Question 1

Define the "consumption function."

Accepted Answer

The consumption func

Question 2

When consumers realize additional income in a household and spend the additional monies, the portion of the additional income that is spent is measured by the

Accepted Answer

A)  credit increase theory. 
B)  marginal propensity to consume. 
C)  aggregate demand factor. 
D)  measure of individual wealth. 
A)  credit increase theory. 
B)  marginal propensity to consume. 
C)  aggregate demand factor. 
D)  measure of individual wealth.

Question 3

Which of the following factors influence the position of the long-run aggregate supply curve?

Accepted Answer

A)  the supply of money 
B)  government spending 
C)  taxes 
D)  the level of full-employment output 
A)  the supply of money 
B)  government spending 
C)  taxes 
D)  the level of full-employment output

Question 4

If home prices are falling, consumers purchasing a home will find their purchasing power of money has increased. This benefit to consumers is called the

Accepted Answer

A)  inflation effect. 
B)  wealth effect. 
C)  home equity effect. 
D)  multiplier effect. 
A)  inflation effect. 
B)  wealth effect. 
C)  home equity effect. 
D)  multiplier effect.

Question 5

Recall the Application about the factors involved in causing recessions, and the causes of recessions in the United States from 1893 to 1990 to answer the following question(s).
-According to this Application, the recession of 1929 was primarily due to

Accepted Answer

A)  a decrease in aggregate demand caused by the private sector. 
B)  a decrease in aggregate demand resulting from decreases in government spending. 
C)  a decrease in aggregate supply due to rising gold prices. 
D)  an increase in aggregate supply resulting from European bank collapses. 
A)  a decrease in aggregate demand caused by the private sector. 
B)  a decrease in aggregate demand resulting from decreases in government spending. 
C)  a decrease in aggregate supply due to rising gold prices. 
D)  an increase in aggregate supply resulting from European bank collapses.

Question 6

If the supply of money increases, the long-run aggregate supply curve suggests that output will not change but price level will.

Accepted Answer

A) True 
 B)False

Question 7

Figure 9.1 shows three aggregate demand curves. A movement from point b to point c could be caused by a(n)

Accepted Answer

A)  increase in the money supply. 
B)  decrease in taxes. 
C)  decrease in the price level. 
D)  decrease in government spending. 
A)  increase in the money supply. 
B)  decrease in taxes. 
C)  decrease in the price level. 
D)  decrease in government spending.

Question 8

Assuming the price level has not changed, how would an increase in the aggregate demand affect real GDP?

Accepted Answer

A)  It decreases. 
B)  It increases. 
C)  It only changes with changes in imports. 
D)  It only changes with changes in exports. 
A)  It decreases. 
B)  It increases. 
C)  It only changes with changes in imports. 
D)  It only changes with changes in exports.

Question 9

Which of the following does NOT shift the U.S. aggregate demand curve?

Accepted Answer

A)  an increase in the supply of money 
B)  an increase in GDP in Japan 
C)  a decrease in taxes 
D)  a decrease in the price level 
A)  an increase in the supply of money 
B)  an increase in GDP in Japan 
C)  a decrease in taxes 
D)  a decrease in the price level

Question 10

Define "autonomous consumption spending."

Accepted Answer

Autonomous spending

Question 11

If potential output exceeds actual output, the aggregate demand curve shifts downward over time.

Accepted Answer

A) True 
 B)False

Question 12

In which market would the price be least likely to be "sticky"?

Accepted Answer

A)  refrigerators 
B)  steel rods 
C)  fresh fruit 
D)  trucks 
A)  refrigerators 
B)  steel rods 
C)  fresh fruit 
D)  trucks

Question 13

An increase in the money supply will increase aggregate demand.

Accepted Answer

A) True 
 B)False

Question 14

If the multiplier = 2.5, the MPS would be

Accepted Answer

A)  0.25. 
B)  0.4. 
C)  0.6. 
D)  0.75. 
A)  0.25. 
B)  0.4. 
C)  0.6. 
D)  0.75.

Question 15

Recall the Application about the causes of oil price increases to answer the following question(s). Economist Lutz Kilian examined the importance of supply disruptions to the U.S. oil market by constructing measures of supply disruptions in oil producing countries based on a detailed examination of prior trends in demand and specifications in oil contracts.
-According to this Application, oil price increases may be caused by

Accepted Answer

A)  increases in world demand. 
B)  increases in world supply. 
C)  increase in the U.S. supply of money. 
D)  beneficial supply shocks for the U.S. consumer. 
A)  increases in world demand. 
B)  increases in world supply. 
C)  increase in the U.S. supply of money. 
D)  beneficial supply shocks for the U.S. consumer.

