Question 1

An increase in household saving causes consumption to

Accepted Answer

A) rise and aggregate demand to increase. 
B) rise and aggregate demand to decrease. 
C) fall and aggregate demand to increase. 
D) fall and aggregate demand to decrease. 
A) rise and aggregate demand to increase. 
B) rise and aggregate demand to decrease. 
C) fall and aggregate demand to increase. 
D) fall and aggregate demand to decrease.

Question 2

Other things the same, what happens to the price level and the quantity of output when the short run aggregate supply curve shifts to the right?

Accepted Answer

The price

Question 3

Which of the following adjust to bring aggregate supply and demand into balance?

Accepted Answer

A) the price level and real output 
B) the real rate of interest and the money supply 
C) government expenditures and taxes 
D) the saving rate and net exports 
A) the price level and real output 
B) the real rate of interest and the money supply 
C) government expenditures and taxes 
D) the saving rate and net exports

Question 4

Consider the exhibit below for the following questions.
Figure 33-4  
-Refer to Figure 33-4. If the economy is at A and there is a fall in aggregate demand, in the short run the economy

Accepted Answer

A) stays at A. 
B) moves to B. 
C) moves to C. 
D) moves to D. 
A) stays at A. 
B) moves to B. 
C) moves to C. 
D) moves to D.

Question 5

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

Accepted Answer

A) an increase in either technology or the human capital stock. 
B) an increase in human capital but not technology. 
C) an increase in technology, but not the human capital stock. 
D) neither an increase in technology nor the human capital stock. 
A) an increase in either technology or the human capital stock. 
B) an increase in human capital but not technology. 
C) an increase in technology, but not the human capital stock. 
D) neither an increase in technology nor the human capital stock.

Question 6

In the first few years of the Great Depression, unemployment rose to about

Accepted Answer

A) 10 percent, and prices rose about 14 percent. 
B) 15 percent, and prices rose about 22 percent. 
C) 20 percent, and prices fell about 14 percent. 
D) 25 percent, and prices fell about 22 percent. 
A) 10 percent, and prices rose about 14 percent. 
B) 15 percent, and prices rose about 22 percent. 
C) 20 percent, and prices fell about 14 percent. 
D) 25 percent, and prices fell about 22 percent.

Question 7

When the dollar appreciates, U.S.

Accepted Answer

A) exports decrease, while imports increase. 
B) exports and imports decrease. 
C) exports and imports increase. 
D) exports increase, while imports decrease. 
A) exports decrease, while imports increase. 
B) exports and imports decrease. 
C) exports and imports increase. 
D) exports increase, while imports decrease.

Question 8

Which of the following would increase output in the short run?

Accepted Answer

A) an increase in stock prices makes people feel wealthier 
B) government spending increases 
C) firms chose to purchase more investment goods 
D) All of the above are correct. 
A) an increase in stock prices makes people feel wealthier 
B) government spending increases 
C) firms chose to purchase more investment goods 
D) All of the above are correct.

Question 9

Which of the following rises when the U.S. price level falls?

Accepted Answer

A) interest rates 
B) the value of the dollar in the market for foreign-currency exchange 
C) real wealth 
D) All of the above are correct. 
A) interest rates 
B) the value of the dollar in the market for foreign-currency exchange 
C) real wealth 
D) All of the above are correct.

Question 10

Aggregate demand shifts right when the government

Accepted Answer

A) decreases taxes. 
B) cuts military expenditures. 
C) repeals an investment tax credit. 
D) None of the above is correct. 
A) decreases taxes. 
B) cuts military expenditures. 
C) repeals an investment tax credit. 
D) None of the above is correct.

Question 11

A decrease in the expected price level shifts short-run aggregate supply to the

Accepted Answer

A) right, and an increase in the actual price level shifts short-run aggregate supply to the right. 
B) right, and an increase in the actual price level does not shift short-run aggregate supply. 
C) left, and an increase in the actual price level shifts short-run aggregate supply to the left. 
D) left, and an increase in the actual price level does not shift short-run aggregate supply. 
A) right, and an increase in the actual price level shifts short-run aggregate supply to the right. 
B) right, and an increase in the actual price level does not shift short-run aggregate supply. 
C) left, and an increase in the actual price level shifts short-run aggregate supply to the left. 
D) left, and an increase in the actual price level does not shift short-run aggregate supply.

