, total expenditures on goods and services rises, AD rises, and the AD curve shifts rightward. 
C)  The interest rate falls, consumption rises, total expenditures on goods and services rises, AD rises, and the AD curve shifts rightward. 
D)  b and c 
E)  a, b, and c

Question 17

The real balance effect describes the change in

Accepted Answer

A)  checking account balances that occur when the money supply increases or decreases. 
B)  the value of physical assets (e.g., houses) that results from a change in the price level. 
C)  the output producers produce as they attempt to balance their production in response to changes in consumers' demand. 
D)  the value of cash holdings that results from a change in the price level. 
E)  the balance of cash holdings that results from a change in the amount of income earned. 
A)  checking account balances that occur when the money supply increases or decreases. 
B)  the value of physical assets (e.g., houses) that results from a change in the price level. 
C)  the output producers produce as they attempt to balance their production in response to changes in consumers' demand. 
D)  the value of cash holdings that results from a change in the price level. 
E)  the balance of cash holdings that results from a change in the amount of income earned.

Question 18

The aggregate demand (AD)curve is the graphical representation of production in the short run.

Accepted Answer

A) True 
 B)False

Question 19

When foreign real national income rises,domestic Real GDP falls,ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following best describes how the real balance effect works?

Accepted Answer

A)  The price level falls, purchasing power rises, a person's monetary wealth rises, and the person buys fewer goods and services. 
B)  The price level rises, purchasing power rises, a person's monetary wealth decreases, and the person buys more goods and services. 
C)  The price level rises, purchasing power falls, a person's monetary wealth falls, and the person buys fewer goods and services. 
D)  The price level falls, purchasing power rises, a person's monetary wealth falls, and the person buys fewer goods and services. 
E)  none of the above 
A)  The price level falls, purchasing power rises, a person's monetary wealth rises, and the person buys fewer goods and services. 
B)  The price level rises, purchasing power rises, a person's monetary wealth decreases, and the person buys more goods and services. 
C)  The price level rises, purchasing power falls, a person's monetary wealth falls, and the person buys fewer goods and services. 
D)  The price level falls, purchasing power rises, a person's monetary wealth falls, and the person buys fewer goods and services. 
E)  none of the above

Exam 8: Aggregate Demand and Aggregate Supply

A rise in aggregate demand and a fall in short-run aggregate supply will definitely

If total expenditures fall at a given price level,then the

Explain how aggregate demand and aggregate supply may affect your job prospects after you leave college.Support your answer with an appropriate example.

Explain why the short-run aggregate supply curve (SRAS)is upward sloping,while the long-run aggregate supply (LRAS)curve is a vertical line.

If the price level remains constant but the wage rate increases,then there will be __________ in production and the SRAS curve will shift __________.

An increase in investment at a given price level

Exhibit 8-2 -Refer to Exhibit 8-2. Based on the given change,what word (rises or falls)should go in blank (3)and blank (4),respectively,to summarize the resulting impact on short run equilibrium?

Exhibit 8-2 -Refer to Exhibit 8-2. Based on the given change,what word (rises or falls)should go in blank (11)and blank (12),respectively,to summarize the resulting impact on short run equilibrium?

As the U.S.dollar appreciates,the U.S.____________ curve shifts _____________ resulting in a(n)_________________ in the U.S.price level and a(n)_________________ in Real GDP in the United States.

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

Business optimism about future sales tends to __________ investment expenditures,shifting the AD curve to the __________.

The change in the purchasing power of dollar-denominated assets (such as cash holdings)is the

The interest rate effect,the real balance effect,and the international trade effect all result from a change in the price level.

A change in the quantity demanded of Real GDP is graphically represented as a

Which of the following statements represents a correct and sequentially accurate economic explanation?

The real balance effect describes the change in

The aggregate demand (AD)curve is the graphical representation of production in the short run.

When foreign real national income rises,domestic Real GDP falls,ceteris paribus.

Which of the following best describes how the real balance effect works?

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

If the price level remains constant but the wage rate increases,then there will be in production and the SRAS curve will shift .

As the U.S.dollar appreciates,the U.S.______ curve shifts _ resulting in a(n)_ in the U.S.price level and a(n)_______ in Real GDP in the United States.

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

Business optimism about future sales tends to investment expenditures,shifting the AD curve to the .