Question 1

Which of the following shifts aggregate demand to the right?

Accepted Answer

A) a decrease in the money supply 
B) increases in the profitability of capital due perhaps to technological progress. 
C) the repeal of an investment tax credit 
D) a decrease in the price level 
A) a decrease in the money supply 
B) increases in the profitability of capital due perhaps to technological progress. 
C) the repeal of an investment tax credit 
D) a decrease in the price level

Question 2

An increase in the expected price level shifts the short-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is correct?

Accepted Answer

A) Short run fluctuations in economic activity happen only in developing countries. 
B) During economic contractions most firms experience rising profits. 
C) Recessions come at irregular intervals and are easy to predict. 
D) When real GDP falls, the rate of unemployment generally rises. 
A) Short run fluctuations in economic activity happen only in developing countries. 
B) During economic contractions most firms experience rising profits. 
C) Recessions come at irregular intervals and are easy to predict. 
D) When real GDP falls, the rate of unemployment generally rises.

Question 4

Other things the same, what happens to the price level and quantity of output when an adverse shift in the short run aggregate supply curve occurs?

Accepted Answer

Price leve

Question 5

Suppose that there is an increase in the costs of production that shifts the short-run aggregate supply curve left. If there is no policy response, then eventually

Accepted Answer

A) because unemployment is low, wages will be bid up and short-run aggregate supply will shift right. 
B) because unemployment is low, wages will be bid down and short-run aggregate supply will shift right. 
C) because unemployment is high, wages will be bid up and short-run aggregate supply will shift right. 
D) because unemployment is high, wages will be bid down and short-run aggregate supply will shift right. 
A) because unemployment is low, wages will be bid up and short-run aggregate supply will shift right. 
B) because unemployment is low, wages will be bid down and short-run aggregate supply will shift right. 
C) because unemployment is high, wages will be bid up and short-run aggregate supply will shift right. 
D) because unemployment is high, wages will be bid down and short-run aggregate supply will shift right.

Question 6

Which of the following both shift aggregate demand right?

Accepted Answer

A) net exports rise for some reason other than a price change and government purchases rise. 
B) net exports rise for some reason other than a price change and taxes increase. 
C) net exports fall for some reason other than a price change and government purchases fall. 
D) net exports fall for some reason other than a price change and taxes fall. 
A) net exports rise for some reason other than a price change and government purchases rise. 
B) net exports rise for some reason other than a price change and taxes increase. 
C) net exports fall for some reason other than a price change and government purchases fall. 
D) net exports fall for some reason other than a price change and taxes fall.

Question 7

Identify the variables that could cause shifts in both the short-run and long-run aggregate-supply curves.

Accepted Answer

labor, cap

Question 8

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) 10 percent, 1 percent 
B) 2 percent, 12 percent 
C) -1 percent, 8 percent 
D) -2 percent, 2 percent 
A) 10 percent, 1 percent 
B) 2 percent, 12 percent 
C) -1 percent, 8 percent 
D) -2 percent, 2 percent

Question 9

​Which of the following shifts long-run aggregate supply left?

Accepted Answer

A) ​a decrease in either natural resources or the human capital stock. 
B) ​a decrease in the human capital stock, but not natural resources. 
C) ​a decrease in natural resources, but not the human capital stock. 
D) ​neither a decrease in natural resources nor the human capital stock. 
A) ​a decrease in either natural resources or the human capital stock. 
B) ​a decrease in the human capital stock, but not natural resources. 
C) ​a decrease in natural resources, but not the human capital stock. 
D) ​neither a decrease in natural resources nor the human capital stock.

Question 10

Other things the same, as the price level falls, the real value of a dollar

Accepted Answer

A) rises, and interest rates rise. 
B) rises, and interest rates fall. 
C) falls, and interest rates rise. 
D) falls, and interest rates fall. 
A) rises, and interest rates rise. 
B) rises, and interest rates fall. 
C) falls, and interest rates rise. 
D) falls, and interest rates fall.

Question 11

In the short-run an increase in the costs of production makes

Accepted Answer

A) output and prices rise. 
B) output rise and prices fall. 
C) output fall and prices rise. 
D) output and prices fall. 
A) output and prices rise. 
B) output rise and prices fall. 
C) output fall and prices rise. 
D) output and prices fall.

