Question 1

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

Accepted Answer

A)  either an increase in the price of imported natural resources or opening up international trade 
B)  neither an increase in the price of imported natural resources or opening up international trade 
C)  an increase in the price of imported natural resources,but not opening up international trade 
D)  opening up international trade,but not an increase in the price of imported natural resources 
A)  either an increase in the price of imported natural resources or opening up international trade 
B)  neither an increase in the price of imported natural resources or opening up international trade 
C)  an increase in the price of imported natural resources,but not opening up international trade 
D)  opening up international trade,but not an increase in the price of imported natural resources

Question 2

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

Accepted Answer

A)  back to A in the long run. 
B)  to B in the long run. 
C)  to C in the long run. 
D)  to D in the long run. 
A)  back to A in the long run. 
B)  to B in the long run. 
C)  to C in the long run. 
D)  to D in the long run.

Question 3

What variables besides real GDP tend to decline during recessions? Given the definition of real GDP,argue that declines in these variables are to be expected.

Accepted Answer

Variables that fall along with real GDP

Question 4

The equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level),where a is a positive number,represents

Accepted Answer

A)  an upward-sloping short-run aggregate supply curve 
B)  a vertical short-run aggregate supply curve 
C)  a downward-sloping aggregate demand curve 
D)  None of the above is correct. 
A)  an upward-sloping short-run aggregate supply curve 
B)  a vertical short-run aggregate supply curve 
C)  a downward-sloping aggregate demand curve 
D)  None of the above is correct.

Question 5

Write the mathematical expression that summarizes the three alternative explanations for the upward slope of the short run aggregate supply curve.

Accepted Answer

Quantity of output s

Question 6

Figure 20-2.  
-Refer to Optimism.What happens to the expected price level and what's the result for wage bargaining?

Accepted Answer

A)  The expected price level falls.Bargains are struck for higher wages. 
B)  The expected price level falls.Bargains are struck for lower wages. 
C)  The expected price level rises.Bargains are struck for higher wages. 
D)  The expected price level rises.Bargains are struck for lower wages. 
A)  The expected price level falls.Bargains are struck for higher wages. 
B)  The expected price level falls.Bargains are struck for lower wages. 
C)  The expected price level rises.Bargains are struck for higher wages. 
D)  The expected price level rises.Bargains are struck for lower wages.

Question 7

Other things the same,a decrease in the price level makes the interest rate decrease,which leads to a depreciation of the dollar in the market for foreign-currency exchange.

Accepted Answer

A) True 
 B)False

Question 8

According to the misperceptions theory of aggregate supply,if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent,then the firm would believe that the relative price of what it produce had

Accepted Answer

A)  increased,so it would increase production. 
B)  increased,so it would decrease production. 
C)  decreased,so it would increase production. 
D)  decreased,so it would decrease production. 
A)  increased,so it would increase production. 
B)  increased,so it would decrease production. 
C)  decreased,so it would increase production. 
D)  decreased,so it would decrease production.

Question 9

According to classical macroeconomic theory,changes in the money supply change real GDP but not the price level.

Accepted Answer

A) True 
 B)False

Question 10

Using the aggregate demand and aggregate supply model,a decrease of what curve is by itself consistent with the changes in prices and output that occurred during the onset of the Great Depression?

Accepted Answer

The answer of Using the aggregate demand and aggregate supply...

Question 11

Which of the following would not be included in aggregate demand?

Accepted Answer

A)  additions of newly produced goods to inventory 
B)  purchases of U.S.services by foreigners 
C)  the purchase of newly produced capital goods 
D)  government transfer payments such as Social Security payments 
A)  additions of newly produced goods to inventory 
B)  purchases of U.S.services by foreigners 
C)  the purchase of newly produced capital goods 
D)  government transfer payments such as Social Security payments

Question 12

Most economists believe that classical theory describes the world in the short run but not in the long run.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following by itself is consistent with the directions that the price level and real GDP changed at the onset of the Great Depression?

Accepted Answer

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

Question 14

Figure 20-2.  
-Refer to Financial Crisis.Suppose the economy reaches long-run equilibrium without the Fed responding.Now suppose the financial crisis ends and the ability of banks to lend returns to normal.In which case is the price level lower compared to its value prior to the crisis?

Accepted Answer

A)  both after the economy reaches long-run equilibrium during the crisis and in the long-run equilibrium after the crisis is over 
B)  after the economy reaches long-run equilibrium during the crisis but not in the long-run equilibrium after the crisis is over 
C)  in the long-run equilibrium after the crisis is over but not after the economy reaches long-run equilibrium during the crisis 
D)  neither after the economy reaches long-run equilibrium during the crisis nor in the long-run equilibrium after the crisis is over 
A)  both after the economy reaches long-run equilibrium during the crisis and in the long-run equilibrium after the crisis is over 
B)  after the economy reaches long-run equilibrium during the crisis but not in the long-run equilibrium after the crisis is over 
C)  in the long-run equilibrium after the crisis is over but not after the economy reaches long-run equilibrium during the crisis 
D)  neither after the economy reaches long-run equilibrium during the crisis nor in the long-run equilibrium after the crisis is over

Question 15

The effect of a change in the value of the dollar in the foreign exchange market due to a change in the price level helps explain the slope of aggregate demand,but does not shift it.The effects of a change in the value of the dollar in the foreign exchange market due to speculation is shown by shifting the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following will reduce the price level and real output in the short run?

