Question 1

Most economist agree that money changes real GDP in both the short and long run.

Accepted Answer

A) True 
 B)False

Question 2

If not all prices adjust instantly to changing economic circumstances,an unexpected fall in the price level leaves some firms with higher-than-desired prices,and these higher-than-desired prices depress sales and induce firms to reduce the quantity of goods and services they produce.

Accepted Answer

A) True 
 B)False

Question 3

The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected,some firms will have

Accepted Answer

A)  higher than desired prices which leads to an increase in the aggregate quantity of goods and services supplied. 
B)  higher than desired prices which leads to a decrease in the aggregate quantity of goods and service supplied. 
C)  lower than desired prices which leads to an increase in the aggregate quantity of goods and services supplied. 
D)  lower than desired prices which leads to a decrease in the aggregate quantity of goods and services supplied 
A)  higher than desired prices which leads to an increase in the aggregate quantity of goods and services supplied. 
B)  higher than desired prices which leads to a decrease in the aggregate quantity of goods and service supplied. 
C)  lower than desired prices which leads to an increase in the aggregate quantity of goods and services supplied. 
D)  lower than desired prices which leads to a decrease in the aggregate quantity of goods and services supplied

Question 4

Which of the following would cause prices and real GDP to rise in the short run?

Accepted Answer

A)  an increase in the expected price level 
B)  an increase in the money supply 
C)  a decrease in the capital stock 
D)  None of the above is correct. 
A)  an increase in the expected price level 
B)  an increase in the money supply 
C)  a decrease in the capital stock 
D)  None of the above is correct.

Question 5

During recessions which type of spending falls?

Accepted Answer

A)  consumption and investment 
B)  investment but not consumption 
C)  consumption but not investment 
D)  neither consumption nor investment 
A)  consumption and investment 
B)  investment but not consumption 
C)  consumption but not investment 
D)  neither consumption nor investment

Question 6

Which of the following shifts short-run,but not long-run aggregate supply right?

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)  an increase 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)  an increase in the money supply

Question 7

Other things the same,if the U.S.price level rises,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 8

When production costs rise,

Accepted Answer

A)  the short-run aggregate supply curve shifts to the right. 
B)  the short-run aggregate supply curve shifts to the left. 
C)  the aggregate demand curve shifts to the right. 
D)  the aggregate demand curve shifts to the left. 
A)  the short-run aggregate supply curve shifts to the right. 
B)  the short-run aggregate supply curve shifts to the left. 
C)  the aggregate demand curve shifts to the right. 
D)  the aggregate demand curve shifts to the left.

Question 9

According to classical macroeconomic theory,changes in the money supply affect

Accepted Answer

A)  variables measured in terms of money and variables measured in terms of quantities or relative prices 
B)  variables measured in terms of money but not variables measured in terms of quantities or relative prices 
C)  variables measured in terms of quantities or relative prices,but not variables measured in terms of money 
D)  neither variables measured in terms of money nor variables measured in terms of quantities or relative prices 
A)  variables measured in terms of money and variables measured in terms of quantities or relative prices 
B)  variables measured in terms of money but not variables measured in terms of quantities or relative prices 
C)  variables measured in terms of quantities or relative prices,but not variables measured in terms of money 
D)  neither variables measured in terms of money nor variables measured in terms of quantities or relative prices

Question 10

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

Accepted Answer

The price

Question 11

Which of the following affected aggregate demand during the recession of 2008-2009?

Accepted Answer

A)  a decline in residential construction and a decrease in lending 
B)  a decline in residential construction but not a decrease in lending 
C)  a decrease in lending but not a decline in residential construction 
D)  neither a decrease in residential construction nor a decrease in lending 
A)  a decline in residential construction and a decrease in lending 
B)  a decline in residential construction but not a decrease in lending 
C)  a decrease in lending but not a decline in residential construction 
D)  neither a decrease in residential construction nor a decrease in lending

Question 12

Figure 20-2.  
-Refer to Optimism.In the long run,the change in price expectations created by optimism shifts

Accepted Answer

A)  long-run aggregate supply right. 
B)  long-run aggregate supply left. 
C)  short-run aggregate supply right. 
D)  short-run aggregate supply left. 
A)  long-run aggregate supply right. 
B)  long-run aggregate supply left. 
C)  short-run aggregate supply right. 
D)  short-run aggregate supply left.

