Question 1

What could create an increase in the price level and a decrease in real GDP in the short run?

Accepted Answer

A)  an increase in the money supply 
B)  a decrease in taxes 
C)  an increase in stock prices 
D)  bad weather in agriculture producing provinces 
A)  an increase in the money supply 
B)  a decrease in taxes 
C)  an increase in stock prices 
D)  bad weather in agriculture producing provinces D

Question 2

What are the effects of an increase in the price level?

Accepted Answer

A)  The interest rate increases, the dollar depreciates, and net exports increase. 
B)  The interest rate increases, the dollar appreciates, and net exports decrease. 
C)  The interest rate decreases, the dollar depreciates, and net exports increase. 
D)  The interest rate decreases, the dollar appreciates, and net exports decrease. 
A)  The interest rate increases, the dollar depreciates, and net exports increase. 
B)  The interest rate increases, the dollar appreciates, and net exports decrease. 
C)  The interest rate decreases, the dollar depreciates, and net exports increase. 
D)  The interest rate decreases, the dollar appreciates, and net exports decrease. B

Question 3

How does Canadian aggregate demand change if the dollar appreciates or other countries experience recessions?

Accepted Answer

A)  Aggregate demand shifts right. 
B)  Aggregate demand shifts left. 
C)  If the dollar appreciates, aggregate demand shifts right; if other countries experience recessions, aggregate demand shifts left. 
D)  If the dollar appreciates, aggregate demand shifts left; if other countries experience recessions, aggregate demand shifts right. 
A)  Aggregate demand shifts right. 
B)  Aggregate demand shifts left. 
C)  If the dollar appreciates, aggregate demand shifts right; if other countries experience recessions, aggregate demand shifts left. 
D)  If the dollar appreciates, aggregate demand shifts left; if other countries experience recessions, aggregate demand shifts right. B

Question 4

What happens when the price level falls?

Accepted Answer

A)  Interest rates rise, so firms increase investment. 
B)  Interest rates rise, so firms decrease investment. 
C)  Interest rates fall, so firms increase investment. 
D)  Interest rates fall, so firms decrease investment. 
A)  Interest rates rise, so firms increase investment. 
B)  Interest rates rise, so firms decrease investment. 
C)  Interest rates fall, so firms increase investment. 
D)  Interest rates fall, so firms decrease investment.

Question 5

Figure 14-1  
-Refer to Figure 14-1. If the economy starts at C and there is an increase in aggregate demand, what happens to the economy in the long run?

Accepted Answer

A)  It moves to D and then back to C. 
B)  It moves to B and then to A. 
C)  It moves to D and then to A. 
D)  It moves to B and then back to C. 
A)  It moves to D and then back to C. 
B)  It moves to B and then to A. 
C)  It moves to D and then to A. 
D)  It moves to B and then back to C.

Question 6

What would cause prices and real GDP to rise in the short run?

Accepted Answer

A)  short-run aggregate supply shifts right 
B)  short-run aggregate supply shifts left 
C)  aggregate demand shifts right 
D)  aggregate demand shifts left 
A)  short-run aggregate supply shifts right 
B)  short-run aggregate supply shifts left 
C)  aggregate demand shifts right 
D)  aggregate demand shifts left

Question 7

Illustrate the classical analysis of growth and inflation with aggregate-demand and long-run aggregate-supply curves.

Accepted Answer

See graph.
Figure 14-2 @#IMG-DLM& Over time, techn

Question 8

According to the sticky-wage theory, which statement is consistent with a more-than-expected increase in the price level?

Accepted Answer

A)  Real wages rise, so firms will hire more workers. 
B)  Real wages rise, so firms will hire fewer workers. 
C)  Real wages fall, so firms will hire more workers. 
D)  Real wages fall, so firms will hire fewer workers. 
A)  Real wages rise, so firms will hire more workers. 
B)  Real wages rise, so firms will hire fewer workers. 
C)  Real wages fall, so firms will hire more workers. 
D)  Real wages fall, so firms will hire fewer workers.

Question 9

Which statement best describes the effects of a fall in the price level?

Accepted Answer

A)  The real value of money and the real exchange rate rise. 
B)  The real value of money and the real exchange rate fall. 
C)  The real value of money rises, and the real exchange rate falls. 
D)  The real value of money falls, and the real exchange rate rises. 
A)  The real value of money and the real exchange rate rise. 
B)  The real value of money and the real exchange rate fall. 
C)  The real value of money rises, and the real exchange rate falls. 
D)  The real value of money falls, and the real exchange rate rises.

Question 10

Increased uncertainty and pessimism about the future of the economy decreases investment spending, shifting aggregate demand to the left.

Accepted Answer

A) True 
 B)False

Question 11

What happens when the price level rises?

Accepted Answer

A)  Interest rates rise, so firms increase investment. 
B)  Interest rates rise, so firms decrease investment. 
C)  Interest rates fall, so firms increase investment. 
D)  Interest rates fall, so firms decrease investment. 
A)  Interest rates rise, so firms increase investment. 
B)  Interest rates rise, so firms decrease investment. 
C)  Interest rates fall, so firms increase investment. 
D)  Interest rates fall, so firms decrease investment.

Question 12

What happened during World War II?

Accepted Answer

A)  Government purchases of goods and services increased. 
B)  The real GDP per person decreased by 60 percent. 
C)  The unemployment rate increased to 15 percent. 
D)  More resources were devoted to the production of consumer goods. 
A)  Government purchases of goods and services increased. 
B)  The real GDP per person decreased by 60 percent. 
C)  The unemployment rate increased to 15 percent. 
D)  More resources were devoted to the production of consumer goods.

Question 13

Which statement best describes the effects of a fall in the price level?

Accepted Answer

A)  Dollars become more valuable, and interest rates rise. 
B)  Dollars become more valuable, and interest rates fall. 
C)  Dollars become less valuable, and interest rates rise. 
D)  Dollars become less valuable, and interest rates fall. 
A)  Dollars become more valuable, and interest rates rise. 
B)  Dollars become more valuable, and interest rates fall. 
C)  Dollars become less valuable, and interest rates rise. 
D)  Dollars become less valuable, and interest rates fall.

Question 14

Which of the following shifts aggregate demand to the left?

Accepted Answer

A)  the price level falls 
B)  the money supply increases 
C)  the dollar depreciates 
D)  interest rates rise 
A)  the price level falls 
B)  the money supply increases 
C)  the dollar depreciates 
D)  interest rates rise

Question 15

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

Accepted Answer

A)  an increase in government spending 
B)  an increase in the expected price level 
C)  an increase in the capital stock 
D)  an increase in interest rates 
A)  an increase in government spending 
B)  an increase in the expected price level 
C)  an increase in the capital stock 
D)  an increase in interest rates

Question 16

Make a list of things that would shift the long-run aggregate-supply curve to the right.

Accepted Answer

Examples in the text (or variations) inc

Question 17

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

Accepted Answer

A)  an increase in the price level 
B)  an increase in the expected price level 
C)  an increase in the capital stock 
D)  an increase in the money supply 
A)  an increase in the price level 
B)  an increase in the expected price level 
C)  an increase in the capital stock 
D)  an increase in the money supply

Question 18

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

Accepted Answer

When the price level increases, the purc

Question 19

Although we understand what things change GDP, it is difficult to predict recessions with a fair amount of accuracy.

Accepted Answer

A) True 
 B)False

Question 20

What are the effects of a decrease in the price level?

Accepted Answer

A)  People hold less money, so they lend less, and the interest rate rises. 
B)  People hold less money, so they lend more, and the interest rate falls. 
C)  People hold more money, so they lend more, and the interest rate rises. 
D)  People hold more money, so they lend less, and the interest rate falls. 
A)  People hold less money, so they lend less, and the interest rate rises. 
B)  People hold less money, so they lend more, and the interest rate falls. 
C)  People hold more money, so they lend more, and the interest rate rises. 
D)  People hold more money, so they lend less, and the interest rate falls.

What could create an increase in the price level and a decrease in real GDP in the short run?

What are the effects of an increase in the price level?

How does Canadian aggregate demand change if the dollar appreciates or other countries experience recessions?

What happens when the price level falls?

Figure 14-1 -Refer to Figure 14-1. If the economy starts at C and there is an increase in aggregate demand, what happens to the economy in the long run?

What would cause prices and real GDP to rise in the short run?

Illustrate the classical analysis of growth and inflation with aggregate-demand and long-run aggregate-supply curves.

According to the sticky-wage theory, which statement is consistent with a more-than-expected increase in the price level?

Which statement best describes the effects of a fall in the price level?

Increased uncertainty and pessimism about the future of the economy decreases investment spending, shifting aggregate demand to the left.

What happens when the price level rises?

What happened during World War II?

Which statement best describes the effects of a fall in the price level?

Which of the following shifts aggregate demand to the left?

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

Make a list of things that would shift the long-run aggregate-supply curve to the right.

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

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

Although we understand what things change GDP, it is difficult to predict recessions with a fair amount of accuracy.

What are the effects of a decrease in the price level?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 14: Aggregate Demand and Aggregate Supply

What could create an increase in the price level and a decrease in real GDP in the short run?

What are the effects of an increase in the price level?

How does Canadian aggregate demand change if the dollar appreciates or other countries experience recessions?

What happens when the price level falls?

Figure 14-1 -Refer to Figure 14-1. If the economy starts at C and there is an increase in aggregate demand, what happens to the economy in the long run?

What would cause prices and real GDP to rise in the short run?

Illustrate the classical analysis of growth and inflation with aggregate-demand and long-run aggregate-supply curves.

According to the sticky-wage theory, which statement is consistent with a more-than-expected increase in the price level?

Which statement best describes the effects of a fall in the price level?

Increased uncertainty and pessimism about the future of the economy decreases investment spending, shifting aggregate demand to the left.

What happens when the price level rises?

What happened during World War II?

Which statement best describes the effects of a fall in the price level?

Which of the following shifts aggregate demand to the left?

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

Make a list of things that would shift the long-run aggregate-supply curve to the right.

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

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

Although we understand what things change GDP, it is difficult to predict recessions with a fair amount of accuracy.

What are the effects of a decrease in the price level?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters