Question 1

The immediate-short-run aggregate supply curve is

Accepted Answer

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

Question 2

A decline in investment will shift the AD curve to the

Accepted Answer

A) left by a multiple of the change in investment. 
B) left by the same amount as the change in investment. 
C) right by the same amount as the change in investment. 
D) right by a multiple of the change in investment. 
A) left by a multiple of the change in investment. 
B) left by the same amount as the change in investment. 
C) right by the same amount as the change in investment. 
D) right by a multiple of the change in investment.

Question 3

The aggregate expenditures schedule relates total spending with the price level, while the aggregate demand schedule relates total demand for output with income.

Accepted Answer

A) True 
 B)False

Question 4

Suppose that an economy produces 2,400 units of output, employing 60 units of input, and the price of the input is $30 per unit.If productivity increased such that 3,000 units are now produced with the quantity of inputs still equal to 60, then per-unit production costs would

Accepted Answer

A) decrease and aggregate supply would decrease. 
B) decrease and aggregate supply would increase. 
C) increase and aggregate supply would decrease. 
D) remain unchanged and aggregate supply would remain unchanged. 
A) decrease and aggregate supply would decrease. 
B) decrease and aggregate supply would increase. 
C) increase and aggregate supply would decrease. 
D) remain unchanged and aggregate supply would remain unchanged.

Question 5

An increase in productivity will

Accepted Answer

A) increase aggregate demand. 
B) increase aggregate supply. 
C) increase aggregate supply and aggregate demand. 
D) decrease aggregate supply and aggregate demand. 
A) increase aggregate demand. 
B) increase aggregate supply. 
C) increase aggregate supply and aggregate demand. 
D) decrease aggregate supply and aggregate demand.

Question 6

If the dollar appreciates relative to foreign currencies, then

Accepted Answer

A) U.S.goods will look cheaper to foreign buyers.. 
B) foreign goods will look more expensive to U.S.buyers. 
C) net exports of the U.S.will increase. 
D) foreign buyers will find U.S.goods become more expensive. 
A) U.S.goods will look cheaper to foreign buyers.. 
B) foreign goods will look more expensive to U.S.buyers. 
C) net exports of the U.S.will increase. 
D) foreign buyers will find U.S.goods become more expensive.

Question 7

Degree of Excess Capacity Answer the question based on the accompanying list of factors that are related to the aggregate demand curve.Which of the factors best explain the downward slope of aggregate demand curve?

Accepted Answer

A) 2, 4, and 6 
B) 7, 9, and 10 
C) 1, 3, and 8 
D) 4, 6, and 7 
A) 2, 4, and 6 
B) 7, 9, and 10 
C) 1, 3, and 8 
D) 4, 6, and 7

Question 8

The interest rate effect on aggregate demand indicates that a(n)

Accepted Answer

A) decrease in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending. 
B) decrease in the price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending. 
C) increase in the price level will increase the demand for money, reduce interest rates, and decrease consumption and investment spending. 
D) increase in the supply of money will increase interest rates and decrease interest-sensitive consumption and investment spending. 
A) decrease in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending. 
B) decrease in the price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending. 
C) increase in the price level will increase the demand for money, reduce interest rates, and decrease consumption and investment spending. 
D) increase in the supply of money will increase interest rates and decrease interest-sensitive consumption and investment spending.

Question 9

A decrease in aggregate supply means

Accepted Answer

A) both the real domestic output and the price level will decrease. 
B) the real domestic output will increase and rises in the price level will become smaller. 
C) the real domestic output will decrease and the price level will rise. 
D) both the real domestic output and rises in the price level will become greater. 
A) both the real domestic output and the price level will decrease. 
B) the real domestic output will increase and rises in the price level will become smaller. 
C) the real domestic output will decrease and the price level will rise. 
D) both the real domestic output and rises in the price level will become greater.

Question 10

Degree of Excess Capacity Answer the question based on the accompanying list of factors that are related to the aggregate demand curve.Investment spending would most likely be influenced by changes in

Accepted Answer

A) 1 and 3. 
B) 4 and 6. 
C) 5 and 10. 
D) 8 and 9. 
A) 1 and 3. 
B) 4 and 6. 
C) 5 and 10. 
D) 8 and 9.

Question 11

Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4.Given an increase in input price from $4 to $6, we would expect the aggregate

Accepted Answer

A) supply curve to shift to the left. 
B) supply curve to shift to the right. 
C) demand curve to shift to the left. 
D) supply and demand curves to both remain unchanged. 
A) supply curve to shift to the left. 
B) supply curve to shift to the right. 
C) demand curve to shift to the left. 
D) supply and demand curves to both remain unchanged.

Question 12

An increase in net exports will shift the

Accepted Answer

A) aggregate expenditures curve upward and the aggregate demand curve rightward. 
B) aggregate expenditures curve upward and the aggregate demand curve leftward. 
C) aggregate expenditures curve downward and the aggregate demand curve rightward. 
D) aggregate expenditures curve downward and the aggregate demand curve leftward. 
A) aggregate expenditures curve upward and the aggregate demand curve rightward. 
B) aggregate expenditures curve upward and the aggregate demand curve leftward. 
C) aggregate expenditures curve downward and the aggregate demand curve rightward. 
D) aggregate expenditures curve downward and the aggregate demand curve leftward.

