Question 1

Aggregate demand is determined by adding up the spending of

Accepted Answer

A)  domestic consumers who buy goods and services produced in the United States. 
B)  domestic consumers and firms that buy goods and services produced in the United States. 
C)  domestic and foreign consumers who buy goods and services produced in the United States. 
D)  domestic and foreign consumers and firms that buy goods and services produced in the United States. 
E)  consumers, firms, the government, and foreigners that buy goods and services produced in the United States. 
A)  domestic consumers who buy goods and services produced in the United States. 
B)  domestic consumers and firms that buy goods and services produced in the United States. 
C)  domestic and foreign consumers who buy goods and services produced in the United States. 
D)  domestic and foreign consumers and firms that buy goods and services produced in the United States. 
E)  consumers, firms, the government, and foreigners that buy goods and services produced in the United States.

Question 2

What happens to investment spending when the price level rises? Explain and illustrate using a loanable funds market graph.

Accepted Answer

@#IMG-DLM& An increase in the price level results

Question 3

An increase in long-run aggregate supply can be expected to________ the price level and_______ the natural rate of unemployment.

Accepted Answer

A)  have no effect on; have no effect on 
B)  have no effect on; increase 
C)  decrease; decrease 
D)  decrease; have no effect on 
E)  increase; have no effect on 
A)  have no effect on; have no effect on 
B)  have no effect on; increase 
C)  decrease; decrease 
D)  decrease; have no effect on 
E)  increase; have no effect on

Question 4

When firms invest less because people are saving less, it is called the ______effect.

Accepted Answer

A)  wealth 
B)  international trade 
C)  interest rate 
D)  savings 
E)  investment 
A)  wealth 
B)  international trade 
C)  interest rate 
D)  savings 
E)  investment

Question 5

If consumers decide to save a larger percentage of their incomes, it will be

Accepted Answer

A)  harmful in the long run because the price level will rise. 
B)  beneficial in the short run because saving will rise. 
C)  beneficial in the long run because interest rates will fall. 
D)  harmful in the long run because aggregate supply will fall. 
E)  harmful in the long run because unemployment will increase. 
A)  harmful in the long run because the price level will rise. 
B)  beneficial in the short run because saving will rise. 
C)  beneficial in the long run because interest rates will fall. 
D)  harmful in the long run because aggregate supply will fall. 
E)  harmful in the long run because unemployment will increase.

Question 6

Suppose a country's population is growing due to immigration. In the long run, output will_____ due to______ .

Accepted Answer

A)  increase; an increase in both long-run and short-run aggregate supply 
B)  increase; an increase in long-run aggregate supply 
C)  increase; an increase in aggregate demand 
D)  increase; an increase in short-run aggregate supply 
E)  remain unaffected; price adjustment 
A)  increase; an increase in both long-run and short-run aggregate supply 
B)  increase; an increase in long-run aggregate supply 
C)  increase; an increase in aggregate demand 
D)  increase; an increase in short-run aggregate supply 
E)  remain unaffected; price adjustment

Question 7

An increase in aggregate demand is harmful because

Accepted Answer

A)  workers with sticky wages are paying more for goods and services. 
B)  firms have sticky input prices and earn less profit. 
C)  unemployment rises. 
D)  output has risen above the full-employment level. 
E)  wages will have to fall in the long run. 
A)  workers with sticky wages are paying more for goods and services. 
B)  firms have sticky input prices and earn less profit. 
C)  unemployment rises. 
D)  output has risen above the full-employment level. 
E)  wages will have to fall in the long run.

Question 8

What happens to consumption spending when the price level rises? Explain.

Accepted Answer

An increase in the price level results i

Question 9

Refer to the following figure to answer the next questions.
  
-Based on the figure, if the economy starts at point A and ends up at point E, then in the short run, there was a(n)

Accepted Answer

A)  decrease in aggregate demand. 
B)  increase in aggregate demand. 
C)  decrease in short-run aggregate supply. 
D)  increase in short-run aggregate supply. 
E)  increase in long-run aggregate supply. 
A)  decrease in aggregate demand. 
B)  increase in aggregate demand. 
C)  decrease in short-run aggregate supply. 
D)  increase in short-run aggregate supply. 
E)  increase in long-run aggregate supply.

Question 10

In 2013, the price of gas was $3.60 per gallon, and in 2016, the price of gas was $2.05 per gallon. Since one would be spending less on gas in 2016 than in 2013, one would have more to spend on other goods and services. All else the same, this is an example of the _____effect.

Accepted Answer

A)  wealth 
B)  net export 
C)  consumption 
D)  interest rate 
E)  oil price 
A)  wealth 
B)  net export 
C)  consumption 
D)  interest rate 
E)  oil price

Question 11

Explain how a change in real wealth can sometimes cause a movement along the aggregate demand curve and how sometimes it can cause a shift of the aggregate demand curve.

Accepted Answer

Real wealth can change for different rea

Question 12

Refer to the following figure to answer the next questions.
  
