Question 1

As a general rule, goods that are perishable tend to have prices that are:

Accepted Answer

A)  never changing in the short run. 
B)  never changing in the long run. 
C)  auction. 
D)  custom. 
A)  never changing in the short run. 
B)  never changing in the long run. 
C)  auction. 
D)  custom.

Question 2

In the short run, demand and not prices, determine the production of inputs such as steel.

Accepted Answer

A) True 
 B)False

Question 3

The aggregate demand curve:

Accepted Answer

A)  slopes upward. 
B)  slopes downward. 
C)  is horizontal. 
D)  may slope upward or downward. 
A)  slopes upward. 
B)  slopes downward. 
C)  is horizontal. 
D)  may slope upward or downward.

Question 4

Recall Application 1, "Measuring Price Stickiness in Consumer Markets," to answer the following questions:
-According to the application, during periods of high inflation, catalog prices tend to show

Accepted Answer

A)  more stickiness. 
B)  no change in stickiness. 
C)  stickiness equal to the level of inflation. 
D)  less stickiness. 
A)  more stickiness. 
B)  no change in stickiness. 
C)  stickiness equal to the level of inflation. 
D)  less stickiness.

Question 5

When output exceeds the full employment level of output, we expect that the

Accepted Answer

A)  wages and prices increase as the long- run aggregate supply curve shifts upward over time. 
B)  wages and prices increase as the short- run aggregate supply curve shifts upward over time. 
C)  wages and prices decrease as the short- run aggregate supply curve shifts downward over time. 
D)  wages and prices increase as the long- run aggregate supply curve shifts downward over time. 
A)  wages and prices increase as the long- run aggregate supply curve shifts upward over time. 
B)  wages and prices increase as the short- run aggregate supply curve shifts upward over time. 
C)  wages and prices decrease as the short- run aggregate supply curve shifts downward over time. 
D)  wages and prices increase as the long- run aggregate supply curve shifts downward over time.

Question 6

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

Accepted Answer

A)  a decrease in the money supply 
B)  a decrease in government spending 
C)  an increase in income taxes 
D)  None of the above will increase output in the long run. 
A)  a decrease in the money supply 
B)  a decrease in government spending 
C)  an increase in income taxes 
D)  None of the above will increase output in the long run.

Question 7

Following Keynes' work in explaining the Great Depression, economists started to make a distinction between

Accepted Answer

A)  nominal and real GDP. 
B)  recessions and booms. 
C)  positive and normative economics. 
D)  GDP in the short run and in the long run. 
A)  nominal and real GDP. 
B)  recessions and booms. 
C)  positive and normative economics. 
D)  GDP in the short run and in the long run.

Question 8

Briefly explain how the aggregate demand curve is different from the demand curve for a particular good.

Accepted Answer

The relevant price for the demand curve

Question 9

Using the AS and AD diagram, graphically illustrate how the economy experiences a stagflation.

Accepted Answer

A stagflation occurs when the short run

Question 10

A higher marginal propensity to consume results in a larger multiplier.

Accepted Answer

A) True 
 B)False

Question 11

If the marginal propensity to consume is 0.2, the value of the multiplier is:

Accepted Answer

A)  1.25. 
B)  2. 
C)  0.8. 
D)  5. 
A)  1.25. 
B)  2. 
C)  0.8. 
D)  5.

Question 12

Figure 9.1
-Refer to Figure 9.1. A reduction in the money supply causes:

Accepted Answer

A)  the aggregate demand curve to shift from AD1 to AD0. 
B)  the aggregate demand curve to shift from AD1 to AD2. 
C)  the economy to move from Point A to Point B, but will not shift the aggregate demand curve. 
D)  neither a shift of the aggregate demand curve nor a change in real GDP. 
A)  the aggregate demand curve to shift from AD1 to AD0. 
B)  the aggregate demand curve to shift from AD1 to AD2. 
C)  the economy to move from Point A to Point B, but will not shift the aggregate demand curve. 
D)  neither a shift of the aggregate demand curve nor a change in real GDP.

Question 13

Many economists have argued that oil prices have a big impact on the performance of the economy. Since 2004, oil prices world wide rose dramatically. Explain the effects of this rise in oil prices in the aggregate demand- aggregate supply model.

Accepted Answer

The increase in oil prices is a detrimen

Question 14

In the short run, the aggregate supply curve is relatively flat because at any point in time:

Accepted Answer

A)  firms are assumed to supply all the output demanded with relatively small changes in prices. 
B)  the labor costs faced by firms are slower to adjust than final prices. 
C)  technology advances faster than production costs. 
D)  firms can not face increases in the output demanded without experiencing small reductions in profits. 
A)  firms are assumed to supply all the output demanded with relatively small changes in prices. 
B)  the labor costs faced by firms are slower to adjust than final prices. 
C)  technology advances faster than production costs. 
D)  firms can not face increases in the output demanded without experiencing small reductions in profits.

