Question 1

Other things the same, if the price level falls, domestic interest rates

Accepted Answer

A) rise, so domestic residents will want to hold more foreign bonds. 
B) rise, so domestic residents will want to hold fewer foreign bonds. 
C) fall, so domestic residents will want to hold more foreign bonds. 
D) fall, so domestic residents will want to hold fewer foreign bonds. 
A) rise, so domestic residents will want to hold more foreign bonds. 
B) rise, so domestic residents will want to hold fewer foreign bonds. 
C) fall, so domestic residents will want to hold more foreign bonds. 
D) fall, so domestic residents will want to hold fewer foreign bonds.

Question 2

Tax cuts shift aggregate demand

Accepted Answer

A) right as do increases in government spending. 
B) right while increases in government spending shift aggregate demand left. 
C) left as do increases in government spending. 
D) left while increases in government spending shift aggregate demand right. 
A) right as do increases in government spending. 
B) right while increases in government spending shift aggregate demand left. 
C) left as do increases in government spending. 
D) left while increases in government spending shift aggregate demand right.

Question 3

Which of the following correctly expresses why the short-run aggregate-supply curve slopes upward?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 4

Other things the same, what happens in the long run to the price level and quantity of output after a contraction in aggregate demand?

Accepted Answer

The price level decr

Question 5

If the dollar appreciates, perhaps because of speculation or government policy, then U.S. net exports

Accepted Answer

A) increase which shifts aggregate demand right. 
B) increase which shifts aggregate demand left. 
C) decrease which shifts aggregate demand right. 
D) decrease which shifts aggregate demand left. 
A) increase which shifts aggregate demand right. 
B) increase which shifts aggregate demand left. 
C) decrease which shifts aggregate demand right. 
D) decrease which shifts aggregate demand left.

Question 6

Refer to Pessimism. How is the new long-run equilibrium different from the original one?

Accepted Answer

A) both price and real GDP are higher. 
B) both price and real GDP are lower. 
C) the price level is the same and GDP is lower. 
D) the price level is lower and real GDP is the same. 
A) both price and real GDP are higher. 
B) both price and real GDP are lower. 
C) the price level is the same and GDP is lower. 
D) the price level is lower and real GDP is the same.

Question 7

Suppose the economy is in long-run equilibrium and the government decreases its expenditures. Which of the following helps explain the logic of why the economy moves back to long-run equilibrium?

Accepted Answer

A) as people revise their price-level expectations upward, firms and workers strike bargains for higher nominal wages. 
B) as people revise their price-level expectations upward, firms and workers strike bargains for lower nominal wages. 
C) as people revise their price-level expectations downward, firms and workers strike bargains for higher nominal wages. 
D) as people revise their price-level expectations downward, firms and workers strike bargains for lower nominal wages. 
A) as people revise their price-level expectations upward, firms and workers strike bargains for higher nominal wages. 
B) as people revise their price-level expectations upward, firms and workers strike bargains for lower nominal wages. 
C) as people revise their price-level expectations downward, firms and workers strike bargains for higher nominal wages. 
D) as people revise their price-level expectations downward, firms and workers strike bargains for lower nominal wages.

Question 8

Other things the same, if workers and firms expected inflation to be 2%, but it is only 1% then

Accepted Answer

A) employment and production rise. 
B) employment rises and production falls. 
C) employment falls and production rises. 
D) employment and production fall. 
A) employment and production rise. 
B) employment rises and production falls. 
C) employment falls and production rises. 
D) employment and production fall.

Question 9

The long-run aggregate supply curve shifts right if

Accepted Answer

A) technology improves. 
B) the price level decreases. 
C) the money supply increases. 
D) All of the above are correct. 
A) technology improves. 
B) the price level decreases. 
C) the money supply increases. 
D) All of the above are correct.

Question 10

Which of the following shifts aggregate demand to the right?

Accepted Answer

A) Congress reduces purchases of new weapons systems. 
B) The Fed buys bonds in the open market. 
C) The price level falls. 
D) Net exports fall. 
A) Congress reduces purchases of new weapons systems. 
B) The Fed buys bonds in the open market. 
C) The price level falls. 
D) Net exports fall.

Question 11

The initial impact of the repeal of 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 12

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

Accepted Answer

A) relative to prices wages are higher and employment rise. 
B) relative to prices wages are higher and employment falls. 
C) relative to prices wages are lower and employment rises. 
D) relative to prices wages are lower and employment falls. 
A) relative to prices wages are higher and employment rise. 
B) relative to prices wages are higher and employment falls. 
C) relative to prices wages are lower and employment rises. 
D) relative to prices wages are lower and employment falls.

Question 13

Consider the exhibit below for the following questions.
Figure 33-4  
-Refer to Figure 33-4. If the economy starts at A, a decrease in the money supply moves the economy

Accepted Answer

A) to A in the long run. 
B) to C in the long run. 
C) back to A in the long run. 
D) to D in the long run. 
A) to A in the long run. 
B) to C in the long run. 
C) back to A in the long run. 
D) to D in the long run.

Question 14

If aggregate demand and aggregate supply both shift right, we can be sure that the price level is higher in the short run.

Accepted Answer

A) True 
 B)False

Question 15

Other things the same, if the price level falls, people

Accepted Answer

A) increase foreign bond purchases, so the dollar appreciates. 
B) increase foreign bond purchases, so the dollar depreciates. 
C) increase domestic bond purchases, so the dollar appreciates. 
D) increase domestic bond purchases, so the dollar depreciates. 
A) increase foreign bond purchases, so the dollar appreciates. 
B) increase foreign bond purchases, so the dollar depreciates. 
C) increase domestic bond purchases, so the dollar appreciates. 
D) increase domestic bond purchases, so the dollar depreciates.

Question 16

Which of the following typically rises during a recession?

Accepted Answer

A) investment. 
B) unemployment. 
C) tax revenues. 
D) new home construction. 
A) investment. 
B) unemployment. 
C) tax revenues. 
D) new home construction.

Question 17

A change in the supply of labor, all else remaining the same, will shift the short-run aggregate-supply curve.​

Accepted Answer

A) True 
 B)False

Question 18

Which of the following would raise the price level in both the short and long run?

Accepted Answer

A) an increase in taxes 
B) an increase in government expenditures 
C) a decrease in the minimum wage 
D) an increase in the capital stock 
A) an increase in taxes 
B) an increase in government expenditures 
C) a decrease in the minimum wage 
D) an increase in the capital stock

Question 19

The recessions of the 1970s are often attributed to

Accepted Answer

A) declining inflation expectations. 
B) an increase in oil prices. 
C) declines in the price of stock. 
D) decreases in the money supply. 
A) declining inflation expectations. 
B) an increase in oil prices. 
C) declines in the price of stock. 
D) decreases in the money supply.

Question 20

When the price level falls

Accepted Answer

A) people want to hold more money. 
B) the interest rate rises. 
C) investment spending rises. 
D) All of the above are correct. 
A) people want to hold more money. 
B) the interest rate rises. 
C) investment spending rises. 
D) All of the above are correct.

Exam 33: Aggregate Demand and Aggregate Supply

Other things the same, if the price level falls, domestic interest rates

Tax cuts shift aggregate demand

Which of the following correctly expresses why the short-run aggregate-supply curve slopes upward?

Other things the same, what happens in the long run to the price level and quantity of output after a contraction in aggregate demand?

If the dollar appreciates, perhaps because of speculation or government policy, then U.S. net exports

Refer to Pessimism. How is the new long-run equilibrium different from the original one?

Suppose the economy is in long-run equilibrium and the government decreases its expenditures. Which of the following helps explain the logic of why the economy moves back to long-run equilibrium?

Other things the same, if workers and firms expected inflation to be 2%, but it is only 1% then

The long-run aggregate supply curve shifts right if

Which of the following shifts aggregate demand to the right?

The initial impact of the repeal of an investment tax credit is to shift

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

Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4. If the economy starts at A, a decrease in the money supply moves the economy

If aggregate demand and aggregate supply both shift right, we can be sure that the price level is higher in the short run.

Other things the same, if the price level falls, people

Which of the following typically rises during a recession?

A change in the supply of labor, all else remaining the same, will shift the short-run aggregate-supply curve.​

Which of the following would raise the price level in both the short and long run?

The recessions of the 1970s are often attributed to

When the price level falls

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

A change in the supply of labor, all else remaining the same, will shift the short-run aggregate-supply curve.