Question 1

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.

Question 2

Accepted Answer

A)  business taxes and government regulation. 
B)  the prices of imported resources. 
C)  the prices of domestic resources. 
D)  productivity. 
A)  business taxes and government regulation. 
B)  the prices of imported resources. 
C)  the prices of domestic resources. 
D)  productivity.

Question 3

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  A and B. 
A)  A. 
B)  B. 
C)  C. 
D)  A and B.

Question 4

Accepted Answer

A)  demand-pull inﬂation in the late 1960s 
B)  cost-push inﬂation in the early 1970s 
C)  full-employment in the late 1990s 
D)  the Great Recession in 2007-2009 
A)  demand-pull inﬂation in the late 1960s 
B)  cost-push inﬂation in the early 1970s 
C)  full-employment in the late 1990s 
D)  the Great Recession in 2007-2009

Question 5

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 6

Which of the following is not a reason why the stimulus package that the government implemented during the Great Recession of 2007-09 did not have as strong an impact on GDP and
Unemployment as expected?

Accepted Answer

A)  Households had very high debt levels. 
B)  Consumers raised their saving rates. 
C)  The stimulus package caused prices to fall in many sectors. 
D)  The effects of the stimulus package were diffuse and spread thinly among many sectors. 
A)  Households had very high debt levels. 
B)  Consumers raised their saving rates. 
C)  The stimulus package caused prices to fall in many sectors. 
D)  The effects of the stimulus package were diffuse and spread thinly among many sectors.

Question 7

The slope of the immediate-short-run aggregate supply curve is based on the assumption that

Accepted Answer

A)  both input and output prices are ﬁxed. 
B)  neither input nor output prices are ﬁxed. 
C)  input prices are ﬂexible but output prices are ﬁxed. 
D)  input prices are ﬁxed but output prices are ﬂexible. 
A)  both input and output prices are ﬁxed. 
B)  neither input nor output prices are ﬁxed. 
C)  input prices are ﬂexible but output prices are ﬁxed. 
D)  input prices are ﬁxed but output prices are ﬂexible.

Question 8

The aggregate demand curve

Accepted Answer

A)  is upsloping because a higher price level is necessary to make production proﬁtable as production costs rise. 
B)  is downsloping because production costs decline as real output increases. 
C)  shows the amount of expenditures required to induce the production of each possible level of real output. 
D)  shows the amount of real output that will be purchased at each possible price level. 
A)  is upsloping because a higher price level is necessary to make production proﬁtable as production costs rise. 
B)  is downsloping because production costs decline as real output increases. 
C)  shows the amount of expenditures required to induce the production of each possible level of real output. 
D)  shows the amount of real output that will be purchased at each possible price level.

Question 9

An increase in real interest rates will increase investment and aggregate demand.

Accepted Answer

A) True 
 B)False

Question 10

Accepted Answer

A)  aggregate demand is AD $$\mathrm { AD } _ { 2 }$$ 
B)  the equilibrium output level is $$Q _ { 3 }$$ 
C)  the equilibrium output level is $$Q _ { 2 }$$ 
D)  producers will supply output level $$Q _ { 1 } .$$ 
A)  aggregate demand is AD $$\mathrm { AD } _ { 2 }$$ 
B)  the equilibrium output level is $$Q _ { 3 }$$ 
C)  the equilibrium output level is $$Q _ { 2 }$$ 
D)  producers will supply output level $$Q _ { 1 } .$$

Question 11

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

Accepted Answer

A)  increase the amount of U.S. real output purchased. 
B)  increase U.S. imports and decrease U.S. exports. 
C)  increase both U.S. imports and U.S. exports. 
D)  decrease both U.S. imports and U.S. exports. 
A)  increase the amount of U.S. real output purchased. 
B)  increase U.S. imports and decrease U.S. exports. 
C)  increase both U.S. imports and U.S. exports. 
D)  decrease both U.S. imports and U.S. exports.

Question 12

A rightward shift of the AD curve in the very ﬂat part of the short-run AS curve will

Accepted Answer

A)  increase real output by more than the price level. 
B)  increase the price level by more than real output. 
C)  reduce real output by more than the price level. 
D)  reduce the price level by more than real output. 
A)  increase real output by more than the price level. 
B)  increase the price level by more than real output. 
C)  reduce real output by more than the price level. 
D)  reduce the price level by more than real output.

Question 13

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  B and C. 
A)  A. 
B)  B. 
C)  C. 
D)  B and C.

Question 14

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  B and C. 
A)  A. 
B)  B. 
C)  C. 
D)  B and C.

Question 15

A fall in labor costs will cause aggregate

Accepted Answer

A)  supply to increase. 
B)  demand to increase. 
C)  supply to decrease. 
D)  demand to decrease. 
A)  supply to increase. 
B)  demand to increase. 
C)  supply to decrease. 
D)  demand to decrease.

Question 16

In the diagram, the economy's relevant aggregate demand and immediate-short-run aggregate supply curves, respectively, are lines

Accepted Answer

A)  4 and 3. 
B)  4 and 1. 
C)  2 and 4. 
D)  2 and 3. 
A)  4 and 3. 
B)  4 and 1. 
C)  2 and 4. 
D)  2 and 3.

Question 17

$$\begin{array} { | c | c | } 
\hline \text { Input Quantity } & \text { Real Domestic Output } \
\hline 100 & 200 \
\hline 150 & 300 \
\hline 200 & 400 \
\hline
\end{array}$$ 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 18

The greater the upward slope of the AS curve, the larger is the realized multiplier effect of a change
in investment spending.

Accepted Answer

A) True 
 B)False

Question 19

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 20

Changes in which of the following would not shift the aggregate demand curve?

Accepted Answer

A)  productivity rates 
B)  foreign-exchange rates 
C)  real interest rates 
D)  income tax rates 
A)  productivity rates 
B)  foreign-exchange rates 
C)  real interest rates 
D)  income tax rates

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

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

Which of the following is not a reason why the stimulus package that the government implemented during the Great Recession of 2007-09 did not have as strong an impact on GDP and Unemployment as expected?

The slope of the immediate-short-run aggregate supply curve is based on the assumption that

The aggregate demand curve

An increase in real interest rates will increase investment and aggregate demand.

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

A rightward shift of the AD curve in the very ﬂat part of the short-run AS curve will

A fall in labor costs will cause aggregate

In the diagram, the economy's relevant aggregate demand and immediate-short-run aggregate supply curves, respectively, are lines

Input Quantity Real Domestic Output 100 200 150 300 200 400 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

The greater the upward slope of the AS curve, the larger is the realized multiplier effect of a change in investment spending.

When the price level decreases,

Changes in which of the following would not shift the aggregate demand curve?

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

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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Exam 12: Aggregate Demand and Aggregate Supply

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

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

Which of the following is not a reason why the stimulus package that the government implemented during the Great Recession of 2007-09 did not have as strong an impact on GDP and Unemployment as expected?

The slope of the immediate-short-run aggregate supply curve is based on the assumption that

The aggregate demand curve

An increase in real interest rates will increase investment and aggregate demand.

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

A rightward shift of the AD curve in the very ﬂat part of the short-run AS curve will

A fall in labor costs will cause aggregate

In the diagram, the economy's relevant aggregate demand and immediate-short-run aggregate supply curves, respectively, are lines

Input Quantity Real Domestic Output 100 200 150 300 200 400 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

The greater the upward slope of the AS curve, the larger is the realized multiplier effect of a change in investment spending.

When the price level decreases,

Changes in which of the following would not shift the aggregate demand curve?

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

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