Question 15

If the economy is in equilibrium at full employment, a decrease in aggregate demand will:

Accepted Answer

A)  decrease both the price level and the level of output in the short run. 
B)  decrease the price level and leave the level of output unchanged in the short run. 
C)  increase both the price level and the level of output in the short run. 
D)  increase the price level and leave the level of output unchanged in the short run. 
A)  decrease both the price level and the level of output in the short run. 
B)  decrease the price level and leave the level of output unchanged in the short run. 
C)  increase both the price level and the level of output in the short run. 
D)  increase the price level and leave the level of output unchanged in the short run.

Question 16

A decrease in the price level causes an increase in aggregate quantity demanded.

Accepted Answer

A) True 
 B)False

Question 17

Suppose an automobile maker producing a certain kind of car suddenly experiences an increase in the demand for the car. In the short run,

Accepted Answer

A)  the demand for steel goes down and the price of steel goes down. 
B)  the demand for steel goes down but the price of steel stays the same. 
C)  the demand for steel goes up and the price of steel goes up very quickly. 
D)  the demand for steel goes up but the steel prices remain the same. 
A)  the demand for steel goes down and the price of steel goes down. 
B)  the demand for steel goes down but the price of steel stays the same. 
C)  the demand for steel goes up and the price of steel goes up very quickly. 
D)  the demand for steel goes up but the steel prices remain the same.

Question 18

Using aggregate supply and aggregate demand curves, indicate the impact of an increase in government spending on the price level and on the equilibrium level of real GDP in the short run.

Accepted Answer

Aggregate demand will increase

Question 19

For most firms, wage is the largest cost incurred when doing business in the U.S..

Accepted Answer

A) True 
 B)False

Question 20

Can the aggregate demand curve slope upwards?

Accepted Answer

A)  Yes, always. 
B)  No. 
C)  Yes, if the economy experiences inflation. 
D)  Yes, if the aggregate supply curve is downward sloping. 
A)  Yes, always. 
B)  No. 
C)  Yes, if the economy experiences inflation. 
D)  Yes, if the aggregate supply curve is downward sloping.

As a general rule, goods that are perishable tend to have prices that are:

In the short run, demand and not prices, determine the production of inputs such as steel.

The aggregate demand curve:

Recall Application 1, "Measuring Price Stickiness in Consumer Markets," to answer the following questions: -According to the application, during periods of high inflation, catalog prices tend to show

When output exceeds the full employment level of output, we expect that the

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

Following Keynes' work in explaining the Great Depression, economists started to make a distinction between

Briefly explain how the aggregate demand curve is different from the demand curve for a particular good.

Using the AS and AD diagram, graphically illustrate how the economy experiences a stagflation.

A higher marginal propensity to consume results in a larger multiplier.

If the marginal propensity to consume is 0.2, the value of the multiplier is:

Figure 9.1 -Refer to Figure 9.1. A reduction in the money supply causes:

Many economists have argued that oil prices have a big impact on the performance of the economy. Since 2004, oil prices world wide rose dramatically. Explain the effects of this rise in oil prices in the aggregate demand- aggregate supply model.

In the short run, the aggregate supply curve is relatively flat because at any point in time:

If the economy is in equilibrium at full employment, a decrease in aggregate demand will:

A decrease in the price level causes an increase in aggregate quantity demanded.

Suppose an automobile maker producing a certain kind of car suddenly experiences an increase in the demand for the car. In the short run,

Using aggregate supply and aggregate demand curves, indicate the impact of an increase in government spending on the price level and on the equilibrium level of real GDP in the short run.

For most firms, wage is the largest cost incurred when doing business in the U.S..

Can the aggregate demand curve slope upwards?

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

As a general rule, goods that are perishable tend to have prices that are:

In the short run, demand and not prices, determine the production of inputs such as steel.

The aggregate demand curve:

Recall Application 1, "Measuring Price Stickiness in Consumer Markets," to answer the following questions: -According to the application, during periods of high inflation, catalog prices tend to show

When output exceeds the full employment level of output, we expect that the

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

Following Keynes' work in explaining the Great Depression, economists started to make a distinction between

Briefly explain how the aggregate demand curve is different from the demand curve for a particular good.

Using the AS and AD diagram, graphically illustrate how the economy experiences a stagflation.

A higher marginal propensity to consume results in a larger multiplier.

If the marginal propensity to consume is 0.2, the value of the multiplier is:

Figure 9.1 -Refer to Figure 9.1. A reduction in the money supply causes:

Many economists have argued that oil prices have a big impact on the performance of the economy. Since 2004, oil prices world wide rose dramatically. Explain the effects of this rise in oil prices in the aggregate demand- aggregate supply model.

In the short run, the aggregate supply curve is relatively flat because at any point in time:

If the economy is in equilibrium at full employment, a decrease in aggregate demand will:

A decrease in the price level causes an increase in aggregate quantity demanded.

Suppose an automobile maker producing a certain kind of car suddenly experiences an increase in the demand for the car. In the short run,

Using aggregate supply and aggregate demand curves, indicate the impact of an increase in government spending on the price level and on the equilibrium level of real GDP in the short run.

For most firms, wage is the largest cost incurred when doing business in the U.S..

Can the aggregate demand curve slope upwards?

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