Question 1

An increase in labor's productivity will cause the SRAS curve to shift __________ and the price level to __________.

Accepted Answer

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

Question 2

Which of the following statements is false?

Accepted Answer

A) An increase in wage rates causes producers to move up along the SRAS curve. 
B) An increase in the price level causes producers to move up along the SRAS curve. 
C) The short-run aggregate supply (SRAS) curve is upward sloping. 
D) The long-run aggregate supply (LRAS) curve is vertical. 
A) An increase in wage rates causes producers to move up along the SRAS curve. 
B) An increase in the price level causes producers to move up along the SRAS curve. 
C) The short-run aggregate supply (SRAS) curve is upward sloping. 
D) The long-run aggregate supply (LRAS) curve is vertical.

Question 3

If businesses buy fewer capital goods, and nothing else changes, then total expenditures on U.S. goods and services will decrease. And if total expenditures decrease, then __________ will decrease; consequently, the __________ curve will shift __________.

Accepted Answer

A) aggregate demand (A
D) ; AD; rightward 
B) short-run aggregate supply (SRAS); SRAS; leftward 
C) aggregate demand (A
D) ; AD; leftward 
D) interest rates; AD; leftward 
E) prices; AD; rightward 
A) aggregate demand (A
D) ; AD; rightward 
B) short-run aggregate supply (SRAS); SRAS; leftward 
C) aggregate demand (A
D) ; AD; leftward 
D) interest rates; AD; leftward 
E) prices; AD; rightward

Question 4

Suppose the price level is rising and it is widely forecast to rise even further. This forecast might cause __________ of some consumption plans, resulting in __________ the AD curve.

Accepted Answer

A) postponement; a rightward shift of 
B) postponement; a leftward shift of 
C) acceleration; a rightward shift of 
D) acceleration; movement down along 
A) postponement; a rightward shift of 
B) postponement; a leftward shift of 
C) acceleration; a rightward shift of 
D) acceleration; movement down along

Question 5

Business taxes fall. This raises __________, which raises __________ and the __________ curve shifts rightward.

Accepted Answer

A) consumption; aggregate demand (A
D) ; AD 
B) investment; government purchases; AD 
C) investment; aggregate demand (A
D) ; AD 
D) net exports; aggregate demand (A
D) ; AD 
E) none of the above 
A) consumption; aggregate demand (A
D) ; AD 
B) investment; government purchases; AD 
C) investment; aggregate demand (A
D) ; AD 
D) net exports; aggregate demand (A
D) ; AD 
E) none of the above

Question 6

Exhibit 8-1
  
-Refer to Exhibit 8-1. If we assume that Real GDP and the unemployment rate are inversely related, which of the points on this graph is most likely representative of the highest unemployment rate?

Accepted Answer

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

Question 7

In the short run, an increase in investment, ceteris paribus, shifts the

Accepted Answer

A) AD curve to the right, causing equilibrium price level to rise and equilibrium Real GDP to increase. 
B) AD curve to the left, causing equilibrium price level to fall and equilibrium Real GDP to decrease. 
C) SRAS curve to the right, causing equilibrium price level to fall and equilibrium Real GDP to increase. 
D) SRAS curve to the left, causing equilibrium price level to rise and equilibrium Real GDP to decrease. 
A) AD curve to the right, causing equilibrium price level to rise and equilibrium Real GDP to increase. 
B) AD curve to the left, causing equilibrium price level to fall and equilibrium Real GDP to decrease. 
C) SRAS curve to the right, causing equilibrium price level to fall and equilibrium Real GDP to increase. 
D) SRAS curve to the left, causing equilibrium price level to rise and equilibrium Real GDP to decrease.

Question 8

An increase in the price level

Accepted Answer

A) shifts the AD curve to the right. 
B) shifts the AD curve to the left. 
C) causes an upward movement along the existing AD curve. 
D) causes a downward movement along the existing AD curve. 
E) a and c 
A) shifts the AD curve to the right. 
B) shifts the AD curve to the left. 
C) causes an upward movement along the existing AD curve. 
D) causes a downward movement along the existing AD curve. 
E) a and c

Question 9

Suppose the real exchange rate of 115 Japanese yen to the dollar changes to 105 yen to the dollar. In this situation, the dollar has __________, making Japanese goods __________ expensive for Americans.

Accepted Answer

A) appreciated; less 
B) appreciated; more 
C) depreciated; less 
D) depreciated; more 
A) appreciated; less 
B) appreciated; more 
C) depreciated; less 
D) depreciated; more

Question 10

An economic policy initiative results in the AD curve shifting to the right. As a result,

Accepted Answer

A) the price level will rise. 
B) the price level will stay constant. 
C) the price level will fall. 
D) Real GDP will rise in the short run. 
E) a and d 
A) the price level will rise. 
B) the price level will stay constant. 
C) the price level will fall. 
D) Real GDP will rise in the short run. 
E) a and d

Question 11

A change in Real GDP in the short run can be brought about by a change in

Accepted Answer

A) the exchange rate. 
B) labor productivity. 
C) expectations of future sales. 
D) wealth. 
E) all of the above 
A) the exchange rate. 
B) labor productivity. 
C) expectations of future sales. 
D) wealth. 
E) all of the above

Question 12

Wage rates fall. This increases __________ and the __________ curve shifts rightward.

Accepted Answer

A) aggregate demand (A
D) ; AD 
B) short-run aggregate supply (SRAS); AD 
C) short-run aggregate supply (SRAS); SRAS 
D) employment; AD 
E) none of the above 
A) aggregate demand (A
D) ; AD 
B) short-run aggregate supply (SRAS); AD 
C) short-run aggregate supply (SRAS); SRAS 
D) employment; AD 
E) none of the above

Question 13

Explain how aggregate demand and aggregate supply may affect your job prospects after you leave college. Support your answer with an appropriate example.