Question 16

Figure 9.1 shows three aggregate demand curves. A movement from curve AD2 to curve AD1 could be caused by a(n)

Accepted Answer

A)  increase in the money supply. 
B)  increase in taxes. 
C)  increase in the price level. 
D)  increase in government spending. 
A)  increase in the money supply. 
B)  increase in taxes. 
C)  increase in the price level. 
D)  increase in government spending.

Question 17

If the MPS = 0.2, the multiplier would be

Accepted Answer

A)  0.5. 
B)  1. 
C)  2. 
D)  5. 
A)  0.5. 
B)  1. 
C)  2. 
D)  5.

Question 18

In the long run, the level of output depends on the price level.

Accepted Answer

A) True 
 B)False

Question 19

If the MPC = 0.9, the multiplier would be

Accepted Answer

A)  0.1. 
B)  2. 
C)  9. 
D)  10. 
A)  0.1. 
B)  2. 
C)  9. 
D)  10.

Question 20

What are supply shocks? Explain what effect adverse and favorable supply shocks have on the supply curve.

Accepted Answer

Supply shocks are external events that s

Define the "consumption function."

When consumers realize additional income in a household and spend the additional monies, the portion of the additional income that is spent is measured by the

Which of the following factors influence the position of the long-run aggregate supply curve?

If home prices are falling, consumers purchasing a home will find their purchasing power of money has increased. This benefit to consumers is called the

Recall the Application about the factors involved in causing recessions, and the causes of recessions in the United States from 1893 to 1990 to answer the following question(s). -According to this Application, the recession of 1929 was primarily due to

If the supply of money increases, the long-run aggregate supply curve suggests that output will not change but price level will.

Figure 9.1 shows three aggregate demand curves. A movement from point b to point c could be caused by a(n)

Assuming the price level has not changed, how would an increase in the aggregate demand affect real GDP?

Which of the following does NOT shift the U.S. aggregate demand curve?

Define "autonomous consumption spending."

If potential output exceeds actual output, the aggregate demand curve shifts downward over time.

In which market would the price be least likely to be "sticky"?

An increase in the money supply will increase aggregate demand.

If the multiplier = 2.5, the MPS would be

Figure 9.1 shows three aggregate demand curves. A movement from curve AD2 to curve AD1 could be caused by a(n)

If the MPS = 0.2, the multiplier would be

In the long run, the level of output depends on the price level.

If the MPC = 0.9, the multiplier would be

What are supply shocks? Explain what effect adverse and favorable supply shocks have on the supply curve.

Introduction: What Is Economics?

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nation's Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow?

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

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Exam 9: Aggregate Demand and Aggregate Supply

Define the "consumption function."

When consumers realize additional income in a household and spend the additional monies, the portion of the additional income that is spent is measured by the

Which of the following factors influence the position of the long-run aggregate supply curve?

If home prices are falling, consumers purchasing a home will find their purchasing power of money has increased. This benefit to consumers is called the

Recall the Application about the factors involved in causing recessions, and the causes of recessions in the United States from 1893 to 1990 to answer the following question(s). -According to this Application, the recession of 1929 was primarily due to

If the supply of money increases, the long-run aggregate supply curve suggests that output will not change but price level will.

Figure 9.1 shows three aggregate demand curves. A movement from point b to point c could be caused by a(n)

Assuming the price level has not changed, how would an increase in the aggregate demand affect real GDP?

Which of the following does NOT shift the U.S. aggregate demand curve?

Define "autonomous consumption spending."

If potential output exceeds actual output, the aggregate demand curve shifts downward over time.

In which market would the price be least likely to be "sticky"?

An increase in the money supply will increase aggregate demand.

If the multiplier = 2.5, the MPS would be

Figure 9.1 shows three aggregate demand curves. A movement from curve AD2 to curve AD1 could be caused by a(n)

If the MPS = 0.2, the multiplier would be

In the long run, the level of output depends on the price level.

If the MPC = 0.9, the multiplier would be

What are supply shocks? Explain what effect adverse and favorable supply shocks have on the supply curve.

Introduction: What Is Economics?

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nation's Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow?

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters