Question 1

If a central bank is independent,

Accepted Answer

A) it has the ability to alter taxes. 
B) it allocates savings to firms. 
C) it restricts trade to increase domestic employment. 
D) it operations are not controlled by the political process. 
A) it has the ability to alter taxes. 
B) it allocates savings to firms. 
C) it restricts trade to increase domestic employment. 
D) it operations are not controlled by the political process.

Question 2

The quantity of aggregate goods and services 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 3

The recession of 2008-2009 was in many ways the worst macroeconomic event in more than half a century.

Accepted Answer

A) True 
 B)False

Question 4

Other things the same, which of the following is correct?

Accepted Answer

A) A decrease in the price level causes the dollar to appreciate. Aggregate demand shifts right. 
B) A decrease in the price level causes the dollar to depreciate. Aggregate demand shifts right. 
C) If speculators lose confidence in the American economy, the dollar appreciates. Aggregate demand shifts right. 
D) If speculators lose confidence in the American economy, the dollar depreciates. Aggregate demand shifts right. 
A) A decrease in the price level causes the dollar to appreciate. Aggregate demand shifts right. 
B) A decrease in the price level causes the dollar to depreciate. Aggregate demand shifts right. 
C) If speculators lose confidence in the American economy, the dollar appreciates. Aggregate demand shifts right. 
D) If speculators lose confidence in the American economy, the dollar depreciates. Aggregate demand shifts right.

Question 5

Which of the following effects helps to explain the slope of the aggregate-demand curve?

Accepted Answer

A) the exchange-rate effect 
B) the wealth effect 
C) the interest-rate effect 
D) All of the above are correct. 
A) the exchange-rate effect 
B) the wealth effect 
C) the interest-rate effect 
D) All of the above are correct.

Question 6

The aggregate quantity of goods and services demanded changes as the price level rises 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 7

Most economists believe that in the long run, changes in the money supply

Accepted Answer

A) affect nominal but not real variables. This view that money is ultimately neutral is consistent with classical theory. 
B) affect nominal but not real variables. This view that money is ultimately neutral is inconsistent with classical theory. 
C) affect real but not nominal variables. This view that money is ultimately neutral is consistent with classical theory. 
D) affect real but not nominal variables. This view that money is ultimately neutral is inconsistent with classical theory. 
A) affect nominal but not real variables. This view that money is ultimately neutral is consistent with classical theory. 
B) affect nominal but not real variables. This view that money is ultimately neutral is inconsistent with classical theory. 
C) affect real but not nominal variables. This view that money is ultimately neutral is consistent with classical theory. 
D) affect real but not nominal variables. This view that money is ultimately neutral is inconsistent with classical theory.

Question 8

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

Question 9

An increase in the money supply causes output to rise in the long run.

Accepted Answer

A) True 
 B)False

Question 10

Consider the exhibit below for the following questions.
Figure 33-4  
-Refer to Figure 33-4. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from

Accepted Answer

A) A to B. 
B) C to D. 
C) B to A. 
D) D to C. 
A) A to B. 
B) C to D. 
C) B to A. 
D) D to C.

Question 11

Refer to Pessimism. Which curve shifts and in which direction?

Accepted Answer

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

Question 12

An increase in the money supply

Accepted Answer

A) and an investment tax credit both cause aggregate demand to shift right. 
B) and an investment tax credit both cause aggregate demand to shift left. 
C) causes aggregate demand to shift right, while an investment tax credit causes aggregate demand to shift left. 
D) causes aggregate demand to shift left, while an investment tax credit causes aggregate demand to shift right. 
A) and an investment tax credit both cause aggregate demand to shift right. 
B) and an investment tax credit both cause aggregate demand to shift left. 
C) causes aggregate demand to shift right, while an investment tax credit causes aggregate demand to shift left. 
D) causes aggregate demand to shift left, while an investment tax credit causes aggregate demand to shift right.

Question 13

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 14

The effect of an increase in the price level on the aggregate-demand curve is represented by a

Accepted Answer

A) shift to the right of the aggregate-demand curve. 
B) shift to the left of the aggregate-demand curve. 
C) movement to the left along a given aggregate-demand curve. 
D) movement to the right along a given aggregate-demand curve. 
A) shift to the right of the aggregate-demand curve. 
B) shift to the left of the aggregate-demand curve. 
C) movement to the left along a given aggregate-demand curve. 
D) movement to the right along a given aggregate-demand curve.

Question 15

Which of the following would cause prices and real GDP 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

Question 16

Identify the direction of the change during a recession in each of the following: consumption expenditures, investment expenditures, and unemployment.

Accepted Answer

Consumption expendit

Question 17

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

Accepted Answer

A) nominal variables and real variables. 
B) nominal variables, but not real variables. 
C) real variables, but not nominal variables. 
D) neither nominal nor real variables. 
A) nominal variables and real variables. 
B) nominal variables, but not real variables. 
C) real variables, but not nominal variables. 
D) neither nominal nor real variables.

Question 18

If the actual price level is 165, but people had been expecting it to be 160, then

Accepted Answer

A) the quantity of output supplied rises, but only in the short run. 
B) the quantity of output supplied rises in the short run and the long run. 
C) the quantity of output supplied falls, but only in the short run. 
D) the quantity of output supplied falls in the short run and the long run. 
A) the quantity of output supplied rises, but only in the short run. 
B) the quantity of output supplied rises in the short run and the long run. 
C) the quantity of output supplied falls, but only in the short run. 
D) the quantity of output supplied falls in the short run and the long run.

Question 19

According to classical macroeconomic theory, changes in the money supply change nominal but not real variables.

Accepted Answer

A) True 
 B)False

Question 20

Most economists use the aggregate demand and aggregate supply model primarily to analyze

Accepted Answer

A) short-run fluctuations in the economy. 
B) the effects of macroeconomic policy on the prices of individual goods. 
C) the long-run effects of international trade policies. 
D) productivity and economic growth. 
A) short-run fluctuations in the economy. 
B) the effects of macroeconomic policy on the prices of individual goods. 
C) the long-run effects of international trade policies. 
D) productivity and economic growth.

Exam 33: Aggregate Demand and Aggregate Supply

If a central bank is independent,

The quantity of aggregate goods and services demanded rises when the

The recession of 2008-2009 was in many ways the worst macroeconomic event in more than half a century.

Other things the same, which of the following is correct?

Which of the following effects helps to explain the slope of the aggregate-demand curve?

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

Most economists believe that in the long run, changes in the money supply

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

An increase in the money supply causes output to rise in the long run.

Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from

Refer to Pessimism. Which curve shifts and in which direction?

An increase in the money supply

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

The effect of an increase in the price level on the aggregate-demand curve is represented by a

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

Identify the direction of the change during a recession in each of the following: consumption expenditures, investment expenditures, and unemployment.

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

If the actual price level is 165, but people had been expecting it to be 160, then

According to classical macroeconomic theory, changes in the money supply change nominal but not real variables.

Most economists use the aggregate demand and aggregate supply model primarily to analyze

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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