Question 1

The wage rate rises. As a result, in the short run Real GDP will __________ and the price level will __________.

Accepted Answer

A) rise; rise 
B) fall; fall 
C) remain constant; fall 
D) fall; rise 
E) rise; fall 
A) rise; rise 
B) fall; fall 
C) remain constant; fall 
D) fall; rise 
E) rise; fall D

Question 2

Exhibit 8-3
  
-Refer to Exhibit 8-3. A shift in aggregate demand from AD1 to AD2 could have been the result of

Accepted Answer

A) a decrease in the price level. 
B) an increase in the price level. 
C) an increase in foreign real national income. 
D) a decrease in foreign real national income. 
A) a decrease in the price level. 
B) an increase in the price level. 
C) an increase in foreign real national income. 
D) a decrease in foreign real national income. C

Question 3

If investment changes because of a change in the price level, then the

Accepted Answer

A) economy moves from one point on an AD curve to another point on the same curve. 
B) AD curve shifts. 
C) economy moves from one point on a SRAS curve to another point on the same curve. 
D) SRAS curve shifts. 
E) none of the above 
A) economy moves from one point on an AD curve to another point on the same curve. 
B) AD curve shifts. 
C) economy moves from one point on a SRAS curve to another point on the same curve. 
D) SRAS curve shifts. 
E) none of the above A

Question 4

Only a change in the price level can cause a movement from one point to another point along a given aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 5

If consumption increases,

Accepted Answer

A) the SRAS curve will shift rightward, which will push the price level up. 
B) the SRAS curve will shift leftward, which will push the price level up. 
C) the AD curve will shift leftward, which will push the price level down. 
D) the AD curve will shift rightward, which will push the price level up. 
A) the SRAS curve will shift rightward, which will push the price level up. 
B) the SRAS curve will shift leftward, which will push the price level up. 
C) the AD curve will shift leftward, which will push the price level down. 
D) the AD curve will shift rightward, which will push the price level up.

Question 6

If investment changes because of a change in a factor other than the price level, then the

Accepted Answer

A) economy moves from one point on an AD curve to another point on the same curve. 
B) AD curve shifts. 
C) economy moves from one point on a short-run aggregate supply (SRAS) curve to another point on the same curve. 
D) SRAS curve shifts. 
E) none of the above 
A) economy moves from one point on an AD curve to another point on the same curve. 
B) AD curve shifts. 
C) economy moves from one point on a short-run aggregate supply (SRAS) curve to another point on the same curve. 
D) SRAS curve shifts. 
E) none of the above

Question 7

If businesses are optimistic about future sales, the short-run aggregate supply curve will shift leftward.

Accepted Answer

A) True 
 B)False

Question 8

Exhibit 8-2
  
-Refer to Exhibit 8-2. What word (rises or falls) should go in blank (7) and blank (8), respectively, to summarize the resulting impact on short run equilibrium of the given change in the economy?

Accepted Answer

A) rises; rises 
B) falls; falls 
C) rises; falls 
D) falls; rises 
A) rises; rises 
B) falls; falls 
C) rises; falls 
D) falls; rises

Question 9

Suppose the following: (1) the wage rate rises, (2) the interest rate rises, (3) any change in AD is greater than any change in SRAS. Based on this information, in the short run Real GDP will __________ and the price level will __________.

Accepted Answer

A) rise; rise 
B) fall; rise 
C) fall; fall 
D) rise; fall 
A) rise; rise 
B) fall; rise 
C) fall; fall 
D) rise; fall

Question 10

After an adverse supply shock occurs, the ____________ curve shifts _____________ resulting in a(n) _________________ in the price level and a(n) ________________ in Real GDP.

Accepted Answer

A) AD; leftward; decrease; decrease 
B) AD; rightward; increase; increase 
C) SRAS; rightward; decrease; increase 
D) SRAS; leftward; increase; decrease 
A) AD; leftward; decrease; decrease 
B) AD; rightward; increase; increase 
C) SRAS; rightward; decrease; increase 
D) SRAS; leftward; increase; decrease

Question 11

The economy suffers an adverse supply shock. As a result, in the short run Real GDP will __________ and the price level will __________.

Accepted Answer

A) rise; rise 
B) fall; fall 
C) fall; remain constant 
D) fall; rise 
E) rise; fall 
A) rise; rise 
B) fall; fall 
C) fall; remain constant 
D) fall; rise 
E) rise; fall

Question 12

If wage rates fall at the same time that labor productivity increases, what is the effect on short-run aggregate supply (SRAS)?

Accepted Answer

A) SRAS falls. 
B) SRAS remains constant. 
C) SRAS rises. 
D) SRAS may rise, fall, or remain constant. 
A) SRAS falls. 
B) SRAS remains constant. 
C) SRAS rises. 
D) SRAS may rise, fall, or remain constant.

Question 13

When foreign real national income rises, domestic Real GDP rises, ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 14

As the dollar depreciates, foreign goods become more expensive for Americans to purchase.

Accepted Answer

A) True 
 B)False

Question 15

Personal income taxes rise. This lowers __________, which lowers __________ and the __________ curve shifts __________.

Accepted Answer

A) net exports; aggregate demand (A
D) ; AD; leftward 
B) consumption; short-run aggregate supply (SRAS); SRAS; rightward 
C) government revenue; net exports; AD; rightward 
D) consumption; aggregate demand (A
D) ; AD; leftward 
E) none of the above 
A) net exports; aggregate demand (A
D) ; AD; leftward 
B) consumption; short-run aggregate supply (SRAS); SRAS; rightward 
C) government revenue; net exports; AD; rightward 
D) consumption; aggregate demand (A
D) ; AD; leftward 
E) none of the above

Question 16

Exhibit 8-4
  
-Refer to Exhibit 8-4. A shift in short-run aggregate supply from SRAS1 to SRAS2 could have been the result of

Accepted Answer

A) a decrease in the price level. 
B) an increase in the price level. 
C) an adverse supply shock. 
D) a beneficial supply shock. 
A) a decrease in the price level. 
B) an increase in the price level. 
C) an adverse supply shock. 
D) a beneficial supply shock.

Question 17

A simultaneous rise in both aggregate demand and short-run aggregate supply will definitely

Accepted Answer

A) raise the price level, but there is not enough information provided to know how Real GDP will change. 
B) lower Real GDP, but there is not enough information provided to know how the price level will change. 
C) raise the price level and Real GDP. 
D) raise Real GDP, but there is not enough information provided to know how the price level will change. 
E) raise the price level and lower Real GDP. 
A) raise the price level, but there is not enough information provided to know how Real GDP will change. 
B) lower Real GDP, but there is not enough information provided to know how the price level will change. 
C) raise the price level and Real GDP. 
D) raise Real GDP, but there is not enough information provided to know how the price level will change. 
E) raise the price level and lower Real GDP.

Question 18

If velocity and the money supply are __________________, then when one component of spending rises another component of spending ________________.

Accepted Answer

A) constant; must fall 
B) constant; must rise 
C) rising; may not necessarily fall 
D) rising; must rise 
A) constant; must fall 
B) constant; must rise 
C) rising; may not necessarily fall 
D) rising; must rise

Question 19

If foreign input prices increase and the United States is a purchaser of those inputs, then the U.S.

Accepted Answer

A) AD curve will shift leftward and U.S.prices will fall. 
B) AD curve will shift rightward and U.S.prices will rise. 
C) SRAS curve will shift leftward and U.S.prices will rise. 
D) SRAS curve will shift rightward and U.S.prices will fall 
A) AD curve will shift leftward and U.S.prices will fall. 
B) AD curve will shift rightward and U.S.prices will rise. 
C) SRAS curve will shift leftward and U.S.prices will rise. 
D) SRAS curve will shift rightward and U.S.prices will fall

Question 20

Exhibit 8-1
  
-Refer to Exhibit 8-1. Assume that the economy is originally in equilibrium at point A. If businesses become more optimistic about future sales, at which point is the economy most likely to end up in the short run?