Question 12

Figure 33-11.  
-Refer to Figure 33-11. A movement from P1 and Y2, to P2 and Y1 would be consistent with

Accepted Answer

A) a decrease in consumption expenditures. 
B) stagflation. 
C) sticky-wages. 
D) an increase in net exports. 
A) a decrease in consumption expenditures. 
B) stagflation. 
C) sticky-wages. 
D) an increase in net exports.

Question 13

Which of the following shifts short-run aggregate supply right?

Accepted Answer

A) an increase in the price level 
B) an increase in the minimum wage 
C) a decrease in the price of oil 
D) more people migrate abroad than immigrate from abroad 
A) an increase in the price level 
B) an increase in the minimum wage 
C) a decrease in the price of oil 
D) more people migrate abroad than immigrate from abroad

Question 14

In the last half of 1999, the U.S. unemployment rate was about 4 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.

Question 15

A decrease in the expected price level shifts

Accepted Answer

A) only the long-run aggregate supply curve right. 
B) only the short-run aggregate supply curve right. 
C) both the short-run and the long-run aggregate supply curve right. 
D) Neither the short-run nor the long-run aggregate supply curve right. 
A) only the long-run aggregate supply curve right. 
B) only the short-run aggregate supply curve right. 
C) both the short-run and the long-run aggregate supply curve right. 
D) Neither the short-run nor the long-run aggregate supply curve right.

Question 16

Explain the effect on output and price level from an increase in the short-run aggregate-supply curve.

Accepted Answer

The price level woul

Question 17

An increase in the price level and a reduction in output would result from

Accepted Answer

A) an increase in the money supply. 
B) an increase in government expenditures. 
C) a fall in stock prices. 
D) bad weather in farm states. 
A) an increase in the money supply. 
B) an increase in government expenditures. 
C) a fall in stock prices. 
D) bad weather in farm states.

Question 18

Which of the following would both shift aggregate demand right?

Accepted Answer

A) the price level decreases and government expenditures increase. 
B) the price level decreases and the government repeals an investment tax credit. 
C) taxes decrease and government expenditures increase. 
D) None of the above are correct. 
A) the price level decreases and government expenditures increase. 
B) the price level decreases and the government repeals an investment tax credit. 
C) taxes decrease and government expenditures increase. 
D) None of the above are correct.

Question 19

During recessions investment

Accepted Answer

A) falls by a larger percentage than GDP. 
B) falls by about the same percentage as GDP. 
C) falls by a smaller percentage than GDP. 
D) falls but the percentage change is sometimes much larger and sometimes much smaller. 
A) falls by a larger percentage than GDP. 
B) falls by about the same percentage as GDP. 
C) falls by a smaller percentage than GDP. 
D) falls but the percentage change is sometimes much larger and sometimes much smaller.

Question 20

Most economists believe that classical theory describes the world

Accepted Answer

A) in the short run. 
B) in the long run. 
C) in both the short run and the long run. 
D) in neither the short run nor the long run. 
A) in the short run. 
B) in the long run. 
C) in both the short run and the long run. 
D) in neither the short run nor the long run.

Exam 33: Aggregate Demand and Aggregate Supply

An increase in household saving causes consumption to

Other things the same, what happens to the price level and the quantity of output when the short run aggregate supply curve shifts to the right?

Which of the following adjust to bring aggregate supply and demand into balance?

Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4. If the economy is at A and there is a fall in aggregate demand, in the short run the economy

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

In the first few years of the Great Depression, unemployment rose to about

When the dollar appreciates, U.S.

Which of the following would increase output in the short run?

Which of the following rises when the U.S. price level falls?

Aggregate demand shifts right when the government

A decrease in the expected price level shifts short-run aggregate supply to the

Figure 33-11. -Refer to Figure 33-11. A movement from P1 and Y2, to P2 and Y1 would be consistent with

Which of the following shifts short-run aggregate supply right?

In the last half of 1999, the U.S. unemployment rate was about 4 percent. Historical experience suggests that this is

A decrease in the expected price level shifts

Explain the effect on output and price level from an increase in the short-run aggregate-supply curve.

An increase in the price level and a reduction in output would result from

Which of the following would both shift aggregate demand right?

During recessions investment

Most economists believe that classical theory describes the world

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

Figure 33-11. -Refer to Figure 33-11. A movement from P₁ and Y₂, to P₂ and Y₁ would be consistent with