Question 1

Misperceptions theory helps explain what feature of the aggregate demand and aggregate supply model?

Accepted Answer

why the short run ag

Question 2

The aggregate demand and aggregate supply model helps us to understand both short-run economic fluctuations and how the economy moves from the short to the long run.

Accepted Answer

A) True 
 B)False

Question 3

Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to

Accepted Answer

A) rise.This rise in price expectations shifts the short-run aggregate supply curve to the right. 
B) rise.This rise in price expectations shifts the short-run aggregate supply curve to the left. 
C) fall.This fall in price expectations shifts the short-run aggregate supply curve to the right. 
D) fall.This fall in price expectations shifts the short-run aggregate supply curve to the left. 
A) rise.This rise in price expectations shifts the short-run aggregate supply curve to the right. 
B) rise.This rise in price expectations shifts the short-run aggregate supply curve to the left. 
C) fall.This fall in price expectations shifts the short-run aggregate supply curve to the right. 
D) fall.This fall in price expectations shifts the short-run aggregate supply curve to the left.

Question 4

Suppose that foreigners had reduced confidence in U.S. financial institutions and believed that privately issued U.S. bonds were more likely to be defaulted on. U.S. net exports would

Accepted Answer

A) rise which by itself would increase aggregate demand. 
B) rise which by itself would decrease aggregate demand. 
C) fall which by itself would increase aggregate demand. 
D) fall which by itself would decrease aggregate demand. 
A) rise which by itself would increase aggregate demand. 
B) rise which by itself would decrease aggregate demand. 
C) fall which by itself would increase aggregate demand. 
D) fall which by itself would decrease aggregate demand.

Question 5

Most economists believe that classical theory describes the world in the short run but not in the long run.

Accepted Answer

A) True 
 B)False

Question 6

Figure 33-5   ​
-Refer to Figure 33-5. Suppose the economy starts at Point Y. If aggregate demand increases from AD2 to AD3, then in the short run the economy moves to

Accepted Answer

A) Point V. 
B) Point X. 
C) Point W. 
D) Point Z. 
A) Point V. 
B) Point X. 
C) Point W. 
D) Point Z.

Question 7

Suppose a country experiences a change in weather patterns that makes farming more difficult. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

Accepted Answer

The short-run and lo

Question 8

Other things the same, as the price level decreases it induces greater spending on

Accepted Answer

A) both net exports and investment. 
B) net exports but not investment. 
C) investment but not net exports. 
D) neither net exports nor investment. 
A) both net exports and investment. 
B) net exports but not investment. 
C) investment but not net exports. 
D) neither net exports nor investment.

Question 9

Using the aggregate demand and aggregate supply model, a decrease of what curve is by itself consistent with the changes in prices and output that occurred during the onset of the Great Depression?

Accepted Answer

The answer of Using the aggregate demand and aggregate supply...

Question 10

The sticky-price theory of the short-run aggregate supply curve says that if the price level rises by 5% while firms were expecting it to rise by 2%, then some firms with high menu costs will have

Accepted Answer

A) higher than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied. 
B) higher than desired prices, which leads to a decrease in the aggregate quantity of goods and services supplied. 
C) lower than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied. 
D) lower than desired prices, which leads to a decrease in the aggregate quantity of goods and services supplied. 
A) higher than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied. 
B) higher than desired prices, which leads to a decrease in the aggregate quantity of goods and services supplied. 
C) lower than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied. 
D) lower than desired prices, which leads to a decrease in the aggregate quantity of goods and services supplied.

Question 11

Explain the effect on output and price level from an increase in the short-run aggregate-supply curve.

Accepted Answer

The price level woul

Question 12

Make a list of things that would shift the long-run aggregate supply curve to the right.

Accepted Answer

Examples in the text (or variations) inc

Question 13

Who wrote the 1936 book titled The General Theory of Employment, Interest, and Money?