Accepted Answer

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

Exam 8: Aggregate Demand and Aggregate Supply

The wage rate rises. As a result, in the short run Real GDP will __________ and the price level will __________.

Exhibit 8-3 -Refer to Exhibit 8-3. A shift in aggregate demand from AD1 to AD2 could have been the result of

If investment changes because of a change in the price level, then the

Only a change in the price level can cause a movement from one point to another point along a given aggregate demand curve.

If consumption increases,

If investment changes because of a change in a factor other than the price level, then the

If businesses are optimistic about future sales, the short-run aggregate supply curve will shift leftward.

Exhibit 8-2 -Refer to Exhibit 8-2. What word (rises or falls) should go in blank (7) and blank (8), respectively, to summarize the resulting impact on short run equilibrium of the given change in the economy?

Suppose the following: (1) the wage rate rises, (2) the interest rate rises, (3) any change in AD is greater than any change in SRAS. Based on this information, in the short run Real GDP will __________ and the price level will __________.

After an adverse supply shock occurs, the ____________ curve shifts _____________ resulting in a(n) _________________ in the price level and a(n) ________________ in Real GDP.

The economy suffers an adverse supply shock. As a result, in the short run Real GDP will __________ and the price level will __________.

If wage rates fall at the same time that labor productivity increases, what is the effect on short-run aggregate supply (SRAS)?

When foreign real national income rises, domestic Real GDP rises, ceteris paribus.

As the dollar depreciates, foreign goods become more expensive for Americans to purchase.

Personal income taxes rise. This lowers __________, which lowers __________ and the __________ curve shifts __________.

Exhibit 8-4 -Refer to Exhibit 8-4. A shift in short-run aggregate supply from SRAS1 to SRAS2 could have been the result of

A simultaneous rise in both aggregate demand and short-run aggregate supply will definitely

If velocity and the money supply are __________________, then when one component of spending rises another component of spending ________________.

If foreign input prices increase and the United States is a purchaser of those inputs, then the U.S.

Exhibit 8-1 -Refer to Exhibit 8-1. Assume that the economy is originally in equilibrium at point A. If businesses become more optimistic about future sales, at which point is the economy most likely to end up in the short run?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II Gdp and Real Gdp

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability a Critique of the Self Regulating Economy

Fiscal Policy and the Federal Budget

Money Banking and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth Resources Technology Ideas and Institutions

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition Oligopoly and Game Theory

Government and Product Markets Antitrust and Regulation

Factor Markets With Emphasis on the Labor Market

Wages Unions and Labor

The Distribution of Income and Poverty

Interest Rent and Profit

Market Failure Externalities Public Goods and Asymmetric Information

Public Choice and Special Interest Group Politics

Building Theories to Explain Everyday Life From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government Five Topics Considered

Stocks Bonds Futures and Options

Filters

The wage rate rises. As a result, in the short run Real GDP will and the price level will .

Exhibit 8-3 -Refer to Exhibit 8-3. A shift in aggregate demand from AD₁ to AD₂ could have been the result of

Suppose the following: (1) the wage rate rises, (2) the interest rate rises, (3) any change in AD is greater than any change in SRAS. Based on this information, in the short run Real GDP will and the price level will .

After an adverse supply shock occurs, the ______ curve shifts _ resulting in a(n) _ in the price level and a(n) ______ in Real GDP.

The economy suffers an adverse supply shock. As a result, in the short run Real GDP will and the price level will .

Personal income taxes rise. This lowers , which lowers and the curve shifts .

Exhibit 8-4 -Refer to Exhibit 8-4. A shift in short-run aggregate supply from SRAS₁ to SRAS₂ could have been the result of

If velocity and the money supply are __, then when one component of spending rises another component of spending .