Question 1

Which of the following would cause prices to fall and output to rise in the short run?

Accepted Answer

A) short-run aggregate supply shifts right 
B) short-run aggregate supply shifts left 
C) aggregate demand shifts right 
D) aggregate demand shifts left 
A) short-run aggregate supply shifts right 
B) short-run aggregate supply shifts left 
C) aggregate demand shifts right 
D) aggregate demand shifts left A

Question 2

Which of the following lists includes only changes that shift aggregate demand to the right?

Accepted Answer

A) repeal of an investment tax credit, an increase in the money supply 
B) repeal of an investment tax credit, a decrease in the money supply 
C) passing of an investment tax credit, an increase in the money supply 
D) passing of an investment tax credit, a decrease in the money supply 
A) repeal of an investment tax credit, an increase in the money supply 
B) repeal of an investment tax credit, a decrease in the money supply 
C) passing of an investment tax credit, an increase in the money supply 
D) passing of an investment tax credit, a decrease in the money supply C

Question 3

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  False

Question 4

Aggregate demand includes

Accepted Answer

A) the quantity of goods and services the government, households, firms, and customers abroad want to buy. 
B) neither the quantity of goods and services the government, households, nor firms want to buy nor the quantity of goods and services customers abroad want to buy. 
C) the quantity of goods and service the government wants to buy, but not the quantity of goods and services households, firms, or customers abroad want to buy. 
D) the quantity of goods and services households and firms want to buy, but not the quantity of goods and services the government wants to buy. 
A) the quantity of goods and services the government, households, firms, and customers abroad want to buy. 
B) neither the quantity of goods and services the government, households, nor firms want to buy nor the quantity of goods and services customers abroad want to buy. 
C) the quantity of goods and service the government wants to buy, but not the quantity of goods and services households, firms, or customers abroad want to buy. 
D) the quantity of goods and services households and firms want to buy, but not the quantity of goods and services the government wants to buy.

Question 5

Figure 33-5.  
-Refer to Figure 33-5. In Figure 33-5,

Accepted Answer

A) Point B represents a short-run equilibrium and a long-run equilibrium. 
B) Point B represents a short-run equilibrium, and Point A represents a long-run equilibrium. 
C) Point B represents a long-run equilibrium, and Point A represents a short-run equilibrium. 
D) Point B represents a long-run equilibrium, and Point C represents a short-run equilibrium. 
A) Point B represents a short-run equilibrium and a long-run equilibrium. 
B) Point B represents a short-run equilibrium, and Point A represents a long-run equilibrium. 
C) Point B represents a long-run equilibrium, and Point A represents a short-run equilibrium. 
D) Point B represents a long-run equilibrium, and Point C represents a short-run equilibrium.

Question 6

Which of the following would cause stagflation?

Accepted Answer

A) rising government expenditures 
B) rising oil prices 
C) a falling money supply 
D) technical progress 
A) rising government expenditures 
B) rising oil prices 
C) a falling money supply 
D) technical progress

Question 7

Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in taxes, then in the short run, real GDP will

Accepted Answer

A) rise and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be unaffected. 
B) fall and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be unaffected. 
C) rise and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be lower. 
D) fall and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be lower. 
A) rise and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be unaffected. 
B) fall and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be unaffected. 
C) rise and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be lower. 
D) fall and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be lower.

Question 8

What do most economists believe concerning the relation between the price level and real output?

Accepted Answer

Most economists believe that in the long

Question 9

Suppose a recession overseas reduces a country's exports. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

Accepted Answer

The aggregate-demand

Question 10

Refer to Pessimism. In the short run what happens to the price level and real GDP?

Accepted Answer

A) Both the price level and real GDP rise. 
B) Both the price level and real GDP fall. 
C) The price level rises and real GDP falls. 
D) The price level falls and real GDP rises. 
A) Both the price level and real GDP rise. 
B) Both the price level and real GDP fall. 
C) The price level rises and real GDP falls. 
D) The price level falls and real GDP rises.

Question 11

Use sticky-wage theory to explain why an increase in the expected price level shifts the aggregate supply curve.

Accepted Answer

When people expect the price l

Question 12

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) 5 percent, 1 percent 
B) 3 percent, 5 percent 
C) -1 percent, 3 percent 
D) -2 percent, 4 percent 
A) 5 percent, 1 percent 
B) 3 percent, 5 percent 
C) -1 percent, 3 percent 
D) -2 percent, 4 percent

Question 13

The primary purpose of the aggregate demand and aggregate supply model is to demonstrate the classical dichotomy.

Accepted Answer

A) True 
 B)False

Question 14

Recessions in Canada and Mexico would cause

Accepted Answer

A) the U.S. price level and real GDP to rise. 
B) the U.S. price level and real GDP to fall. 
C) the U.S. price level to rise and real GDP to fall. 
D) the U.S. price level to fall and real GDP to rise. 
A) the U.S. price level and real GDP to rise. 
B) the U.S. price level and real GDP to fall. 
C) the U.S. price level to rise and real GDP to fall. 
D) the U.S. price level to fall and real GDP to rise.

Question 15

Other things the same, continued technological progress and continued increases in the money supply would unambiguously lead to

Accepted Answer

A) rising prices only. 
B) rising real GDP only. 
C) rising prices and rising real GDP. 
D) neither rising prices nor rising real GDP. 
A) rising prices only. 
B) rising real GDP only. 
C) rising prices and rising real GDP. 
D) neither rising prices nor rising real GDP.

Question 16

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 17

Suppose a nation experiences increased immigration from abroad. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Accepted Answer

The short run and lo

Question 18

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 19

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 20

The aggregate demand and aggregate supply graph has the

Accepted Answer

A) quantity of output on the horizontal axis. Output is best measured by real GDP. 
B) quantity of output on the horizontal axis. Output is best measured by nominal GDP. 
C) quantity of output on the vertical axis. Output is best measured by real GDP. 
D) quantity of output on the vertical axis. Output is best measured by nominal GDP. 
A) quantity of output on the horizontal axis. Output is best measured by real GDP. 
B) quantity of output on the horizontal axis. Output is best measured by nominal GDP. 
C) quantity of output on the vertical axis. Output is best measured by real GDP. 
D) quantity of output on the vertical axis. Output is best measured by nominal GDP.

Exam 33: Aggregate Demand and Aggregate Supply

Which of the following would cause prices to fall and output to rise in the short run?

Which of the following lists includes only changes that shift aggregate demand to the right?

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.

Aggregate demand includes

Figure 33-5. -Refer to Figure 33-5. In Figure 33-5,

Which of the following would cause stagflation?

Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in taxes, then in the short run, real GDP will

What do most economists believe concerning the relation between the price level and real output?

Suppose a recession overseas reduces a country's exports. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

Refer to Pessimism. In the short run what happens to the price level and real GDP?

Use sticky-wage theory to explain why an increase in the expected price level shifts the aggregate supply curve.

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?

The primary purpose of the aggregate demand and aggregate supply model is to demonstrate the classical dichotomy.

Recessions in Canada and Mexico would cause

Other things the same, continued technological progress and continued increases in the money supply would unambiguously lead to

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

Suppose a nation experiences increased immigration from abroad. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

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

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

The aggregate demand and aggregate supply graph has the

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

Applications: 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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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