Question 1

Which of the following would increase the price level?

Accepted Answer

A) an increase in the money supply. 
B) an increase in taxes. 
C) a decrease in the expected price level. 
D) a decrease in the natural rate of unemployment. 
A) an increase in the money supply. 
B) an increase in taxes. 
C) a decrease in the expected price level. 
D) a decrease in the natural rate of unemployment.

Question 2

Aggregate demand shifts left 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 3

Other things the same, the aggregate quantity of output supplied will increase if the price level

Accepted Answer

A) is lower than expected so that firms believe the relative price of their output has increased. 
B) is lower than expected so that firms believe the relative price of their output has decreased. 
C) is higher than expected so that firms believe the relative price of their output has increased. 
D) is higher than expected so that firms believe the relative price of their output has decreased. 
A) is lower than expected so that firms believe the relative price of their output has increased. 
B) is lower than expected so that firms believe the relative price of their output has decreased. 
C) is higher than expected so that firms believe the relative price of their output has increased. 
D) is higher than expected so that firms believe the relative price of their output has decreased.

Question 4

The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,

Accepted Answer

A) production is more profitable and employment rises. 
B) production is more profitable and employment falls. 
C) production is less profitable and employment rises. 
D) production is less profitable and employment falls. 
A) production is more profitable and employment rises. 
B) production is more profitable and employment falls. 
C) production is less profitable and employment rises. 
D) production is less profitable and employment falls.

Question 5

The division of variables into real and nominal is a dichotomy assumed by

Accepted Answer

A) classical economists. 
B) John Maynard Keynes. 
C) the wealth effect. 
D) short-run macroeconomic theory. 
A) classical economists. 
B) John Maynard Keynes. 
C) the wealth effect. 
D) short-run macroeconomic theory.

Question 6

Which of the following, other things the same, would make the price level increase and real GDP decrease?​

Accepted Answer

A) ​long-run aggregate supply shifts left. 
B) ​long-run aggregate supply shifts right. 
C) ​aggregate demand shifts right. 
D) ​aggregate demand shifts left. 
A) ​long-run aggregate supply shifts left. 
B) ​long-run aggregate supply shifts right. 
C) ​aggregate demand shifts right. 
D) ​aggregate demand shifts left.

Question 7

​The misperceptions theory of short-run aggregate supply curve says that quantity of output will decrease if the price level

Accepted Answer

A) ​decreases by more than expected so that firms believe the relative price of their output has decreased. 
B) ​decreases by more than expected so that firms believe the relative price of their output has increased. 
C) ​decreases by less than expected so that firms believe the relative price of their output has decreased. 
D) ​decreases by less than expected so that firms believe the relative price of their output has increased. 
A) ​decreases by more than expected so that firms believe the relative price of their output has decreased. 
B) ​decreases by more than expected so that firms believe the relative price of their output has increased. 
C) ​decreases by less than expected so that firms believe the relative price of their output has decreased. 
D) ​decreases by less than expected so that firms believe the relative price of their output has increased.

Question 8

Real and nominal variables are highly intertwined, and changes in the money supply change real GDP. Most economists would agree that this statement accurately describes

Accepted Answer

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

Question 9

When interest rates fall

Accepted Answer

A) firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. 
B) firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding. 
C) firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding. 
D) firms want to borrow less for new plants and equipment and households want to borrow less for homebuilding. 
A) firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. 
B) firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding. 
C) firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding. 
D) firms want to borrow less for new plants and equipment and households want to borrow less for homebuilding.

Question 10

When the price level falls the quantity of

Accepted Answer

A) consumption goods demanded rises, while the quantity of net exports demanded falls. 
B) consumption goods demanded and the quantity of net exports demanded both rise. 
C) consumption goods demanded and the quantity of net exports demanded both fall. 
D) consumption goods demanded falls, while the quantity of net exports demand rises. 
A) consumption goods demanded rises, while the quantity of net exports demanded falls. 
B) consumption goods demanded and the quantity of net exports demanded both rise. 
C) consumption goods demanded and the quantity of net exports demanded both fall. 
D) consumption goods demanded falls, while the quantity of net exports demand rises.

Question 11

Which of the following by itself is consistent with the directions that the price level and real GDP changed at the onset of the Great Depression?

Accepted Answer

A) aggregate demand shifted right 
B) aggregate demand shifted left 
C) aggregate supply shifted right 
D) aggregate supply shifted left 
A) aggregate demand shifted right 
B) aggregate demand shifted left 
C) aggregate supply shifted right 
D) aggregate supply shifted left

Question 12

Figure 33-12.  
-Refer to Figure 33-12. Explain how the aggregate demand and aggregate supply model changed during periods 1 and 2.

Accepted Answer

The aggregate-demand

Question 13

In response to a decrease in output, the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in short-run aggregate supply.

Accepted Answer

A) True 
 B)False

Question 14

A decrease in the availability of an important major resource such as oil shifts

Accepted Answer

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

Question 15

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 16

Other things the same, a decrease in the price level makes the dollars people hold worth

Accepted Answer

A) more, so they can buy more. 
B) more, so they can buy less. 
C) less, so they can buy more. 
D) less, so they can buy less. 
A) more, so they can buy more. 
B) more, so they can buy less. 
C) less, so they can buy more. 
D) less, so they can buy less.

Question 17

In which case can we be sure real GDP rises in the short run?

Accepted Answer

A) government purchases increase and taxes rise. 
B) government purchases increase and taxes fall. 
C) government purchases decrease and taxes rise. 
D) government purchases decrease and taxes fall. 
A) government purchases increase and taxes rise. 
B) government purchases increase and taxes fall. 
C) government purchases decrease and taxes rise. 
D) government purchases decrease and taxes fall.

Question 18

From 2001 to 2005 there was a dramatic rise in the price of houses. If this rise made people feel wealthier, then it would have shifted

Accepted Answer

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

Question 19

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

Accepted Answer

A) True 
 B)False

Question 20

During the last half of 2012, the U.S. unemployment rate was just under 8 percent. Historical experience suggests that this is

Accepted Answer

A) above the natural rate, so real GDP growth was likely low. 
B) above the natural rate, so real GDP growth was likely high. 
C) below the natural rate, so real GDP growth was likely low. 
D) below the natural rate, so real GDP growth was likely high. 
A) above the natural rate, so real GDP growth was likely low. 
B) above the natural rate, so real GDP growth was likely high. 
C) below the natural rate, so real GDP growth was likely low. 
D) below the natural rate, so real GDP growth was likely high.

Exam 33: Aggregate Demand and Aggregate Supply

Which of the following would increase the price level?

Aggregate demand shifts left if

Other things the same, the aggregate quantity of output supplied will increase if the price level

The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,

The division of variables into real and nominal is a dichotomy assumed by

Which of the following, other things the same, would make the price level increase and real GDP decrease?​

​The misperceptions theory of short-run aggregate supply curve says that quantity of output will decrease if the price level

Real and nominal variables are highly intertwined, and changes in the money supply change real GDP. Most economists would agree that this statement accurately describes

When interest rates fall

When the price level falls the quantity of

Which of the following by itself is consistent with the directions that the price level and real GDP changed at the onset of the Great Depression?

Figure 33-12. -Refer to Figure 33-12. Explain how the aggregate demand and aggregate supply model changed during periods 1 and 2.

In response to a decrease in output, the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in short-run aggregate supply.

A decrease in the availability of an important major resource such as oil shifts

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

Other things the same, a decrease in the price level makes the dollars people hold worth

In which case can we be sure real GDP rises in the short run?

From 2001 to 2005 there was a dramatic rise in the price of houses. If this rise made people feel wealthier, then it would have shifted

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

During the last half of 2012, the U.S. unemployment rate was just under 8 percent. Historical experience suggests that this is

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

Filters

Which of the following, other things the same, would make the price level increase and real GDP decrease?

The misperceptions theory of short-run aggregate supply curve says that quantity of output will decrease if the price level