Question 1

If the U.S.dollar appreciates in value relative to foreign currencies, then this will

Accepted Answer

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

Question 2

When the economy is experiencing demand-pull inflation, its real GDP tends to be rising.

Accepted Answer

A) True 
 B)False

Question 3

The table gives information about the relationship between input quantities and real domestic output in a hypothetical economy.The level of productivity in the economy is

Accepted Answer

A) 2. 
B) 0.5. 
C) 4. 
D)  200 
A) 2. 
B) 0.5. 
C) 4. 
D)  200

Question 4

An increase in the price level, other things equal, will shift the

Accepted Answer

A) consumption, investment, and net exports schedules of the aggregate expenditures model downward. 
B) consumption, investment, and net exports schedules of the aggregate expenditures model upward. 
C) consumption and investment schedules of the aggregate expenditures model upward, but the net exports schedule downward. 
D) consumption and net exports schedules of the aggregate expenditures model upward, but the investment schedule downward. 
A) consumption, investment, and net exports schedules of the aggregate expenditures model downward. 
B) consumption, investment, and net exports schedules of the aggregate expenditures model upward. 
C) consumption and investment schedules of the aggregate expenditures model upward, but the net exports schedule downward. 
D) consumption and net exports schedules of the aggregate expenditures model upward, but the investment schedule downward.

Question 5

If the price level increases, then the aggregate expenditures schedule will shift down and the aggregate demand curve will shift to the left.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would most likely shift the aggregate demand curve to the right?

Accepted Answer

A) an increase in stock prices that increases consumer wealth 
B) increased fear that a recession will cause workers to lose their jobs 
C) an increase in personal income tax rates 
D) a reduction in household borrowing because of tighter lending practices 
A) an increase in stock prices that increases consumer wealth 
B) increased fear that a recession will cause workers to lose their jobs 
C) an increase in personal income tax rates 
D) a reduction in household borrowing because of tighter lending practices

Question 7

An economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the

Accepted Answer

A) net export effect. 
B) wealth effect. 
C) real-balances effect. 
D) multiplier effect. 
A) net export effect. 
B) wealth effect. 
C) real-balances effect. 
D) multiplier effect.

Question 8

Prices and wages tend to be

Accepted Answer

A) flexible both upward and downward. 
B) inflexible both upward and downward. 
C) flexible downward but inflexible upward. 
D) flexible upward but inflexible downward. 
A) flexible both upward and downward. 
B) inflexible both upward and downward. 
C) flexible downward but inflexible upward. 
D) flexible upward but inflexible downward.

Question 9

A decrease in government spending will cause a(n)

Accepted Answer

A) increase in the quantity of real output demanded. 
B) decrease in the quantity of real output demanded. 
C) decrease in aggregate demand. 
D) increase in aggregate demand. 
A) increase in the quantity of real output demanded. 
B) decrease in the quantity of real output demanded. 
C) decrease in aggregate demand. 
D) increase in aggregate demand.

Question 10

When the dollar appreciates relative to foreign currencies, it means that

Accepted Answer

A) we need more dollars to buy each unit of another currency. 
B) we can buy less foreign currency with a given amount of dollars. 
C) the value of foreign currencies decreased relative to our dollar. 
D) foreigners need less of their currency to buy one dollar. 
A) we need more dollars to buy each unit of another currency. 
B) we can buy less foreign currency with a given amount of dollars. 
C) the value of foreign currencies decreased relative to our dollar. 
D) foreigners need less of their currency to buy one dollar.

Question 11

When the price level decreases,

Accepted Answer

A) the demand for money falls and the interest rate falls. 
B) holders of financial assets with fixed money values decrease their spending. 
C) holders of financial assets with fixed money values have less purchasing power. 
D) there is a decrease in consumer spending that is sensitive to changes in interest rates. 
A) the demand for money falls and the interest rate falls. 
B) holders of financial assets with fixed money values decrease their spending. 
C) holders of financial assets with fixed money values have less purchasing power. 
D) there is a decrease in consumer spending that is sensitive to changes in interest rates.

Question 12

If the dollar appreciates in value relative to foreign currencies,

Accepted Answer

A) aggregate demand decreases because C decreases. 
B) aggregate demand increases because C increases. 
C) aggregate demand decreases because net exports decrease. 
D) aggregate demand increases because net exports increase. 
A) aggregate demand decreases because C decreases. 
B) aggregate demand increases because C increases. 
C) aggregate demand decreases because net exports decrease. 
D) aggregate demand increases because net exports increase.

Question 13

Which of the following would most likely reduce aggregate demand (shift the AD curve to the left)?