Question 12

The model of aggregate demand and aggregate supply explains the relationship between

Accepted Answer

A) the price and quantity of a particular good. 
B) unemployment and output. 
C) wages and employment. 
D) real GDP and the price level. 
A) the price and quantity of a particular good. 
B) unemployment and output. 
C) wages and employment. 
D) real GDP and the price level.

Question 13

A change in the money supply changes only nominal variables in the long run.

Accepted Answer

A) True 
 B)False

Question 14

The position of the long-run aggregate supply curve

Accepted Answer

A) is determined by resource usage and technology. 
B) is at the point where the unemployment rate is zero. 
C) shifts to the right when the money supply increases. 
D) is at the point where the economy would cease to grow. 
A) is determined by resource usage and technology. 
B) is at the point where the unemployment rate is zero. 
C) shifts to the right when the money supply increases. 
D) is at the point where the economy would cease to grow.

Question 15

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

Accepted Answer

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

Question 16

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

Accepted Answer

A) unemployment and the price level. 
B) unemployment but not the price level. 
C) the price level, but not unemployment. 
D) neither the price level nor unemployment. 
A) unemployment and the price level. 
B) unemployment but not the price level. 
C) the price level, but not unemployment. 
D) neither the price level nor unemployment.

Question 17

Which of the following shifts aggregate demand to the right?

Accepted Answer

A) both an investment tax credit and a decrease in income tax rates 
B) an investment tax credit but not a decrease in income tax rates 
C) a decrease in income tax rates but not an investment tax credit 
D) neither an investment tax credit nor a decrease in income tax rates 
A) both an investment tax credit and a decrease in income tax rates 
B) an investment tax credit but not a decrease in income tax rates 
C) a decrease in income tax rates but not an investment tax credit 
D) neither an investment tax credit nor a decrease in income tax rates

Question 18

Other things the same, a decrease in the price level makes the interest rate decrease, which leads to a depreciation of the dollar in the market for foreign-currency exchange.

Accepted Answer

A) True 
 B)False

Question 19

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 20

If aggregate demand shifts right then in the short run

Accepted Answer

A) firms will increase production. In the long run increased price expectations shift the short-run aggregate supply curve to the right. 
B) firms will increase production. In the long run increased price expectations shift the short-run aggregate supply curve to the left. 
C) firms will decrease production. In the long run increased price expectations shift the short-run aggregate supply curve to the right. 
D) firms will decrease production. In the long run increased price expectations shift the short-run aggregate supply curve to the left. 
A) firms will increase production. In the long run increased price expectations shift the short-run aggregate supply curve to the right. 
B) firms will increase production. In the long run increased price expectations shift the short-run aggregate supply curve to the left. 
C) firms will decrease production. In the long run increased price expectations shift the short-run aggregate supply curve to the right. 
D) firms will decrease production. In the long run increased price expectations shift the short-run aggregate supply curve to the left.

Exam 33: Aggregate Demand and Aggregate Supply

Which of the following shifts aggregate demand to the right?

An increase in the expected price level shifts the short-run aggregate supply curve to the right.

Which of the following is correct?

Other things the same, what happens to the price level and quantity of output when an adverse shift in the short run aggregate supply curve occurs?

Suppose that there is an increase in the costs of production that shifts the short-run aggregate supply curve left. If there is no policy response, then eventually

Which of the following both shift aggregate demand right?

Identify the variables that could cause shifts in both the short-run and long-run aggregate-supply curves.

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?

​Which of the following shifts long-run aggregate supply left?

Other things the same, as the price level falls, the real value of a dollar

In the short-run an increase in the costs of production makes

The model of aggregate demand and aggregate supply explains the relationship between

A change in the money supply changes only nominal variables in the long run.

The position of the long-run aggregate supply curve

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

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

Which of the following shifts aggregate demand to the right?

Other things the same, a decrease in the price level makes the interest rate decrease, which leads to a depreciation of the dollar in the market for foreign-currency exchange.

The price level rises in the short run if

If aggregate demand shifts right then in the short run

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 shifts long-run aggregate supply left?