Question 1

If aggregate quantity supplied is greater than aggregate quantity demanded at a particular price level, then a

Accepted Answer

A) shortage exists and consumers will bid the price level up. 
B) surplus exists and consumers will bid the price level up. 
C) surplus exists and the price level will decline. 
D) shortage exists and the price level will decline. 
E) c and d 
A) shortage exists and consumers will bid the price level up. 
B) surplus exists and consumers will bid the price level up. 
C) surplus exists and the price level will decline. 
D) shortage exists and the price level will decline. 
E) c and d

Question 2

If total expenditures fall at a given price level, then the

Accepted Answer

A) quantity demanded of Real GDP rises. 
B) quantity demanded of Real GDP falls. 
C) AD curves shifts to the right. 
D) AD curve shifts to the left. 
E) none of the above 
A) quantity demanded of Real GDP rises. 
B) quantity demanded of Real GDP falls. 
C) AD curves shifts to the right. 
D) AD curve shifts to the left. 
E) none of the above

Question 3

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

Accepted Answer

A) a decrease in the price level. 
B) an increase in the price level. 
C) businesses become more optimistic about future sales. 
D) businesses become more pessimistic about future sales. 
A) a decrease in the price level. 
B) an increase in the price level. 
C) businesses become more optimistic about future sales. 
D) businesses become more pessimistic about future sales.

Question 4

Assume that the economy is currently in short-run equilibrium, then personal income taxes decline. Describe the correct sequence of events that happen as the economy adjusts to a new short-run equilibrium (be sure to state what the impact would be on the price level and Real GDP).

Accepted Answer

As personal income taxes decline, househ

Question 5

A decrease in the price of a nonlabor input such as machinery

Accepted Answer

A) shifts the SRAS curve to the right. 
B) shifts the SRAS curve to the left. 
C) causes an upward movement along the existing SRAS curve. 
D) causes a downward movement along the existing SRAS curve. 
E) none of the above 
A) shifts the SRAS curve to the right. 
B) shifts the SRAS curve to the left. 
C) causes an upward movement along the existing SRAS curve. 
D) causes a downward movement along the existing SRAS curve. 
E) none of the above

Question 6

The AD curve shows the various amounts of real output that people are willing and able to

Accepted Answer

A) buy at different income levels. 
B) buy at different price levels. 
C) sell at different profit levels. 
D) sell at different price levels. 
E) none of the above 
A) buy at different income levels. 
B) buy at different price levels. 
C) sell at different profit levels. 
D) sell at different price levels. 
E) none of the above

Question 7

Which of the following statements is false?

Accepted Answer

A) Aggregate demand is a specific dollar amount, such as $400 billion. 
B) At a given price level, anything that changes total expenditures changes aggregate demand. 
C) Total expenditures rises if consumption rises, ceteris paribus. 
D) Total expenditures rises if investment spending rises, ceteris paribus. 
A) Aggregate demand is a specific dollar amount, such as $400 billion. 
B) At a given price level, anything that changes total expenditures changes aggregate demand. 
C) Total expenditures rises if consumption rises, ceteris paribus. 
D) Total expenditures rises if investment spending rises, ceteris paribus.

Question 8

The aggregate demand (AD) curve has shifted to the right. This is a result of

Accepted Answer

A) total expenditures increasing at a given price level. 
B) total expenditures decreasing at a given price level. 
C) the real balance effect. 
D) the interest rate effect 
E) b and c 
A) total expenditures increasing at a given price level. 
B) total expenditures decreasing at a given price level. 
C) the real balance effect. 
D) the interest rate effect 
E) b and c

Question 9

The nominal wage is $40 an hour and the price level as measured by a price index is 2.00. If the nominal wage falls to $30 and the price index declines to 1.50, according to the worker misperception explanation of the upward-sloping SRAS curve, workers will initially perceive the

Accepted Answer

A) real wage as something greater than $20. 
B) real wage as something less than $20. 
C) real wage as $20. 
D) nominal wage as something more than $30. 
E) nominal wage as something less than $30. 
A) real wage as something greater than $20. 
B) real wage as something less than $20. 
C) real wage as $20. 
D) nominal wage as something more than $30. 
E) nominal wage as something less than $30.

Question 10

Suppose the real exchange rate of 10 Mexican pesos to the dollar changes to 9 pesos to the dollar. In this situation, the dollar has ________________, making Mexican 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 11

If foreign real national income rises, the U.S. ____________ curve shifts _____________. When labor productivity increases the _____________ curve shifts _______________. If both of these situations occur simultaneously, the combined result would be a(n) ______________ the price level and a(n) __________________ Real GDP in the United States.

Accepted Answer

A) AD; leftward; SRAS; rightward; decrease in; indeterminant impact on 
B) AD; rightward; SRAS; leftward; increase in; indeterminant impact on 
C) SRAS; leftward; SRAS rightward; indeterminant impact on; indeterminat impact on 
D) AD; rightward; SRAS; rightward; indeterminant impact on; increase in 
A) AD; leftward; SRAS; rightward; decrease in; indeterminant impact on 
B) AD; rightward; SRAS; leftward; increase in; indeterminant impact on 
C) SRAS; leftward; SRAS rightward; indeterminant impact on; indeterminat impact on 
D) AD; rightward; SRAS; rightward; indeterminant impact on; increase in

Question 12

As the price level falls, ceteris paribus, people holding some of their wealth in monetary form become

Accepted Answer

A) less wealthy and they buy less. 
B) more wealthy and they buy more. 
C) less wealthy and they buy more. 
D) more wealthy and they buy less. 
A) less wealthy and they buy less. 
B) more wealthy and they buy more. 
C) less wealthy and they buy more. 
D) more wealthy and they buy less.

