Question 1

Who wrote the 1936 book titled The General Theory of Employment,Interest,and Money?

Accepted Answer

The answer of Who wrote the 1936 book titled The...

Question 2

Which of the following has been suggested as a cause of the Great Depression?

Accepted Answer

A)  a decline in the money supply 
B)  a decrease in stock prices 
C)  the collapse of the banking system 
D)  All of the above are correct. 
A)  a decline in the money supply 
B)  a decrease in stock prices 
C)  the collapse of the banking system 
D)  All of the above are correct.

Question 3

When interest rates fall

Accepted Answer

A)  firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. 
B)  firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding. 
C)  firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding. 
D)  firms want to borrow less for new plants and equipment and households want to borrow less for homebuilding. 
A)  firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. 
B)  firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding. 
C)  firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding. 
D)  firms want to borrow less for new plants and equipment and households want to borrow less for homebuilding.

Question 4

The aggregate quantity of goods and services demanded changes as the price level falls because

Accepted Answer

A)  real wealth falls,interest rates rise,and the dollar appreciates. 
B)  real wealth falls,interest rates rise,and the dollar depreciates. 
C)  real wealth rises,interest rates fall,and the dollar appreciates. 
D)  real wealth rises,interest rates fall,and the dollar depreciates. 
A)  real wealth falls,interest rates rise,and the dollar appreciates. 
B)  real wealth falls,interest rates rise,and the dollar depreciates. 
C)  real wealth rises,interest rates fall,and the dollar appreciates. 
D)  real wealth rises,interest rates fall,and the dollar depreciates.

Question 5

The curve that shows the quantity of goods and services that firms produce and sell

Accepted Answer

A)  as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-demand curve. 
B)  as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-supply curve. 
C)  as it relates to the overall price level is called the aggregate-demand curve. 
D)  as it relates to the overall price level is called the aggregate-supply curve. 
A)  as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-demand curve. 
B)  as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-supply curve. 
C)  as it relates to the overall price level is called the aggregate-demand curve. 
D)  as it relates to the overall price level is called the aggregate-supply curve.

Question 6

If the government provides an investment tax credit and increases income taxes,

Accepted Answer

A)  real GDP rises,and the price level could rise,fall,or stay the same. 
B)  real GDP falls,and the price level could rise,fall,or stay the same. 
C)  the price level rises and real GDP could rise,fall or stay the same 
D)  None of the above are necessarily correct. 
A)  real GDP rises,and the price level could rise,fall,or stay the same. 
B)  real GDP falls,and the price level could rise,fall,or stay the same. 
C)  the price level rises and real GDP could rise,fall or stay the same 
D)  None of the above are necessarily correct.

Question 7

The aggregate-demand curve shows the quantity of domestic goods and services that households,firms,the government,and customers abroad want to buy at each price level.

Accepted Answer

A) True 
 B)False

Question 8

If banks and speculators in the U.S.decided to exchange U.S.dollars for the foreign currencies of other countries,but foreigners do not desire to increase their holdings of U.S.dollars,then U.S.net exports would

Accepted Answer

A)  rise and aggregate demand would shift left. 
B)  rise and aggregate demand would shift right. 
C)  fall and aggregate demand would shift left. 
D)  fall and aggregate demand would shift right. 
A)  rise and aggregate demand would shift left. 
B)  rise and aggregate demand would shift right. 
C)  fall and aggregate demand would shift left. 
D)  fall and aggregate demand would shift right.

Question 9

The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,

Accepted Answer

A)  production is more profitable and employment rises. 
B)  production is more profitable and employment falls. 
C)  production is less profitable and employment rises. 
D)  production is less profitable and employment falls. 
A)  production is more profitable and employment rises. 
B)  production is more profitable and employment falls. 
C)  production is less profitable and employment rises. 
D)  production is less profitable and employment falls.

Question 10

The quantity of aggregate goods and service demanded rises when the

Accepted Answer

A)  price level rises,because the interest rate rises. 
B)  price level rises,because the interest rate falls. 
C)  price level falls,because the interest rate rises. 
D)  price level falls,because the interest rate falls. 
A)  price level rises,because the interest rate rises. 
B)  price level rises,because the interest rate falls. 
C)  price level falls,because the interest rate rises. 
D)  price level falls,because the interest rate falls.

Question 11

In the context of the aggregate-demand curve,the interest-rate effect refers to the idea that,when the price level increases,

Accepted Answer

A)  the real value of money decreases;in turn,the real value of the dollar increases in foreign exchange markets,which decreases net exports. 
B)  the real value of money decreases;in turn,interest rates increase,which decreases net exports. 
C)  households increase their holdings of money;in turn,interest rates decrease,which reduces spending on investment goods. 
D)  households increase their holdings of money;in turn,interest rates increase,which reduces spending on investment goods. 
A)  the real value of money decreases;in turn,the real value of the dollar increases in foreign exchange markets,which decreases net exports. 
B)  the real value of money decreases;in turn,interest rates increase,which decreases net exports. 
C)  households increase their holdings of money;in turn,interest rates decrease,which reduces spending on investment goods. 
D)  households increase their holdings of money;in turn,interest rates increase,which reduces spending on investment goods.

Question 12

Other things the same,when the price level rises,interest rates

Accepted Answer

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

Question 13

Refer to Political Instability Abroad.What would happen to the dollar?

