Question 1

An increase in the money supply causes the interest rate to fall, investment spending to rise, and aggregate demand to shift right.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is most commonly used to monitor short-run changes in economic activity?

Accepted Answer

A) the inflation rate. 
B) real GDP. 
C) interest rates. 
D) value of the U.S. dollar in the foreign exchange market. 
A) the inflation rate. 
B) real GDP. 
C) interest rates. 
D) value of the U.S. dollar in the foreign exchange market.

Question 3

In 2009 Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right?

Accepted Answer

A) only the increased funding for states 
B) only the tax cuts 
C) both the increased funding for states and the tax cuts 
D) neither the increased funding for states nor the tax cuts 
A) only the increased funding for states 
B) only the tax cuts 
C) both the increased funding for states and the tax cuts 
D) neither the increased funding for states nor the tax cuts

Question 4

Other things the same, when the price level rises, interest rates

Accepted Answer

A) rise, which means consumers will want to spend more on homebuilding. 
B) rise, which means consumers will want to spend less on homebuilding. 
C) fall, which means consumers will want to spend more on homebuilding. 
D) fall, which means consumers will want to spend less on homebuilding. 
A) rise, which means consumers will want to spend more on homebuilding. 
B) rise, which means consumers will want to spend less on homebuilding. 
C) fall, which means consumers will want to spend more on homebuilding. 
D) fall, which means consumers will want to spend less on homebuilding.

Question 5

Other things the same, if the U.S. price level falls, then

Accepted Answer

A) U.S. residents want to buy more foreign bonds. The real exchange rate rises. 
B) U.S. residents want to buy more foreign bonds. The real exchange rate falls. 
C) U.S. residents want to buy fewer foreign bonds. The real exchange rate rises. 
D) U.S. residents want to buy fewer foreign bonds. The real exchange rate falls. 
A) U.S. residents want to buy more foreign bonds. The real exchange rate rises. 
B) U.S. residents want to buy more foreign bonds. The real exchange rate falls. 
C) U.S. residents want to buy fewer foreign bonds. The real exchange rate rises. 
D) U.S. residents want to buy fewer foreign bonds. The real exchange rate falls.

Question 6

The model of aggregate demand and aggregate supply is nothing more than a large version of the model of market demand and market supply.​

Accepted Answer

A) True 
 B)False

Question 7

​Imagine the U.S. economy is in long-run equilibrium. Then suppose the aggregate demand increases. We would expect that in the long-run the price level would

Accepted Answer

A) ​increase. 
B) ​decrease. 
C) ​stay the same. 
D) ​decrease by the same amount as the increase in aggregate demand. 
A) ​increase. 
B) ​decrease. 
C) ​stay the same. 
D) ​decrease by the same amount as the increase in aggregate demand.

Question 8

Which of the following decreases during recessions?​

Accepted Answer

A) ​real GDP 
B) ​unemployment 
C) ​layoffs and consumer spending 
D) ​layoffs but not consumer spending 
A) ​real GDP 
B) ​unemployment 
C) ​layoffs and consumer spending 
D) ​layoffs but not consumer spending

Question 9

If the dollar depreciates because of speculation or government policy, U.S.

Accepted Answer

A) aggregate demand shifts left. U.S. aggregate demand also shifts left if other countries experience an increase in real GDP. 
B) aggregate demand shifts left. U.S. aggregate demand shifts right if other countries experience an increase in real GDP. 
C) aggregate demand shifts right. U.S. aggregate demand also shifts right if other countries experience a decrease in real GDP. 
D) aggregate demand shifts right. U.S. aggregate demand shifts left if other countries experience a decrease in real GDP. 
A) aggregate demand shifts left. U.S. aggregate demand also shifts left if other countries experience an increase in real GDP. 
B) aggregate demand shifts left. U.S. aggregate demand shifts right if other countries experience an increase in real GDP. 
C) aggregate demand shifts right. U.S. aggregate demand also shifts right if other countries experience a decrease in real GDP. 
D) aggregate demand shifts right. U.S. aggregate demand shifts left if other countries experience a decrease in real GDP.

Question 10

Technological progress shifts the long-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 11

Part of the explanation for why the aggregate-demand curve slopes downward is that a decrease in the price level

Accepted Answer

A) decreases the real value of money. 
B) increases the real value of the dollar in foreign exchange markets. 
C) decreases the interest rate. 
D) All of the above are correct. 
A) decreases the real value of money. 
B) increases the real value of the dollar in foreign exchange markets. 
C) decreases the interest rate. 
D) All of the above are correct.

