Question 1

A decrease in what variable will raise the quantity of goods and services supplied, and shift only the short run aggregate supply curve to the right?

Accepted Answer

The expect

Question 2

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

Accepted Answer

A) True 
 B)False

Question 3

The initial impact of an increase in an investment tax credit is to shift

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 4

Which of the following is not a determinant of the long-run level of real GDP?

Accepted Answer

A) the price level. 
B) the amount of capital used by firms. 
C) available stock of human capital. 
D) available technology 
A) the price level. 
B) the amount of capital used by firms. 
C) available stock of human capital. 
D) available technology

Question 5

Aggregate demand shifts to the left if the money supply increases.

Accepted Answer

A) True 
 B)False

Question 6

The sticky-price theory helps explain what feature of the aggregate demand and aggregate supply model?

Accepted Answer

why the short run ag

Question 7

Imagine the U.S. economy is in long-run equilibrium. Then suppose the value of the U.S. dollar decreases. At the same time, people in the U.S. revise their expectations so that the expected price level rises. We would expect that in the short-run

Accepted Answer

A) real GDP will rise and the price level might rise, fall, or stay the same. 
B) real GDP will fall and the price level might rise, fall, or stay the same. 
C) the price level will rise, and real GDP might rise, fall, or stay the same. 
D) the price level will fall, and real GDP might rise, fall, or stay the same. 
A) real GDP will rise and the price level might rise, fall, or stay the same. 
B) real GDP will fall and the price level might rise, fall, or stay the same. 
C) the price level will rise, and real GDP might rise, fall, or stay the same. 
D) the price level will fall, and real GDP might rise, fall, or stay the same.

Question 8

Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to

Accepted Answer

A) rise. This rise in price expectations shifts the short-run aggregate supply curve to the right. 
B) rise. This rise in price expectations shifts the short-run aggregate supply curve to the left. 
C) fall. This fall in price expectations shifts the short-run aggregate supply curve to the right. 
D) fall. This fall in price expectations shifts the short-run aggregate supply curve to the left. 
A) rise. This rise in price expectations shifts the short-run aggregate supply curve to the right. 
B) rise. This rise in price expectations shifts the short-run aggregate supply curve to the left. 
C) fall. This fall in price expectations shifts the short-run aggregate supply curve to the right. 
D) fall. This fall in price expectations shifts the short-run aggregate supply curve to the left.

Question 9

From 1995 to 1999 there was a dramatic rise in stock prices. 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 10

Other things the same, an increase in the price level induces people to hold

Accepted Answer

A) less money, so they lend less, and the interest rate rises. 
B) less money, so they lend more, and the interest rate falls. 
C) more money, so they lend more, and the interest rate falls. 
D) more money, so they lend less, and the interest rate rises. 
A) less money, so they lend less, and the interest rate rises. 
B) less money, so they lend more, and the interest rate falls. 
C) more money, so they lend more, and the interest rate falls. 
D) more money, so they lend less, and the interest rate rises.

Question 11

Make a list of things that would shift the aggregate demand curve to the right.

Accepted Answer

Examples (and variations on examples) in

Question 12

Other things the same, the aggregate quantity of goods demanded in the U.S. increases if

Accepted Answer

A) real wealth rises. 
B) the interest rate rises. 
C) the dollar appreciates. 
D) All of the above are correct. 
A) real wealth rises. 
B) the interest rate rises. 
C) the dollar appreciates. 
D) All of the above are correct.

Question 13

The Central Bank of Wiknam increases the money supply at the same time the Parliament of Wiknam passes a new investment tax credit. Which of these policies shift aggregate demand to the right?