Accepted Answer

A)  an increase in the money supply 
B)  an increase in oil prices 
C)  a decrease in the money supply 
D)  technical progress 
A)  an increase in the money supply 
B)  an increase in oil prices 
C)  a decrease in the money supply 
D)  technical progress

Question 17

Figure 20-2.  
-Refer to Financial Crisis.What happens to the price level and real GDP in the short run?

Accepted Answer

A)  both the price level and real GDP rise 
B)  the the price level level rises and real GDP falls 
C)  the the price level level falls and real GDP rises 
D)  both the price level and real GDP fall 
A)  both the price level and real GDP rise 
B)  the the price level level rises and real GDP falls 
C)  the the price level level falls and real GDP rises 
D)  both the price level and real GDP fall

Question 18

Recession come at

Accepted Answer

A)  regular intervals.During recessions consumption spending falls relatively more than investment spending. 
B)  regular intervals.During recessions investment spending falls relatively more than consumption spending. 
C)  irregular intervals.During recessions consumption spending falls relatively more than investment spending. 
D)  irregular intervals.During recessions investment spending falls relatively more than consumption spending. 
A)  regular intervals.During recessions consumption spending falls relatively more than investment spending. 
B)  regular intervals.During recessions investment spending falls relatively more than consumption spending. 
C)  irregular intervals.During recessions consumption spending falls relatively more than investment spending. 
D)  irregular intervals.During recessions investment spending falls relatively more than consumption spending.

Question 19

If aggregate demand and aggregate supply both shift right,we can be sure that the price level is higher in the short run.

Accepted Answer

A) True 
 B)False

Question 20

If output is above its natural rate,then according to sticky-wage theory

Accepted Answer

A)  workers and firms will strike bargains for higher wages.This increase in wages shifts the short-run aggregate supply curve right. 
B)  workers and firms will strike bargains for higher wages.This increase in wages shifts the short-run aggregate supply curve left. 
C)  workers and firms will strike bargains for lower wages.This decrease in wages shifts the short-run aggregate supply curve right. 
D)  workers and firms will strike bargains for lower wages.This decrease in wages shifts the short-run aggregate supply curve left. 
A)  workers and firms will strike bargains for higher wages.This increase in wages shifts the short-run aggregate supply curve right. 
B)  workers and firms will strike bargains for higher wages.This increase in wages shifts the short-run aggregate supply curve left. 
C)  workers and firms will strike bargains for lower wages.This decrease in wages shifts the short-run aggregate supply curve right. 
D)  workers and firms will strike bargains for lower wages.This decrease in wages shifts the short-run aggregate supply curve left.

Exam 33: Aggregate Demand and Aggregate Supply

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

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

What variables besides real GDP tend to decline during recessions? Given the definition of real GDP,argue that declines in these variables are to be expected.

The equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level),where a is a positive number,represents

Write the mathematical expression that summarizes the three alternative explanations for the upward slope of the short run aggregate supply curve.

Figure 20-2. -Refer to Optimism.What happens to the expected price level and what's the result for wage bargaining?

Other things the same,a decrease in the price level makes the interest rate decrease,which leads to a depreciation of the dollar in the market for foreign-currency exchange.

According to the misperceptions theory of aggregate supply,if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent,then the firm would believe that the relative price of what it produce had

According to classical macroeconomic theory,changes in the money supply change real GDP but not the price level.

Using the aggregate demand and aggregate supply model,a decrease of what curve is by itself consistent with the changes in prices and output that occurred during the onset of the Great Depression?

Which of the following would not be included in aggregate demand?

Most economists believe that classical theory describes the world in the short run but not in the long run.

Which of the following by itself is consistent with the directions that the price level and real GDP changed at the onset of the Great Depression?

Figure 20-2. -Refer to Financial Crisis.Suppose the economy reaches long-run equilibrium without the Fed responding.Now suppose the financial crisis ends and the ability of banks to lend returns to normal.In which case is the price level lower compared to its value prior to the crisis?

Which of the following will reduce the price level and real output in the short run?

Figure 20-2. -Refer to Financial Crisis.What happens to the price level and real GDP in the short run?

Recession come at

If aggregate demand and aggregate supply both shift right,we can be sure that the price level is higher in the short run.

If output is above its natural rate,then according to sticky-wage theory

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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