Accepted Answer

A)  It would appreciate in foreign exchange markets making U.S goods more expensive compared to foreign goods. 
B)  It would appreciate in foreign exchange markets making U.S.goods less expensive compared to foreign goods. 
C)  It would depreciate in foreign exchange markets making U.S.goods more expensive compared to foreign goods. 
D)  It would depreciate in foreign exchange markets making U.S.goods less expensive compared to foreign goods. 
A)  It would appreciate in foreign exchange markets making U.S goods more expensive compared to foreign goods. 
B)  It would appreciate in foreign exchange markets making U.S.goods less expensive compared to foreign goods. 
C)  It would depreciate in foreign exchange markets making U.S.goods more expensive compared to foreign goods. 
D)  It would depreciate in foreign exchange markets making U.S.goods less expensive compared to foreign goods.

Question 14

Increased optimism about the future leads to rising prices and falling unemployment in the short run.

Accepted Answer

A) True 
 B)False

Question 15

Other things the same,as the price level falls,the real value of a dollar

Accepted Answer

A)  rises,and interest rates rise. 
B)  rises,and interest rates fall. 
C)  falls,and interest rates rise. 
D)  falls,and interest rates fall. 
A)  rises,and interest rates rise. 
B)  rises,and interest rates fall. 
C)  falls,and interest rates rise. 
D)  falls,and interest rates fall.

Question 16

Which of the following is not a determinant of the long-run level of real GDP?

Accepted Answer

A)  the price level 
B)  the supply of labor 
C)  available natural resources 
D)  available technology 
A)  the price level 
B)  the supply of labor 
C)  available natural resources 
D)  available technology

Question 17

Other things the same,if the money supply rises by 2% and people were expecting it to rise by 5%,then some firms have

Accepted Answer

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

Question 18

When the price level falls,people want to

Accepted Answer

A)  hold more money and the quantity of aggregate goods and services demanded increases. 
B)  hold more money and the quantity of aggregate goods and services demanded decreases. 
C)  hold less money and the quantity of aggregate goods and services demanded increases. 
D)  hold less money and the quantity of aggregate goods and services demanded decreases. 
A)  hold more money and the quantity of aggregate goods and services demanded increases. 
B)  hold more money and the quantity of aggregate goods and services demanded decreases. 
C)  hold less money and the quantity of aggregate goods and services demanded increases. 
D)  hold less money and the quantity of aggregate goods and services demanded decreases.

Question 19

Below are pairs of GDP growth rates and unemployment rates.Economists would be shocked to see most of these pairs in the U.S.Which pair of GDP growth rates and unemployment rates is realistic?

Accepted Answer

A)  6 percent,0 percent 
B)  3 percent,10 percent 
C)  -1 percent,6 percent 
D)  -3 percent,2 percent 
A)  6 percent,0 percent 
B)  3 percent,10 percent 
C)  -1 percent,6 percent 
D)  -3 percent,2 percent

Question 20

Refer to Political Instability Abroad.What would the change in the interest rate created by foreigners wanting to buy more U.S.assets do to investment spending in the U.S.?

Accepted Answer

A)  make it rise which by itself would increase U.S.aggregate demand. 
B)  make it rise which by itself would decrease U.S.aggregate demand. 
C)  make it fall which by itself would increase U.S.aggregate demand. 
D)  make it fall which by itself would decrease U.S.aggregate demand. 
A)  make it rise which by itself would increase U.S.aggregate demand. 
B)  make it rise which by itself would decrease U.S.aggregate demand. 
C)  make it fall which by itself would increase U.S.aggregate demand. 
D)  make it fall which by itself would decrease U.S.aggregate demand.

Exam 33: Aggregate Demand and Aggregate Supply

Who wrote the 1936 book titled The General Theory of Employment,Interest,and Money?

Which of the following has been suggested as a cause of the Great Depression?

When interest rates fall

The aggregate quantity of goods and services demanded changes as the price level falls because

The curve that shows the quantity of goods and services that firms produce and sell

If the government provides an investment tax credit and increases income taxes,

The aggregate-demand curve shows the quantity of domestic goods and services that households,firms,the government,and customers abroad want to buy at each price level.

If banks and speculators in the U.S.decided to exchange U.S.dollars for the foreign currencies of other countries,but foreigners do not desire to increase their holdings of U.S.dollars,then U.S.net exports would

The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,

The quantity of aggregate goods and service demanded rises when the

In the context of the aggregate-demand curve,the interest-rate effect refers to the idea that,when the price level increases,

Other things the same,when the price level rises,interest rates

Refer to Political Instability Abroad.What would happen to the dollar?

Increased optimism about the future leads to rising prices and falling unemployment in the short run.

Other things the same,as the price level falls,the real value of a dollar

Which of the following is not a determinant of the long-run level of real GDP?

Other things the same,if the money supply rises by 2% and people were expecting it to rise by 5%,then some firms have

When the price level falls,people want to

Below are pairs of GDP growth rates and unemployment rates.Economists would be shocked to see most of these pairs in the U.S.Which pair of GDP growth rates and unemployment rates is realistic?

Refer to Political Instability Abroad.What would the change in the interest rate created by foreigners wanting to buy more U.S.assets do to investment spending in the U.S.?

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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