Accepted Answer

A) both the money supply increase and the investment tax credit 
B) the money supply increase but not the investment tax credit 
C) the investment tax credit but not the money supply increase 
D) neither the investment tax credit nor the money supply increase 
A) both the money supply increase and the investment tax credit 
B) the money supply increase but not the investment tax credit 
C) the investment tax credit but not the money supply increase 
D) neither the investment tax credit nor the money supply increase

Question 14

As the price level falls

Accepted Answer

A) people will want to buy more bonds, so the interest rate rises. 
B) people will want to buy fewer bonds, so the interest rate falls. 
C) people will want to buy more bonds, so the interest rate falls. 
D) people will want to buy fewer bonds, so the interest rate rises. 
A) people will want to buy more bonds, so the interest rate rises. 
B) people will want to buy fewer bonds, so the interest rate falls. 
C) people will want to buy more bonds, so the interest rate falls. 
D) people will want to buy fewer bonds, so the interest rate rises.

Question 15

When production costs rise,

Accepted Answer

A) the short-run aggregate supply curve shifts to the right. 
B) the short-run aggregate supply curve shifts to the left. 
C) the aggregate demand curve shifts to the right. 
D) the aggregate demand curve shifts to the left. 
A) the short-run aggregate supply curve shifts to the right. 
B) the short-run aggregate supply curve shifts to the left. 
C) the aggregate demand curve shifts to the right. 
D) the aggregate demand curve shifts to the left.

Question 16

Suppose a country experiences an increase in its capital stock. 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

When the Fed buys bonds

Accepted Answer

A) the supply of money increases and so aggregate demand shifts right. 
B) the supply of money decreases and so aggregate demand shifts left. 
C) the supply of money decreases and so aggregate demand shifts right. 
D) the supply of money increases and so aggregate demand shifts left. 
A) the supply of money increases and so aggregate demand shifts right. 
B) the supply of money decreases and so aggregate demand shifts left. 
C) the supply of money decreases and so aggregate demand shifts right. 
D) the supply of money increases and so aggregate demand shifts left.

Question 18

Explain how a recession differs from a depression.

Accepted Answer

Recessions are relatively mild

Question 19

Suppose a boom in stock market prices helps make people feel wealthier. Using the model of aggregate demand and aggregate supply, identify the curves that are affected, and which way these curves would shift.

Accepted Answer

The aggregate demand

Question 20

If countries that imported goods and services from the United States went into recession, we would expect that U.S. net exports would

Accepted Answer

A) rise, making aggregate demand shift right. 
B) rise, making aggregate demand shift left. 
C) fall, making aggregate demand shift right. 
D) fall, making aggregate demand shift left. 
A) rise, making aggregate demand shift right. 
B) rise, making aggregate demand shift left. 
C) fall, making aggregate demand shift right. 
D) fall, making aggregate demand shift left.

Exam 33: Aggregate Demand and Aggregate Supply

A decrease in what variable will raise the quantity of goods and services supplied, and shift only the short run aggregate supply curve to the right?

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

The initial impact of an increase in an investment tax credit is to shift

Which of the following is not a determinant of the long-run level of real GDP?

Aggregate demand shifts to the left if the money supply increases.

The sticky-price theory helps explain what feature of the aggregate demand and aggregate supply model?

Imagine the U.S. economy is in long-run equilibrium. Then suppose the value of the U.S. dollar decreases. At the same time, people in the U.S. revise their expectations so that the expected price level rises. We would expect that in the short-run

Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to

From 1995 to 1999 there was a dramatic rise in stock prices. If this rise made people feel wealthier, then it would have shifted

Other things the same, an increase in the price level induces people to hold

Make a list of things that would shift the aggregate demand curve to the right.

Other things the same, the aggregate quantity of goods demanded in the U.S. increases if

The Central Bank of Wiknam increases the money supply at the same time the Parliament of Wiknam passes a new investment tax credit. Which of these policies shift aggregate demand to the right?

As the price level falls

When production costs rise,

Suppose a country experiences an increase in its capital stock. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

When the Fed buys bonds

Explain how a recession differs from a depression.

Suppose a boom in stock market prices helps make people feel wealthier. Using the model of aggregate demand and aggregate supply, identify the curves that are affected, and which way these curves would shift.

If countries that imported goods and services from the United States went into recession, we would expect that U.S. net exports would

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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