Question 1

In the first few years of the Great Depression,unemployment rose to about

Accepted Answer

A)  10 percent,and prices rose about 14 percent. 
B)  15 percent,and prices rose about 22 percent. 
C)  20 percent,and prices fell about 14 percent. 
D)  25 percent,and prices fell about 22 percent. 
A)  10 percent,and prices rose about 14 percent. 
B)  15 percent,and prices rose about 22 percent. 
C)  20 percent,and prices fell about 14 percent. 
D)  25 percent,and prices fell about 22 percent.

Question 2

Other things the same,if the price level is lower than expected,then some firms believe that the relative price of what they produce has

Accepted Answer

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

Question 3

An increase in the interest rate causes investment to

Accepted Answer

A)  rise and the exchange rate to appreciate. 
B)  fall and the exchange rate to depreciate. 
C)  rise and the exchange rate to depreciate. 
D)  fall and the exchange rate to appreciate. 
A)  rise and the exchange rate to appreciate. 
B)  fall and the exchange rate to depreciate. 
C)  rise and the exchange rate to depreciate. 
D)  fall and the exchange rate to appreciate.

Question 4

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

Accepted Answer

A)  increase foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange increases. 
B)  increase foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange decreases. 
C)  decrease foreign bond purchases,so the supply of dollars in market for foreign-currency exchange increases. 
D)  decrease foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange decreases. 
A)  increase foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange increases. 
B)  increase foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange decreases. 
C)  decrease foreign bond purchases,so the supply of dollars in market for foreign-currency exchange increases. 
D)  decrease foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange decreases.

Question 5

Other things the same,a decrease in the price level causes the interest rate to

Accepted Answer

A)  increase,the dollar to appreciate,and net exports to increase. 
B)  increase,the dollar to depreciate,and net exports to decrease. 
C)  decrease,the dollar to depreciate,and net exports to increase. 
D)  decrease,the dollar to appreciate,and net exports to decrease. 
A)  increase,the dollar to appreciate,and net exports to increase. 
B)  increase,the dollar to depreciate,and net exports to decrease. 
C)  decrease,the dollar to depreciate,and net exports to increase. 
D)  decrease,the dollar to appreciate,and net exports to decrease.

Question 6

A change in the money supply changes only nominal variables in the long run.

Accepted Answer

A) True 
 B)False

Question 7

As the price level rises,

Accepted Answer

A)  the exchange rate falls,so net exports fall. 
B)  the exchange rate falls,so net exports rise. 
C)  the exchange rate rises,so net exports fall. 
D)  the exchange rate rises,so net exports rise. 
A)  the exchange rate falls,so net exports fall. 
B)  the exchange rate falls,so net exports rise. 
C)  the exchange rate rises,so net exports fall. 
D)  the exchange rate rises,so net exports rise.

Question 8

Other things the same,if workers and firms expected inflation to be 2%,but it is only 1% then

Accepted Answer

A)  employment and production rise. 
B)  employment rises and production falls. 
C)  employment falls and production rises. 
D)  employment and production fall. 
A)  employment and production rise. 
B)  employment rises and production falls. 
C)  employment falls and production rises. 
D)  employment and production fall.

Question 9

In which case can we be sure aggregate demand shifts left overall?

Accepted Answer

A)  people want to save more for retirement and the government raises taxes 
B)  people want to save more for retirement and the government cuts taxes 
C)  people want to save less for retirement and the government raises taxes 
D)  people want to save less for retirement and the government cuts taxes 
A)  people want to save more for retirement and the government raises taxes 
B)  people want to save more for retirement and the government cuts taxes 
C)  people want to save less for retirement and the government raises taxes 
D)  people want to save less for retirement and the government cuts taxes

Question 10

Other things the same,what happens to the price level and the quantity of output when the short run aggregate supply curve shifts to the right?

Accepted Answer

The price

Question 11

Other things the same,what happens in the long run to the price level and quantity of output after a contraction in aggregate demand?

Accepted Answer

The price level decr

Question 12

Which of the following does not help explain the direction the quantity of aggregate goods demanded changes when the price level decreases?