Question 13

Using the aggregate demand and aggregate supply model,an increase in what curve is by itself consistent with the changes in prices and output that occurred during World War II?

Accepted Answer

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

Question 14

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

Accepted Answer

A)  rise,which means consumers will want to spend more on homebuilding. 
B)  rise,which means consumers will want to spend less on homebuilding. 
C)  fall,which means consumers will want to spend more on homebuilding. 
D)  fall,which means consumers will want to spend less on homebuilding. 
A)  rise,which means consumers will want to spend more on homebuilding. 
B)  rise,which means consumers will want to spend less on homebuilding. 
C)  fall,which means consumers will want to spend more on homebuilding. 
D)  fall,which means consumers will want to spend less on homebuilding.

Question 15

In 1936,John Maynard Keynes published a book,The General Theory,which attempted to explain

Accepted Answer

A)  stagflation. 
B)  the classical dichotomy. 
C)  short-run economic fluctuations. 
D)  how changes in the money supply had created the Great Depression. 
A)  stagflation. 
B)  the classical dichotomy. 
C)  short-run economic fluctuations. 
D)  how changes in the money supply had created the Great Depression.

Question 16

List the three alternative explanations for the upward slope of the short run aggregate supply curve.

Accepted Answer

Sticky wages,sticky

Question 17

Wages tend to be sticky

Accepted Answer

A)  because of contracts,social norms,and notions of fairness. 
B)  because of contracts,but not social norms or notions of fairness. 
C)  because of social norms and notions of fairness,but not contracts. 
D)  None of the above are correct. 
A)  because of contracts,social norms,and notions of fairness. 
B)  because of contracts,but not social norms or notions of fairness. 
C)  because of social norms and notions of fairness,but not contracts. 
D)  None of the above are correct.

Question 18

The price level rises in the short run if

Accepted Answer

A)  aggregate demand or aggregate supply shifts right 
B)  aggregate demand shifts right or aggregate supply shifts left . 
C)  aggregate demand shifts left or aggregate supply shifts right. 
D)  aggregate demand or aggregate supply shifts right. 
A)  aggregate demand or aggregate supply shifts right 
B)  aggregate demand shifts right or aggregate supply shifts left . 
C)  aggregate demand shifts left or aggregate supply shifts right. 
D)  aggregate demand or aggregate supply shifts right.

Question 19

Which of the following shifts long-run aggregate supply right?

Accepted Answer

A)  an increase in either the physical or human capital stock 
B)  an increase in the human but not the physical capital stock 
C)  an increase in the physical capital stock,but no the human capital stock 
D)  neither an increase in the physical capital stock or the human capital stock 
A)  an increase in either the physical or human capital stock 
B)  an increase in the human but not the physical capital stock 
C)  an increase in the physical capital stock,but no the human capital stock 
D)  neither an increase in the physical capital stock or the human capital stock

Question 20

Other things the same,if the long-run aggregate supply curve shifts right,prices

Accepted Answer

A)  and output both increase. 
B)  and output both decrease. 
C)  increase and output decreases. 
D)  decrease and output increases. 
A)  and output both increase. 
B)  and output both decrease. 
C)  increase and output decreases. 
D)  decrease and output increases.

Exam 33: Aggregate Demand and Aggregate Supply

Most economist agree that money changes real GDP in both the short and long run.

If not all prices adjust instantly to changing economic circumstances,an unexpected fall in the price level leaves some firms with higher-than-desired prices,and these higher-than-desired prices depress sales and induce firms to reduce the quantity of goods and services they produce.

The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected,some firms will have

Which of the following would cause prices and real GDP to rise in the short run?

During recessions which type of spending falls?

Which of the following shifts short-run,but not long-run aggregate supply right?

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

When production costs rise,

According to classical macroeconomic theory,changes in the money supply affect

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

Which of the following affected aggregate demand during the recession of 2008-2009?

Figure 20-2. -Refer to Optimism.In the long run,the change in price expectations created by optimism shifts

Using the aggregate demand and aggregate supply model,an increase in what curve is by itself consistent with the changes in prices and output that occurred during World War II?

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

In 1936,John Maynard Keynes published a book,The General Theory,which attempted to explain

List the three alternative explanations for the upward slope of the short run aggregate supply curve.

Wages tend to be sticky

The price level rises in the short run if

Which of the following shifts long-run aggregate supply right?

Other things the same,if the long-run aggregate supply curve shifts right,prices

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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