Accepted Answer

The answer of Who wrote the 1936 book titled The...

Question 14

When the price level rises unexpectedly, some businesses may mistake part of the increase for an increase in the price of their product relative to others and so decrease their production.

Accepted Answer

A) True 
 B)False

Question 15

Write the mathematical expression that summarizes the three alternative explanations for the upward slope of the short run aggregate supply curve.

Accepted Answer

Quantity of output s

Question 16

If the central bank increased the money supply in response to a decrease in short-run aggregate supply, unemployment would return towards its natural rate, but prices would rise even more.

Accepted Answer

A) True 
 B)False

Question 17

Figure 33-2   ​
-Refer to Figure 33-2. If the economy starts at S, a decrease in the money supply moves the economy

Accepted Answer

A) to T in the long run. 
B) to U in the long run. 
C) back to S in the long run. 
D) to V in the long run. 
A) to T in the long run. 
B) to U in the long run. 
C) back to S in the long run. 
D) to V in the long run.

Question 18

The initial impact of an increase in an investment tax credit is to shift aggregate

Accepted Answer

A) demand right. 
B) demand left. 
C) supply right. 
D) supply left. 
A) demand right. 
B) demand left. 
C) supply right. 
D) supply left.

Question 19

In the short-run an increase in the costs of production makes

Accepted Answer

A) both output and prices rise. 
B) output rise and prices fall. 
C) output fall and prices rise. 
D) both output and prices fall. 
A) both output and prices rise. 
B) output rise and prices fall. 
C) output fall and prices rise. 
D) both output and prices fall.

Question 20

Suppose a recession overseas reduces a country's exports. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

Accepted Answer

The aggregate-demand

Exam 33: Aggregate Demand and Aggregate Supply

Misperceptions theory helps explain what feature of the aggregate demand and aggregate supply model?

The aggregate demand and aggregate supply model helps us to understand both short-run economic fluctuations and how the economy moves from the short to the long run.

Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to

Suppose that foreigners had reduced confidence in U.S. financial institutions and believed that privately issued U.S. bonds were more likely to be defaulted on. U.S. net exports would

Most economists believe that classical theory describes the world in the short run but not in the long run.

Figure 33-5 ​ -Refer to Figure 33-5. Suppose the economy starts at Point Y. If aggregate demand increases from AD2 to AD3, then in the short run the economy moves to

Suppose a country experiences a change in weather patterns that makes farming more difficult. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

Other things the same, as the price level decreases it induces greater spending on

Using the aggregate demand and aggregate supply model, a decrease of what curve is by itself consistent with the changes in prices and output that occurred during the onset of the Great Depression?

The sticky-price theory of the short-run aggregate supply curve says that if the price level rises by 5% while firms were expecting it to rise by 2%, then some firms with high menu costs will have

Explain the effect on output and price level from an increase in the short-run aggregate-supply curve.

Make a list of things that would shift the long-run aggregate supply curve to the right.

Who wrote the 1936 book titled The General Theory of Employment, Interest, and Money?

When the price level rises unexpectedly, some businesses may mistake part of the increase for an increase in the price of their product relative to others and so decrease their production.

Write the mathematical expression that summarizes the three alternative explanations for the upward slope of the short run aggregate supply curve.

If the central bank increased the money supply in response to a decrease in short-run aggregate supply, unemployment would return towards its natural rate, but prices would rise even more.

Figure 33-2 ​ -Refer to Figure 33-2. If the economy starts at S, a decrease in the money supply moves the economy

The initial impact of an increase in an investment tax credit is to shift aggregate

In the short-run an increase in the costs of production makes

Suppose a recession overseas reduces a country's exports. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Figure 33-5 -Refer to Figure 33-5. Suppose the economy starts at Point Y. If aggregate demand increases from AD₂ to AD₃, then in the short run the economy moves to

Figure 33-2 -Refer to Figure 33-2. If the economy starts at S, a decrease in the money supply moves the economy