Accepted Answer

A)  consumer wealth rises 
B)  borrowing rises 
C)  each dollar is worth more domestic goods 
D)  the dollar appreciates relative to other currencies 
A)  consumer wealth rises 
B)  borrowing rises 
C)  each dollar is worth more domestic goods 
D)  the dollar appreciates relative to other currencies

Question 13

If aggregate demand shifts right then in the short run

Accepted Answer

A)  firms will increase production.In the long run increased price expectations shift the short-run aggregate supply curve to the right. 
B)  firms will increase production.In the long run increased price expectations shift the short-run aggregate supply curve to the left. 
C)  firms will decrease production.In the long run increased price expectations shift the short-run aggregate supply curve to the right. 
D)  firms will decrease production.In the long run increased price expectations shift the short-run aggregate supply curve to the left. 
A)  firms will increase production.In the long run increased price expectations shift the short-run aggregate supply curve to the right. 
B)  firms will increase production.In the long run increased price expectations shift the short-run aggregate supply curve to the left. 
C)  firms will decrease production.In the long run increased price expectations shift the short-run aggregate supply curve to the right. 
D)  firms will decrease production.In the long run increased price expectations shift the short-run aggregate supply curve to the left.

Question 14

Since the end of World War II,the U.S.has almost always had rising prices and an upward trend in real GDP.This can be explained

Accepted Answer

A)  only by technological progress. 
B)  only by money supply growth. 
C)  by technological progress and money supply growth. 
D)  None of the above is correct. 
A)  only by technological progress. 
B)  only by money supply growth. 
C)  by technological progress and money supply growth. 
D)  None of the above is correct.

Question 15

Other things the same,a fall in an economy's overall level of prices tends to

Accepted Answer

A)  raise both the quantity demanded and supplied of goods and services. 
B)  raise the quantity demanded of goods and services,but lower the quantity supplied. 
C)  lower the quantity demanded of goods and services,but raise the quantity supplied. 
D)  lower both the quantity demanded and the quantity supplied of goods and services. 
A)  raise both the quantity demanded and supplied of goods and services. 
B)  raise the quantity demanded of goods and services,but lower the quantity supplied. 
C)  lower the quantity demanded of goods and services,but raise the quantity supplied. 
D)  lower both the quantity demanded and the quantity supplied of goods and services.

Question 16

People will buy more if the price level

Accepted Answer

A)  rises because rising prices increase the real value of a dollar. 
B)  rises because rising prices decrease the real value of a dollar. 
C)  falls because falling prices increase the real value of a dollar. 
D)  falls because falling prices decrease the real value of a dollar. 
A)  rises because rising prices increase the real value of a dollar. 
B)  rises because rising prices decrease the real value of a dollar. 
C)  falls because falling prices increase the real value of a dollar. 
D)  falls because falling prices decrease the real value of a dollar.

Question 17

During the 2008-2009 recession real GDP fell by about

Accepted Answer

A)  2% 
B)  4% 
C)  6% 
D)  8% 
A)  2% 
B)  4% 
C)  6% 
D)  8%

Question 18

A decrease in the money supply causes the interest rate to rise so that investment falls.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following shifts both short-run and long-run aggregate supply left?

Accepted Answer

A)  a decrease in the actual price level 
B)  a decrease in the expected price level 
C)  a decrease in the capital stock 
D)  a decrease in the money supply 
A)  a decrease in the actual price level 
B)  a decrease in the expected price level 
C)  a decrease in the capital stock 
D)  a decrease in the money supply

Question 20

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

Accepted Answer

A)  real wealth rises. 
B)  the interest rate rises. 
C)  the dollar appreciates. 
D)  All of the above are correct. 
A)  real wealth rises. 
B)  the interest rate rises. 
C)  the dollar appreciates. 
D)  All of the above are correct.

Exam 33: Aggregate Demand and Aggregate Supply

In the first few years of the Great Depression,unemployment rose to about

Other things the same,if the price level is lower than expected,then some firms believe that the relative price of what they produce has

An increase in the interest rate causes investment to

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

Other things the same,a decrease in the price level causes the interest rate to

A change in the money supply changes only nominal variables in the long run.

As the price level rises,

Other things the same,if workers and firms expected inflation to be 2%,but it is only 1% then

In which case can we be sure aggregate demand shifts left overall?

Other things the same,what happens to the price level and the quantity of output when the short run aggregate supply curve shifts to the right?

Other things the same,what happens in the long run to the price level and quantity of output after a contraction in aggregate demand?

Which of the following does not help explain the direction the quantity of aggregate goods demanded changes when the price level decreases?

If aggregate demand shifts right then in the short run

Since the end of World War II,the U.S.has almost always had rising prices and an upward trend in real GDP.This can be explained

Other things the same,a fall in an economy's overall level of prices tends to

People will buy more if the price level

During the 2008-2009 recession real GDP fell by about

A decrease in the money supply causes the interest rate to rise so that investment falls.

Which of the following shifts both short-run and long-run aggregate supply left?

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

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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