Accepted Answer

A) a reduced amount of excess capacity 
B) increased government spending on military equipment 
C) an appreciation of the U.S.dollar 
D) increased consumer optimism regarding future economic conditions 
A) a reduced amount of excess capacity 
B) increased government spending on military equipment 
C) an appreciation of the U.S.dollar 
D) increased consumer optimism regarding future economic conditions

Question 14

When deriving the aggregate demand (AD) curve from the aggregate expenditures model, an increase in U.S.product prices would cause an increase in

Accepted Answer

A) the value of household wealth and lower consumption expenditures. 
B) interest rates and lower investment expenditures. 
C) exports and imports. 
D) U.S.resource prices and an increase in aggregate supply. 
A) the value of household wealth and lower consumption expenditures. 
B) interest rates and lower investment expenditures. 
C) exports and imports. 
D) U.S.resource prices and an increase in aggregate supply.

Question 15

Which one of the following would not shift the aggregate demand curve?

Accepted Answer

A) a change in the price level 
B) depreciation of the international value of the dollar 
C) a decline in the interest rate at each possible price level 
D) an increase in personal income tax rates 
A) a change in the price level 
B) depreciation of the international value of the dollar 
C) a decline in the interest rate at each possible price level 
D) an increase in personal income tax rates

Question 16

In the accompanying table for a particular country, C is consumption expenditures, Ig is gross investment expenditures, G is government expenditures, X is exports, and M is imports.All figures are in billions of dollars.If equilibrium real GDP is $31 billion, the equilibrium price level will be

Accepted Answer

A) 128. 
B) 125. 
C) 122. 
D) 119. 
A) 128. 
B) 125. 
C) 122. 
D) 119.

Question 17

Degree of Excess Capacity Answer the question based on the accompanying list of factors that are related to the aggregate demand curve.Changes in which two of the factors would most likely cause a shift in aggregate demand due to a change in consumer spending?

Accepted Answer

A) 1 and 3 
B) 2 and 4 
C) 5 and 10 
D) 8 and 9 
A) 1 and 3 
B) 2 and 4 
C) 5 and 10 
D) 8 and 9

Question 18

Other things equal, an improvement in productivity will

Accepted Answer

A) shift the aggregate demand curve to the left. 
B) shift the aggregate supply curve to the left. 
C) shift the aggregate supply curve to the right. 
D) increase the price level. 
A) shift the aggregate demand curve to the left. 
B) shift the aggregate supply curve to the left. 
C) shift the aggregate supply curve to the right. 
D) increase the price level.

Question 19

(Consider This) The idea that the price level readily moves upward but not downward is called the

Accepted Answer

A) elevator effect. 
B) escalator effect. 
C) ratchet effect. 
D) stair-step effect. 
A) elevator effect. 
B) escalator effect. 
C) ratchet effect. 
D) stair-step effect.

Question 20

In deriving the aggregate demand curve from the aggregate expenditures model, we note that

Accepted Answer

A) the real-balances effect is irrelevant to both models. 
B) a change in the price level will have no impact on the aggregate expenditures schedule. 
C) an increase (decrease) in the price level shifts the aggregate expenditures schedule upward (downward). 
D) an increase (decrease) in the price level shifts the aggregate expenditures schedule downward (upward). 
A) the real-balances effect is irrelevant to both models. 
B) a change in the price level will have no impact on the aggregate expenditures schedule. 
C) an increase (decrease) in the price level shifts the aggregate expenditures schedule upward (downward). 
D) an increase (decrease) in the price level shifts the aggregate expenditures schedule downward (upward).

Exam 32: Aggregate Demand and Aggregate Supply

If the U.S.dollar appreciates in value relative to foreign currencies, then this will

When the economy is experiencing demand-pull inflation, its real GDP tends to be rising.

The table gives information about the relationship between input quantities and real domestic output in a hypothetical economy.The level of productivity in the economy is

An increase in the price level, other things equal, will shift the

If the price level increases, then the aggregate expenditures schedule will shift down and the aggregate demand curve will shift to the left.

Which of the following would most likely shift the aggregate demand curve to the right?

An economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the

Prices and wages tend to be

A decrease in government spending will cause a(n)

When the dollar appreciates relative to foreign currencies, it means that

When the price level decreases,

If the dollar appreciates in value relative to foreign currencies,

Which of the following would most likely reduce aggregate demand (shift the AD curve to the left)?

When deriving the aggregate demand (AD) curve from the aggregate expenditures model, an increase in U.S.product prices would cause an increase in

Which one of the following would not shift the aggregate demand curve?

In the accompanying table for a particular country, C is consumption expenditures, Ig is gross investment expenditures, G is government expenditures, X is exports, and M is imports.All figures are in billions of dollars.If equilibrium real GDP is $31 billion, the equilibrium price level will be

Degree of Excess Capacity Answer the question based on the accompanying list of factors that are related to the aggregate demand curve.Changes in which two of the factors would most likely cause a shift in aggregate demand due to a change in consumer spending?

Other things equal, an improvement in productivity will

(Consider This) The idea that the price level readily moves upward but not downward is called the

In deriving the aggregate demand curve from the aggregate expenditures model, we note that

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

Filters