Question 1

Aggregate demand shifts right if

Accepted Answer

A) government purchases increase and shifts left if stock prices rise. 
B) government purchases increase and shifts left if stock prices fall. 
C) government purchases decrease and shifts left if stock prices rise. 
D) government purchases decrease and shifts left is stock prices fall. 
A) government purchases increase and shifts left if stock prices rise. 
B) government purchases increase and shifts left if stock prices fall. 
C) government purchases decrease and shifts left if stock prices rise. 
D) government purchases decrease and shifts left is stock prices fall.

Question 2

Who is credited for the original development of the model of aggregate demand and aggregate supply?

Accepted Answer

The answer of Who is credited for the original development...

Question 3

Which of the following will reduce the price level and real output in the short run?

Accepted Answer

A) an increase in government purchases. 
B) an decrease in oil prices 
C) a decrease in the money supply 
D) technical progress 
A) an increase in government purchases. 
B) an decrease in oil prices 
C) a decrease in the money supply 
D) technical progress

Question 4

Other things the same, an unexpected fall in the price level results in some firms having

Accepted Answer

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

Question 5

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

Accepted Answer

A) an increase in the expected price level. 
B) an increase in the capital stock. 
C) an increase in the money supply. 
D) an increase in taxes. 
A) an increase in the expected price level. 
B) an increase in the capital stock. 
C) an increase in the money supply. 
D) an increase in taxes.

Question 6

As the price level rises

Accepted Answer

A) people will want to hold more money, so the interest rate rises. 
B) people will want to hold more money, so the interest rate falls. 
C) people will want to hold less money, so the interest rate falls. 
D) people will want to hold less money, so the interest rate rises. 
A) people will want to hold more money, so the interest rate rises. 
B) people will want to hold more money, so the interest rate falls. 
C) people will want to hold less money, so the interest rate falls. 
D) people will want to hold less money, so the interest rate rises.

Question 7

Which of the following did not happen during the onset of the Great Depression?

Accepted Answer

A) The money supply fell as households took money out of bank deposits. 
B) The Fed conducted expansionary monetary policy. 
C) Stock prices fell about 90 percent. 
D) Disruption of the banking system made it difficult for some firms to obtain funds for investment. 
A) The money supply fell as households took money out of bank deposits. 
B) The Fed conducted expansionary monetary policy. 
C) Stock prices fell about 90 percent. 
D) Disruption of the banking system made it difficult for some firms to obtain funds for investment.

Question 8

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 9

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

Accepted Answer

A) both an increase in the capital stock and technological improvements 
B) an increase in the capital stock but not technological improvements 
C) An increase in the capital stock but not technological improvements 
D) neither an increase in the capital stock nor an technological improvements 
A) both an increase in the capital stock and technological improvements 
B) an increase in the capital stock but not technological improvements 
C) An increase in the capital stock but not technological improvements 
D) neither an increase in the capital stock nor an technological improvements

Question 10

The recession of 2008-2009 was associated with a fall in housing prices which shifted aggregate demand to the left.

Accepted Answer

A) True 
 B)False

Question 11

The exchange-rate effect helps explain what feature in the aggregate demand and aggregate supply model?

Accepted Answer

why the ag

Question 12

The model of short-run economic fluctuations focuses on

Accepted Answer

A) the price level and real GDP. 
B) productivity and economic growth. 
C) the neutrality of money and inflation. 
D) None of the above is correct. 
A) the price level and real GDP. 
B) productivity and economic growth. 
C) the neutrality of money and inflation. 
D) None of the above is correct.

Question 13

Most economists believe that classical macroeconomic theory is a good description of the economy

Accepted Answer

A) in neither the short nor long run. 
B) in the short run and in the long run. 
C) in the short run, but not in the long run. 
D) in the long run, but not in the short run. 
A) in neither the short nor long run. 
B) in the short run and in the long run. 
C) in the short run, but not in the long run. 
D) in the long run, but not in the short run.

Question 14

The classical dichotomy and monetary neutrality are represented graphically by

Accepted Answer

A) an upward-sloping long-run aggregate-supply curve. 
B) a vertical long-run aggregate-supply curve. 
C) an upward-sloping short-run aggregate-curve. 
D) a downward-sloping aggregate-demand curve. 
A) an upward-sloping long-run aggregate-supply curve. 
B) a vertical long-run aggregate-supply curve. 
C) an upward-sloping short-run aggregate-curve. 
D) a downward-sloping aggregate-demand curve.

Question 15

Figure 33-7.  
-Refer to Figure 33-7. If the economy starts at Y, then a recession occurs at

Accepted Answer

A) V. 
B) W. 
C) X. 
D) Z. 
A) V. 
B) W. 
C) X. 
D) Z.

Question 16

Suppose a country experiences a change in weather patterns that makes farming more difficult. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

Accepted Answer

The short-run and lo

Question 17

Other things the same, as the price level rises,

Accepted Answer

A) the dollar depreciates. 
B) the interest rate falls. 
C) people feel less wealthy. 
D) All of the above are correct. 
A) the dollar depreciates. 
B) the interest rate falls. 
C) people feel less wealthy. 
D) All of the above are correct.

Question 18

When taxes increase, consumption

Accepted Answer

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

Question 19

Which of the following would not be included in aggregate demand?

Accepted Answer

A) an increase in firms' inventories. 
B) purchases of goods by households. 
C) firms' purchases of newly produced machinery. 
D) government's tax collections. 
A) an increase in firms' inventories. 
B) purchases of goods by households. 
C) firms' purchases of newly produced machinery. 
D) government's tax collections.

Question 20

Figure 33-12.  
-Refer to Figure 33-12. Identify periods 1 and 2.

Accepted Answer

Period 1 is the Grea

Exam 33: Aggregate Demand and Aggregate Supply

Aggregate demand shifts right if

Who is credited for the original development of the model of aggregate demand and aggregate supply?

Which of the following will reduce the price level and real output in the short run?

Other things the same, an unexpected fall in the price level results in some firms having

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

As the price level rises

Which of the following did not happen during the onset of the Great Depression?

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

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

The recession of 2008-2009 was associated with a fall in housing prices which shifted aggregate demand to the left.

The exchange-rate effect helps explain what feature in the aggregate demand and aggregate supply model?

The model of short-run economic fluctuations focuses on

Most economists believe that classical macroeconomic theory is a good description of the economy

The classical dichotomy and monetary neutrality are represented graphically by

Figure 33-7. -Refer to Figure 33-7. If the economy starts at Y, then a recession occurs at

Suppose a country experiences a change in weather patterns that makes farming more difficult. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

Other things the same, as the price level rises,

When taxes increase, consumption

Which of the following would not be included in aggregate demand?

Figure 33-12. -Refer to Figure 33-12. Identify periods 1 and 2.

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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