Question 13

A change in labor productivity shifts the __________ curve and a change in the exchange rate shifts the __________ curve.

Accepted Answer

A) SRAS; SRAS 
B) AD; AD 
C) SRAS; AD 
D) AD; SRAS 
E) none of the above 
A) SRAS; SRAS 
B) AD; AD 
C) SRAS; AD 
D) AD; SRAS 
E) none of the above

Question 14

The product of ____________________ and _________________ is equal to the total amount of spending in an economy.

Accepted Answer

A) the money supply; the price level 
B) velocity; the price level 
C) the money supply; velocity 
D) velocity; the level of output 
A) the money supply; the price level 
B) velocity; the price level 
C) the money supply; velocity 
D) velocity; the level of output

Question 15

An increase in the price of nonlabor inputs

Accepted Answer

A) shifts the AD curve leftward. 
B) shifts the SRAS curve leftward. 
C) is the same thing as a beneficial supply shock. 
D) shifts the AD curve rightward. 
E) shifts the SRAS curve rightward. 
A) shifts the AD curve leftward. 
B) shifts the SRAS curve leftward. 
C) is the same thing as a beneficial supply shock. 
D) shifts the AD curve rightward. 
E) shifts the SRAS curve rightward.

Question 16

Starting from short-run equilibrium, the following occurs: personal income taxes rise and foreign real national income rises. What is the effect on the price level and Real GDP in the short run?

Accepted Answer

A) The price level rises and Real GDP falls. 
B) The price level falls and Real GDP falls. 
C) The price level rises and Real GDP rises. 
D) The price level falls and Real GDP rises. 
E) There is not enough information to answer this question. 
A) The price level rises and Real GDP falls. 
B) The price level falls and Real GDP falls. 
C) The price level rises and Real GDP rises. 
D) The price level falls and Real GDP rises. 
E) There is not enough information to answer this question.

Question 17

One of the reasons why the AD curve slopes downward is that as the

Accepted Answer

A) price level rises, purchasing power rises. 
B) price level falls, purchasing power rises. 
C) nation's income level rises, purchasing power rises. 
D) nation's income level rises, purchasing power falls. 
E) This is a trick question, because the AD curve is upward sloping. 
A) price level rises, purchasing power rises. 
B) price level falls, purchasing power rises. 
C) nation's income level rises, purchasing power rises. 
D) nation's income level rises, purchasing power falls. 
E) This is a trick question, because the AD curve is upward sloping.

Question 18

An increase in the interest rate __________ purchases of consumer __________.

Accepted Answer

A) increases; durables 
B) increases; nondurables 
C) reduces; durables 
D) reduces; nondurables 
A) increases; durables 
B) increases; nondurables 
C) reduces; durables 
D) reduces; nondurables

Question 19

When wage rates rise the short-run aggregate supply curve shifts to the right.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) Business taxes rise, investment falls, total expenditures on goods and services falls, AD rises, and the AD curve shifts rightward. 
B) The dollar depreciates, net exports rise, total expenditures on goods and services rises, AD rises, and the AD curve shifts rightward. 
C) The interest rate falls, consumption rises, total expenditures on goods and services rises, AD rises, and the AD curve shifts rightward. 
D) b and c 
E) a, b, and c 
A) Business taxes rise, investment falls, total expenditures on goods and services falls, AD rises, and the AD curve shifts rightward. 
B) The dollar depreciates, net exports rise, total expenditures on goods and services rises, AD rises, and the AD curve shifts rightward. 
C) The interest rate falls, consumption rises, total expenditures on goods and services rises, AD rises, and the AD curve shifts rightward. 
D) b and c 
E) a, b, and c

Exam 8: Aggregate Demand and Aggregate Supply

If aggregate quantity supplied is greater than aggregate quantity demanded at a particular price level, then a

If total expenditures fall at a given price level, then the

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

Assume that the economy is currently in short-run equilibrium, then personal income taxes decline. Describe the correct sequence of events that happen as the economy adjusts to a new short-run equilibrium (be sure to state what the impact would be on the price level and Real GDP).

A decrease in the price of a nonlabor input such as machinery

The AD curve shows the various amounts of real output that people are willing and able to

Which of the following statements is false?

The aggregate demand (AD) curve has shifted to the right. This is a result of

The nominal wage is $40 an hour and the price level as measured by a price index is 2.00. If the nominal wage falls to $30 and the price index declines to 1.50, according to the worker misperception explanation of the upward-sloping SRAS curve, workers will initially perceive the

Suppose the real exchange rate of 10 Mexican pesos to the dollar changes to 9 pesos to the dollar. In this situation, the dollar has ________________, making Mexican goods __________ expensive for Americans.

As the price level falls, ceteris paribus, people holding some of their wealth in monetary form become

A change in labor productivity shifts the __________ curve and a change in the exchange rate shifts the __________ curve.

The product of ____________________ and _________________ is equal to the total amount of spending in an economy.

An increase in the price of nonlabor inputs

Starting from short-run equilibrium, the following occurs: personal income taxes rise and foreign real national income rises. What is the effect on the price level and Real GDP in the short run?

One of the reasons why the AD curve slopes downward is that as the

An increase in the interest rate __________ purchases of consumer __________.

When wage rates rise the short-run aggregate supply curve shifts to the right.

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

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

Suppose the real exchange rate of 10 Mexican pesos to the dollar changes to 9 pesos to the dollar. In this situation, the dollar has ______, making Mexican goods expensive for Americans.

A change in labor productivity shifts the curve and a change in the exchange rate shifts the curve.

The product of ____ and _ is equal to the total amount of spending in an economy.

An increase in the interest rate purchases of consumer .