Accepted Answer

The ability to find a job depe

Question 14

The change in the purchasing power of dollar-denominated assets (such as cash holdings) is the

Accepted Answer

A) money effect. 
B) interest rate effect. 
C) asset effect. 
D) real balance effect. 
E) none of the above 
A) money effect. 
B) interest rate effect. 
C) asset effect. 
D) real balance effect. 
E) none of the above

Question 15

When the government lowers income taxes, consumption is ______________, causing a __________ the AD curve.

Accepted Answer

A) stimulated; rightward shift of 
B) stimulated; movement down along 
C) reduced; leftward shift of 
D) reduced; movement up along 
A) stimulated; rightward shift of 
B) stimulated; movement down along 
C) reduced; leftward shift of 
D) reduced; movement up along

Question 16

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) a decrease in interest rates (which was not prompted by a change in the price level). 
D) an increase in interest rates (which was not prompted by a change in the price level). 
A) a decrease in the price level. 
B) an increase in the price level. 
C) a decrease in interest rates (which was not prompted by a change in the price level). 
D) an increase in interest rates (which was not prompted by a change in the price level).

Question 17

There is a rise in labor productivity in the economy. As a result, in the short run Real GDP __________ and the price level __________.

Accepted Answer

A) rises; falls 
B) falls; rises 
C) falls; falls 
D) rises; rises 
E) remains constant; remains constant 
A) rises; falls 
B) falls; rises 
C) falls; falls 
D) rises; rises 
E) remains constant; remains constant

Question 18

Aggregate demand curves are

Accepted Answer

A) downward sloping. 
B) upward sloping. 
C) horizontal. 
D) vertical. 
A) downward sloping. 
B) upward sloping. 
C) horizontal. 
D) vertical.

Question 19

The real balance effect helps to explain "a change in

Accepted Answer

A) aggregate demand." 
B) the quantity demanded of Real GDP." 
C) aggregate supply." 
D) the quantity supplied of Real GDP." 
A) aggregate demand." 
B) the quantity demanded of Real GDP." 
C) aggregate supply." 
D) the quantity supplied of Real GDP."

Question 20

Which of the following statements represents a correct and sequentially accurate economic explanation?

Accepted Answer

A) If consumption falls, total expenditures on goods and services rises, and the AD curve shifts leftward. 
B) If investment increases, total expenditures on goods and services falls, and the AD curve shifts leftward. 
C) If net exports rise, total expenditures on goods and services rises, and the AD curve shifts rightward. 
D) If consumption falls, total expenditures on goods and services falls, and the AD curve shifts leftward. 
E) c and d 
A) If consumption falls, total expenditures on goods and services rises, and the AD curve shifts leftward. 
B) If investment increases, total expenditures on goods and services falls, and the AD curve shifts leftward. 
C) If net exports rise, total expenditures on goods and services rises, and the AD curve shifts rightward. 
D) If consumption falls, total expenditures on goods and services falls, and the AD curve shifts leftward. 
E) c and d

Exam 8: Aggregate Demand and Aggregate Supply

An increase in labor's productivity will cause the SRAS curve to shift __________ and the price level to __________.

Which of the following statements is false?

If businesses buy fewer capital goods, and nothing else changes, then total expenditures on U.S. goods and services will decrease. And if total expenditures decrease, then __________ will decrease; consequently, the __________ curve will shift __________.

Suppose the price level is rising and it is widely forecast to rise even further. This forecast might cause __________ of some consumption plans, resulting in __________ the AD curve.

Business taxes fall. This raises __________, which raises __________ and the __________ curve shifts rightward.

Exhibit 8-1 -Refer to Exhibit 8-1. If we assume that Real GDP and the unemployment rate are inversely related, which of the points on this graph is most likely representative of the highest unemployment rate?

In the short run, an increase in investment, ceteris paribus, shifts the

An increase in the price level

Suppose the real exchange rate of 115 Japanese yen to the dollar changes to 105 yen to the dollar. In this situation, the dollar has __________, making Japanese goods __________ expensive for Americans.

An economic policy initiative results in the AD curve shifting to the right. As a result,

A change in Real GDP in the short run can be brought about by a change in

Wage rates fall. This increases __________ and the __________ curve shifts rightward.

Explain how aggregate demand and aggregate supply may affect your job prospects after you leave college. Support your answer with an appropriate example.

The change in the purchasing power of dollar-denominated assets (such as cash holdings) is the

When the government lowers income taxes, consumption is ______________, causing a __________ the AD curve.

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

There is a rise in labor productivity in the economy. As a result, in the short run Real GDP __________ and the price level __________.

Aggregate demand curves are

The real balance effect helps to explain "a change in

Which of the following statements represents a correct and sequentially accurate economic explanation?

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

An increase in labor's productivity will cause the SRAS curve to shift and the price level to .

If businesses buy fewer capital goods, and nothing else changes, then total expenditures on U.S. goods and services will decrease. And if total expenditures decrease, then will decrease; consequently, the curve will shift __.

Suppose the price level is rising and it is widely forecast to rise even further. This forecast might cause of some consumption plans, resulting in the AD curve.

Business taxes fall. This raises , which raises and the __ curve shifts rightward.

Suppose the real exchange rate of 115 Japanese yen to the dollar changes to 105 yen to the dollar. In this situation, the dollar has , making Japanese goods expensive for Americans.

Wage rates fall. This increases and the curve shifts rightward.

When the government lowers income taxes, consumption is ____, causing a the AD curve.

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

There is a rise in labor productivity in the economy. As a result, in the short run Real GDP and the price level .