Question 1

Suppose a stock market boom makes people feel wealthier.The increase in wealth would cause people to desire

Accepted Answer

A)  increased consumption,which shifts the aggregate-demand curve right. 
B)  increased consumption,which shifts the aggregate-demand curve left. 
C)  decreased consumption,which shifts the aggregate-demand curve right. 
D)  decreased consumption,which shifts the aggregate-demand curve left. 
A)  increased consumption,which shifts the aggregate-demand curve right. 
B)  increased consumption,which shifts the aggregate-demand curve left. 
C)  decreased consumption,which shifts the aggregate-demand curve right. 
D)  decreased consumption,which shifts the aggregate-demand curve left.

Question 2

Other things the same,if the price level rises,people

Accepted Answer

A)  increase foreign bond purchases,so the dollar appreciates. 
B)  increase foreign bond purchases,so the dollar depreciates. 
C)  increase domestic bond purchases,so the dollar appreciates. 
D)  increase domestic bond purchases,so the dollar depreciates. 
A)  increase foreign bond purchases,so the dollar appreciates. 
B)  increase foreign bond purchases,so the dollar depreciates. 
C)  increase domestic bond purchases,so the dollar appreciates. 
D)  increase domestic bond purchases,so the dollar depreciates.

Question 3

Other things the same,the aggregate quantity of goods demanded in the U.S.increases if

Accepted Answer

A)  real wealth falls. 
B)  the interest rate rises. 
C)  the dollar depreciates. 
D)  None of the above is correct. 
A)  real wealth falls. 
B)  the interest rate rises. 
C)  the dollar depreciates. 
D)  None of the above is correct.

Question 4

If the price level falls,the real value of a dollar

Accepted Answer

A)  rises,so people will want to buy more.This response helps explain the slope of the aggregate demand curve. 
B)  rises,so people will want to buy more.This response shifts aggregate demand to the right. 
C)  falls,so people will want to buy less.This response helps explain the slope of the aggregate demand curve. 
D)  falls,so people will want to buy less.This response shifts aggregate demand to the left. 
A)  rises,so people will want to buy more.This response helps explain the slope of the aggregate demand curve. 
B)  rises,so people will want to buy more.This response shifts aggregate demand to the right. 
C)  falls,so people will want to buy less.This response helps explain the slope of the aggregate demand curve. 
D)  falls,so people will want to buy less.This response shifts aggregate demand to the left.

Question 5

A decrease in the expected price level shifts

Accepted Answer

A)  only the long-run aggregate supply curve right. 
B)  only the short-run aggregate supply curve right. 
C)  both the short-run and the long-run aggregate supply curve right. 
D)  Neither the short-run nor the long-run aggregate supply curve right. 
A)  only the long-run aggregate supply curve right. 
B)  only the short-run aggregate supply curve right. 
C)  both the short-run and the long-run aggregate supply curve right. 
D)  Neither the short-run nor the long-run aggregate supply curve right.

Question 6

Suppose that a decrease in the demand for goods and services pushes the economy into recession.What happens to the price level? If the government does nothing,what ensures that the economy still eventually gets back to the natural rate of output?

Accepted Answer

A decrease in aggregate demand causes th

Question 7

Other things the same,as the price level falls,which of the following increases?

Accepted Answer

A)  lending and investment spending 
B)  lending,but not investment spending 
C)  investment spending,but not lending 
D)  neither investment spending nor lending 
A)  lending and investment spending 
B)  lending,but not investment spending 
C)  investment spending,but not lending 
D)  neither investment spending nor lending

Question 8

The explanations for the slopes of the aggregate demand and short-run aggregate supply curves are the same as the explanations for the slopes of demand and supply curves for specific goods and services.

Accepted Answer

A) True 
 B)False

Question 9

Other things the same,an unexpected fall in the price level results in some firms having

Accepted Answer

A)  lower than desired prices which increases their sales. 
B)  lower than desired prices which depresses their sales. 
C)  higher than desired prices which increases their sales. 
D)  higher than desired prices which depresses their sales. 
A)  lower than desired prices which increases their sales. 
B)  lower than desired prices which depresses their sales. 
C)  higher than desired prices which increases their sales. 
D)  higher than desired prices which depresses their sales.

Question 10

The economic boom of the early 1940s resulted mostly from

Accepted Answer

A)  increased government expenditures. 
B)  falling prices of oil and other natural resources. 
C)  an increase in the growth rate of the money supply. 
D)  rapid developments in transportation,electronics,and communication. 
A)  increased government expenditures. 
B)  falling prices of oil and other natural resources. 
C)  an increase in the growth rate of the money supply. 
D)  rapid developments in transportation,electronics,and communication.

Question 11

If the price level rises above what was expected and nominal wages are fixed,then

Accepted Answer

A)  production becomes less profitable so firms will hire fewer workers. 
B)  production becomes less profitable so firms will hire more workers. 
C)  production becomes more profitable so firms will hire fewer workers. 
D)  production become more profitable so firms will hire more workers. 
A)  production becomes less profitable so firms will hire fewer workers. 
B)  production becomes less profitable so firms will hire more workers. 
C)  production becomes more profitable so firms will hire fewer workers. 
D)  production become more profitable so firms will hire more workers.