-Based on the figure, which points represent short-run equilibrium but not long-run equilibrium?

Accepted Answer

A)  A and B 
B)  A and C 
C)  A and D 
D)  B and D 
E)  A, B, C, and D 
A)  A and B 
B)  A and C 
C)  A and D 
D)  B and D 
E)  A, B, C, and D

Question 13

If large emerging economies continue to grow rapidly, we can expect U.S. aggregate

Accepted Answer

A)  demand to increase. 
B)  demand to decrease. 
C)  supply to increase. 
D)  supply to decrease. 
E)  demand and supply to be unaffected. 
A)  demand to increase. 
B)  demand to decrease. 
C)  supply to increase. 
D)  supply to decrease. 
E)  demand and supply to be unaffected.

Question 14

_____would cause a rightward shift of the aggregate demand curve.

Accepted Answer

A)  A decrease in the expected price level 
B)  A decrease in foreign income 
C)  An increase in expected income 
D)  A decrease in real wealth 
E)  An increase in the value of the dollar 
A)  A decrease in the expected price level 
B)  A decrease in foreign income 
C)  An increase in expected income 
D)  A decrease in real wealth 
E)  An increase in the value of the dollar

Question 15

When median home prices rise, the value of real wealth _________and aggregate demand_______ .

Accepted Answer

A)  increases; is unaffected 
B)  increases; increases 
C)  increases; decreases 
D)  decreases; decreases 
E)  is unaffected; is unaffected 
A)  increases; is unaffected 
B)  increases; increases 
C)  increases; decreases 
D)  decreases; decreases 
E)  is unaffected; is unaffected

Aggregate demand is determined by adding up the spending of

What happens to investment spending when the price level rises? Explain and illustrate using a loanable funds market graph.

An increase in long-run aggregate supply can be expected to__ the price level and_ the natural rate of unemployment.

When firms invest less because people are saving less, it is called the ______effect.

If consumers decide to save a larger percentage of their incomes, it will be

Suppose a country's population is growing due to immigration. In the long run, output will_ due to__ .

An increase in aggregate demand is harmful because

What happens to consumption spending when the price level rises? Explain.

Refer to the following figure to answer the next questions. -Based on the figure, if the economy starts at point A and ends up at point E, then in the short run, there was a(n)

In 2013, the price of gas was $3.60 per gallon, and in 2016, the price of gas was $2.05 per gallon. Since one would be spending less on gas in 2016 than in 2013, one would have more to spend on other goods and services. All else the same, this is an example of the _____effect.

Explain how a change in real wealth can sometimes cause a movement along the aggregate demand curve and how sometimes it can cause a shift of the aggregate demand curve.

Refer to the following figure to answer the next questions. -Based on the figure, which points represent short-run equilibrium but not long-run equilibrium?

If large emerging economies continue to grow rapidly, we can expect U.S. aggregate

_____would cause a rightward shift of the aggregate demand curve.

When median home prices rise, the value of real wealth ___and aggregate demand_ .

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand Y

Market Outcomes and Tax Incidence

Price Controls

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, Interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

Recessions, Expansions, and the Debate Over How to Manage Them

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

Exam 13: The Aggregate Demandaggregate Supply Model

Aggregate demand is determined by adding up the spending of

What happens to investment spending when the price level rises? Explain and illustrate using a loanable funds market graph.

An increase in long-run aggregate supply can be expected to________ the price level and_______ the natural rate of unemployment.

When firms invest less because people are saving less, it is called the ______effect.

If consumers decide to save a larger percentage of their incomes, it will be

Suppose a country's population is growing due to immigration. In the long run, output will_____ due to______ .

An increase in aggregate demand is harmful because

What happens to consumption spending when the price level rises? Explain.

Refer to the following figure to answer the next questions. -Based on the figure, if the economy starts at point A and ends up at point E, then in the short run, there was a(n)

In 2013, the price of gas was $3.60 per gallon, and in 2016, the price of gas was $2.05 per gallon. Since one would be spending less on gas in 2016 than in 2013, one would have more to spend on other goods and services. All else the same, this is an example of the _____effect.

Explain how a change in real wealth can sometimes cause a movement along the aggregate demand curve and how sometimes it can cause a shift of the aggregate demand curve.

Refer to the following figure to answer the next questions. -Based on the figure, which points represent short-run equilibrium but not long-run equilibrium?

If large emerging economies continue to grow rapidly, we can expect U.S. aggregate

_____would cause a rightward shift of the aggregate demand curve.

When median home prices rise, the value of real wealth _________and aggregate demand_______ .

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand Y

Market Outcomes and Tax Incidence

Price Controls

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, Interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

Recessions, Expansions, and the Debate Over How to Manage Them

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

An increase in long-run aggregate supply can be expected to__ the price level and_ the natural rate of unemployment.

Suppose a country's population is growing due to immigration. In the long run, output will_ due to__ .

When median home prices rise, the value of real wealth ___and aggregate demand_ .