Question 13

Disinflation refers to a situation where

Accepted Answer

A) the price level falls, but the rate inflation does not. 
B) the price level rises, but the rate of inflation does not. 
C) the rate of inflation falls, but the price level does not. 
D) the rate of inflation rises, but the price level does not. 
A) the price level falls, but the rate inflation does not. 
B) the price level rises, but the rate of inflation does not. 
C) the rate of inflation falls, but the price level does not. 
D) the rate of inflation rises, but the price level does not.

Question 14

An increase in imports (independent of a change in the U.S.price level) will increase both U.S.aggregate supply and U.S.aggregate demand.

Accepted Answer

A) True 
 B)False

Question 15

An expected increase in the prices of consumer goods in the near future will

Accepted Answer

A) decrease (or shift left) in aggregate demand now. 
B) increase (or shift right) in aggregate demand now. 
C) decrease in the quantity of real output demanded (or movement up along A
D) . 
D) increase in the quantity of real output demanded (or movement down along A
D) . 
A) decrease (or shift left) in aggregate demand now. 
B) increase (or shift right) in aggregate demand now. 
C) decrease in the quantity of real output demanded (or movement up along A
D) . 
D) increase in the quantity of real output demanded (or movement down along A
D) .

Question 16

The foreign purchases effect suggests that a decrease in the U.S.price level relative to other countries will

Accepted Answer

A) shift the aggregate demand curve leftward. 
B) shift the aggregate supply curve leftward. 
C) decrease U.S.exports and increase U.S.imports. 
D) increase U.S.exports and decrease U.S.imports. 
A) shift the aggregate demand curve leftward. 
B) shift the aggregate supply curve leftward. 
C) decrease U.S.exports and increase U.S.imports. 
D) increase U.S.exports and decrease U.S.imports.

Question 17

A decrease in aggregate demand will cause a greater decline in real output the

Accepted Answer

A) less flexible is the economy's price level. 
B) more flexible is the economy's price level. 
C) steeper is the economy's AS curve. 
D) larger is the economy's marginal propensity to save. 
A) less flexible is the economy's price level. 
B) more flexible is the economy's price level. 
C) steeper is the economy's AS curve. 
D) larger is the economy's marginal propensity to save.

Question 18

Suppose that an economy produces 2,400 units of output, employing 60 units of input, and the price of the input is $30 per unit.The level of productivity in this economy is

Accepted Answer

A) 20. 
B) 30. 
C) 40. 
D) 50. 
A) 20. 
B) 30. 
C) 40. 
D) 50.

Question 19

Cost-push inflation is characterized by a(n)

Accepted Answer

A) increase in aggregate supply and a decrease in aggregate demand. 
B) increase in aggregate demand and no change in aggregate supply. 
C) decrease in aggregate supply and no change in aggregate demand. 
D) decrease in both aggregate supply and aggregate demand. 
A) increase in aggregate supply and a decrease in aggregate demand. 
B) increase in aggregate demand and no change in aggregate supply. 
C) decrease in aggregate supply and no change in aggregate demand. 
D) decrease in both aggregate supply and aggregate demand.

Question 20

Other things equal, if the U.S.dollar were to depreciate, the

Accepted Answer

A) aggregate demand curve would remain fixed in place. 
B) aggregate supply curve would shift to the left. 
C) aggregate supply curve would shift to the right. 
D) aggregate demand curve would shift to the left. 
A) aggregate demand curve would remain fixed in place. 
B) aggregate supply curve would shift to the left. 
C) aggregate supply curve would shift to the right. 
D) aggregate demand curve would shift to the left.

Exam 32: Aggregate Demand and Aggregate Supply

The immediate-short-run aggregate supply curve is

A decline in investment will shift the AD curve to the

The aggregate expenditures schedule relates total spending with the price level, while the aggregate demand schedule relates total demand for output with income.

Suppose that an economy produces 2,400 units of output, employing 60 units of input, and the price of the input is $30 per unit.If productivity increased such that 3,000 units are now produced with the quantity of inputs still equal to 60, then per-unit production costs would

An increase in productivity will

If the dollar appreciates relative to foreign currencies, then

Degree of Excess Capacity Answer the question based on the accompanying list of factors that are related to the aggregate demand curve.Which of the factors best explain the downward slope of aggregate demand curve?

The interest rate effect on aggregate demand indicates that a(n)

A decrease in aggregate supply means

Degree of Excess Capacity Answer the question based on the accompanying list of factors that are related to the aggregate demand curve.Investment spending would most likely be influenced by changes in

Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4.Given an increase in input price from $4 to $6, we would expect the aggregate

An increase in net exports will shift the

Disinflation refers to a situation where

An increase in imports (independent of a change in the U.S.price level) will increase both U.S.aggregate supply and U.S.aggregate demand.

An expected increase in the prices of consumer goods in the near future will

The foreign purchases effect suggests that a decrease in the U.S.price level relative to other countries will

A decrease in aggregate demand will cause a greater decline in real output the

Suppose that an economy produces 2,400 units of output, employing 60 units of input, and the price of the input is $30 per unit.The level of productivity in this economy is

Cost-push inflation is characterized by a(n)

Other things equal, if the U.S.dollar were to depreciate, the

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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