Question 1

The _______ is one reason why the aggregate demand curve is downward sloping.

Accepted Answer

A)  paradox of thrift 
B)  natural rate of unemployment 
C)  wealth effect 
D)  presence of sticky prices 
A)  paradox of thrift 
B)  natural rate of unemployment 
C)  wealth effect 
D)  presence of sticky prices

Question 2

Sticky prices cause an economic coordination problem for the economy because:

Accepted Answer

A)  they are likely to cause the CPI to understate the actual increase in the cost of living. 
B)  they increase the transaction costs in open market auctions. 
C)  they confuse the signal system that brings together consumers and producers. 
D)  they confuse the system of custom prices. 
A)  they are likely to cause the CPI to understate the actual increase in the cost of living. 
B)  they increase the transaction costs in open market auctions. 
C)  they confuse the signal system that brings together consumers and producers. 
D)  they confuse the system of custom prices.

Question 3

Which of the following will cause the price level to increase in the long- run?

Accepted Answer

A)  a decrease in government spending 
B)  an increase in income taxes 
C)  a decrease in the money supply 
D)  an increase in the interest rates 
A)  a decrease in government spending 
B)  an increase in income taxes 
C)  a decrease in the money supply 
D)  an increase in the interest rates

Question 4

When the economy is in a recession, the intersection between the:

Accepted Answer

A)  long run AS and the AD occurs at an output level lower than potential output. 
B)  long run AS and the AD occurs at an output level higher than potential output. 
C)  short run AS and the AD occurs at an output level higher than potential output. 
D)  short run AS and the AD occurs at an output level lower than potential output. 
A)  long run AS and the AD occurs at an output level lower than potential output. 
B)  long run AS and the AD occurs at an output level higher than potential output. 
C)  short run AS and the AD occurs at an output level higher than potential output. 
D)  short run AS and the AD occurs at an output level lower than potential output.

Question 5

The aggregate demand curve shows a(n) _______ relationship between the _______.

Accepted Answer

A)  positive; price level and real GDP 
B)  positive; interest rate and investment 
C)  negative; level of real GDP and investment 
D)  negative; price level and real GDP 
A)  positive; price level and real GDP 
B)  positive; interest rate and investment 
C)  negative; level of real GDP and investment 
D)  negative; price level and real GDP

Question 6

If the marginal propensity to consume is 0.5, an increase in consumption by $200 will shift the aggregate demand curve horizontally to the right by

Accepted Answer

A)  $200. 
B)  $400. 
C)  $100. 
D)  $200.5. 
A)  $200. 
B)  $400. 
C)  $100. 
D)  $200.5.

Question 7

A rightward shift in the aggregate demand curve can be caused by:

Accepted Answer

A)  an increase in government spending. 
B)  an increase in the money supply. 
C)  a decrease in taxes. 
D)  all of the above 
A)  an increase in government spending. 
B)  an increase in the money supply. 
C)  a decrease in taxes. 
D)  all of the above

Question 8

A decrease in government purchases shifts the _______ curve to the _______.

Accepted Answer

A)  aggregate demand; right 
B)  aggregate supply; left 
C)  aggregate supply; right 
D)  aggregate demand; left 
A)  aggregate demand; right 
B)  aggregate supply; left 
C)  aggregate supply; right 
D)  aggregate demand; left

Question 9

If the consumption function is C = 200 + 0.8Y and there is a $10 million increase in investment spending, then the aggregate demand curve will shift horizontally to the right by:

Accepted Answer

A)  $8 million. 
B)  $12.5 million. 
C)  $2 million. 
D)  $50 million. 
A)  $8 million. 
B)  $12.5 million. 
C)  $2 million. 
D)  $50 million.

The _______ is one reason why the aggregate demand curve is downward sloping.

Sticky prices cause an economic coordination problem for the economy because:

Which of the following will cause the price level to increase in the long- run?

When the economy is in a recession, the intersection between the:

The aggregate demand curve shows a(n) _ relationship between the _.

If the marginal propensity to consume is 0.5, an increase in consumption by $200 will shift the aggregate demand curve horizontally to the right by

A rightward shift in the aggregate demand curve can be caused by:

A decrease in government purchases shifts the _ curve to the _.

If the consumption function is C = 200 + 0.8Y and there is a $10 million increase in investment spending, then the aggregate demand curve will shift horizontally to the right by:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

Exam 9: Aggregate Demand and Aggregate Supply

The _______ is one reason why the aggregate demand curve is downward sloping.

Sticky prices cause an economic coordination problem for the economy because:

Which of the following will cause the price level to increase in the long- run?

When the economy is in a recession, the intersection between the:

The aggregate demand curve shows a(n) _______ relationship between the _______.

If the marginal propensity to consume is 0.5, an increase in consumption by $200 will shift the aggregate demand curve horizontally to the right by

A rightward shift in the aggregate demand curve can be caused by:

A decrease in government purchases shifts the _______ curve to the _______.

If the consumption function is C = 200 + 0.8Y and there is a $10 million increase in investment spending, then the aggregate demand curve will shift horizontally to the right by:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

The aggregate demand curve shows a(n) _ relationship between the _.

A decrease in government purchases shifts the _ curve to the _.