Question 12

The quantity of money has no real impact on things people really care about like whether or not they have a job. Most economists would agree that this statement is appropriate concerning

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 13

The theory of short-run economic fluctuations is uncontroversial.​

Accepted Answer

A) True 
 B)False

Question 14

Other things the same, the aggregate quantity of goods demanded decreases if

Accepted Answer

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

Question 15

If there are floods or droughts or a decrease in the availability of raw materials

Accepted Answer

A) aggregate supply shifts right. 
B) output falls in the short run. 
C) prices fall in the short run. 
D) None of the above is correct. 
A) aggregate supply shifts right. 
B) output falls in the short run. 
C) prices fall in the short run. 
D) None of the above is correct.

Question 16

Which part of real GDP fluctuates most over the course of the business cycle?

Accepted Answer

A) consumption expenditures 
B) government expenditures 
C) investment expenditures 
D) net exports 
A) consumption expenditures 
B) government expenditures 
C) investment expenditures 
D) net exports

Question 17

When the price level rises more than expected, a firm with a sticky price will sell its output at a price that is

Accepted Answer

A) less than it desires and increase its production. 
B) less than it desires and decrease its production. 
C) more than it desires and increase its production. 
D) Less than it desires and decrease its production. 
A) less than it desires and increase its production. 
B) less than it desires and decrease its production. 
C) more than it desires and increase its production. 
D) Less than it desires and decrease its production.

Question 18

Other things the same, if technology increases, then in the long run

Accepted Answer

A) both output and prices are higher. 
B) output is higher and prices are lower. 
C) output is lower and prices are higher. 
D) both output and prices are lower. 
A) both output and prices are higher. 
B) output is higher and prices are lower. 
C) output is lower and prices are higher. 
D) both output and prices are lower.

Question 19

Suppose speculators lost confidence in foreign economies and bought more U.S. bonds. How would this affect net exports in the U.S., and which way would this cause the aggregate demand curve to shift?

Accepted Answer

Net exports would fa

Question 20

When the price level falls, people want to

Accepted Answer

A) hold more money and the quantity of aggregate goods and services demanded increases. 
B) hold more money and the quantity of aggregate goods and services demanded decreases. 
C) hold less money and the quantity of aggregate goods and services demanded increases. 
D) hold less money and the quantity of aggregate goods and services demanded decreases. 
A) hold more money and the quantity of aggregate goods and services demanded increases. 
B) hold more money and the quantity of aggregate goods and services demanded decreases. 
C) hold less money and the quantity of aggregate goods and services demanded increases. 
D) hold less money and the quantity of aggregate goods and services demanded decreases.

Exam 33: Aggregate Demand and Aggregate Supply

An increase in the money supply causes the interest rate to fall, investment spending to rise, and aggregate demand to shift right.

Which of the following is most commonly used to monitor short-run changes in economic activity?

In 2009 Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right?

Other things the same, when the price level rises, interest rates

Other things the same, if the U.S. price level falls, then

The model of aggregate demand and aggregate supply is nothing more than a large version of the model of market demand and market supply.​

​Imagine the U.S. economy is in long-run equilibrium. Then suppose the aggregate demand increases. We would expect that in the long-run the price level would

Which of the following decreases during recessions?​

If the dollar depreciates because of speculation or government policy, U.S.

Technological progress shifts the long-run aggregate supply curve to the right.

Part of the explanation for why the aggregate-demand curve slopes downward is that a decrease in the price level

The quantity of money has no real impact on things people really care about like whether or not they have a job. Most economists would agree that this statement is appropriate concerning

The theory of short-run economic fluctuations is uncontroversial.​

Other things the same, the aggregate quantity of goods demanded decreases if

If there are floods or droughts or a decrease in the availability of raw materials

Which part of real GDP fluctuates most over the course of the business cycle?

When the price level rises more than expected, a firm with a sticky price will sell its output at a price that is

Other things the same, if technology increases, then in the long run

Suppose speculators lost confidence in foreign economies and bought more U.S. bonds. How would this affect net exports in the U.S., and which way would this cause the aggregate demand curve to shift?

When the price level falls, people want to

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

The model of aggregate demand and aggregate supply is nothing more than a large version of the model of market demand and market supply.

Imagine the U.S. economy is in long-run equilibrium. Then suppose the aggregate demand increases. We would expect that in the long-run the price level would

Which of the following decreases during recessions?

The theory of short-run economic fluctuations is uncontroversial.