Question 12

Other things the same,as the price level rises,

Accepted Answer

A)  the dollar depreciates. 
B)  the interest rate falls. 
C)  people feel less wealthy. 
D)  All of the above are correct. 
A)  the dollar depreciates. 
B)  the interest rate falls. 
C)  people feel less wealthy. 
D)  All of the above are correct.

Question 13

During World War II,

Accepted Answer

A)  government purchases of goods and services increased fivefold. 
B)  the economy's production increased about 25 percent. 
C)  unemployment fell to about 5%. 
D)  All of the above are correct. 
A)  government purchases of goods and services increased fivefold. 
B)  the economy's production increased about 25 percent. 
C)  unemployment fell to about 5%. 
D)  All of the above are correct.

Question 14

Which of the following would both shift aggregate demand right?

Accepted Answer

A)  the price level decreases and government expenditures increase 
B)  the price level decreases and the government repeals an investment tax credit 
C)  government expenditures increase and the money supply increases 
D)  None of the above are correct. 
A)  the price level decreases and government expenditures increase 
B)  the price level decreases and the government repeals an investment tax credit 
C)  government expenditures increase and the money supply increases 
D)  None of the above are correct.

Question 15

In which case can we be sure real GDP rises in the short run?

Accepted Answer

A)  foreign economies expand and taxes rise 
B)  foreign economies expand and taxes fall 
C)  foreign economies contract and taxes fall 
D)  None of the above are correct. 
A)  foreign economies expand and taxes rise 
B)  foreign economies expand and taxes fall 
C)  foreign economies contract and taxes fall 
D)  None of the above are correct.

Question 16

Figure 20-1  
-Refer to Figure 20-1.If the economy is at A and there is a fall in aggregate demand,in the short run the economy

Accepted Answer

A)  stays at A. 
B)  moves to B. 
C)  moves to C. 
D)  moves to D. 
A)  stays at A. 
B)  moves to B. 
C)  moves to C. 
D)  moves to D.

Question 17

Other things the same,if the U.S.price level falls,then

Accepted Answer

A)  the supply of dollars in the market for foreign-currency exchange increases,so the exchange rate rises. 
B)  the supply of dollars in the market for foreign-currency exchange increases,so the exchange rate falls. 
C)  the supply of dollars in the market for foreign-currency exchange decreases,so the exchange rate rises. 
D)  the supply of dollars in the market for foreign-currency exchange decreases,so the exchange rate falls. 
A)  the supply of dollars in the market for foreign-currency exchange increases,so the exchange rate rises. 
B)  the supply of dollars in the market for foreign-currency exchange increases,so the exchange rate falls. 
C)  the supply of dollars in the market for foreign-currency exchange decreases,so the exchange rate rises. 
D)  the supply of dollars in the market for foreign-currency exchange decreases,so the exchange rate falls.

Question 18

As recessions begin,production

Accepted Answer

A)  and unemployment both rise. 
B)  rises and unemployment falls. 
C)  falls and unemployment rises. 
D)  and unemployment both fall. 
A)  and unemployment both rise. 
B)  rises and unemployment falls. 
C)  falls and unemployment rises. 
D)  and unemployment both fall.

Question 19

Which of the following typically rises during a recession?

Accepted Answer

A)  consumption 
B)  unemployment 
C)  corporate profits 
D)  automobile sales 
A)  consumption 
B)  unemployment 
C)  corporate profits 
D)  automobile sales

Question 20

The long-run aggregate supply curve would shift right if the government were to

Accepted Answer

A)  increase the minimum-wage. 
B)  make unemployment benefits more generous. 
C)  raise taxes on investment spending. 
D)  None of the above is correct. 
A)  increase the minimum-wage. 
B)  make unemployment benefits more generous. 
C)  raise taxes on investment spending. 
D)  None of the above is correct.

Exam 33: Aggregate Demand and Aggregate Supply

Suppose a stock market boom makes people feel wealthier.The increase in wealth would cause people to desire

Other things the same,if the price level rises,people

Other things the same,the aggregate quantity of goods demanded in the U.S.increases if

If the price level falls,the real value of a dollar

A decrease in the expected price level shifts

Suppose that a decrease in the demand for goods and services pushes the economy into recession.What happens to the price level? If the government does nothing,what ensures that the economy still eventually gets back to the natural rate of output?

Other things the same,as the price level falls,which of the following increases?

The explanations for the slopes of the aggregate demand and short-run aggregate supply curves are the same as the explanations for the slopes of demand and supply curves for specific goods and services.

Other things the same,an unexpected fall in the price level results in some firms having

The economic boom of the early 1940s resulted mostly from

If the price level rises above what was expected and nominal wages are fixed,then

Other things the same,as the price level rises,

During World War II,

Which of the following would both shift aggregate demand right?

In which case can we be sure real GDP rises in the short run?

Figure 20-1 -Refer to Figure 20-1.If the economy is at A and there is a fall in aggregate demand,in the short run the economy

Other things the same,if the U.S.price level falls,then

As recessions begin,production

Which of the following typically rises during a recession?

The long-run aggregate supply curve would shift right if the government were to

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply,demand,and Government Policies

Consumers,producers,and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Market for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving,investment,and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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