Question 1

If the Fed conducts an open market purchase of bonds,which of the following will happen?

Accepted Answer

A)  The interest rate will decrease,the aggregate expenditure line will shift upward,and the aggregate demand curve will shift leftward. 
B)  The interest rate will increase,the aggregate expenditure line will shift upward,and the aggregate demand curve will shift rightward. 
C)  The interest rate will decrease,the aggregate expenditure line will shift upward,and the aggregate demand curve will shift rightward. 
D)  The interest rate will decrease,the aggregate expenditure line will shift downward,and the aggregate demand curve will shift rightward. 
E)  The interest rate will increase,the aggregate expenditure line will shift downward,and the aggregate demand curve will shift leftward. 
A)  The interest rate will decrease,the aggregate expenditure line will shift upward,and the aggregate demand curve will shift leftward. 
B)  The interest rate will increase,the aggregate expenditure line will shift upward,and the aggregate demand curve will shift rightward. 
C)  The interest rate will decrease,the aggregate expenditure line will shift upward,and the aggregate demand curve will shift rightward. 
D)  The interest rate will decrease,the aggregate expenditure line will shift downward,and the aggregate demand curve will shift rightward. 
E)  The interest rate will increase,the aggregate expenditure line will shift downward,and the aggregate demand curve will shift leftward.

Question 2

In the long run

Accepted Answer

A)  both supply and demand shocks have permanent effects on real GDP. 
B)  real GDP can remain below potential. 
C)  real GDP can remain above potential. 
D)  both supply and demand shocks have no effect on real GDP. 
E)  supply shocks have permanent effects on real GDP but demand shocks have no effect. 
A)  both supply and demand shocks have permanent effects on real GDP. 
B)  real GDP can remain below potential. 
C)  real GDP can remain above potential. 
D)  both supply and demand shocks have no effect on real GDP. 
E)  supply shocks have permanent effects on real GDP but demand shocks have no effect.

Question 3

-Refer to Figure 15-13.Beginning at point A,suppose a supply shock shifts the aggregate supply curve to AS₂.In the long run,we would expect

Accepted Answer

A)  an increase in the price level and a decrease in real GDP 
B)  an increase in the price level and a return of real GDP to its full-employment level 
C)  a decrease in the price level to below its level at point A,and a return of real GDP to its full-employment level 
D)  the price level and real GDP to return to their original levels at point A 
E)  aggregate demand to increase until full employment is restored. 
A)  an increase in the price level and a decrease in real GDP 
B)  an increase in the price level and a return of real GDP to its full-employment level 
C)  a decrease in the price level to below its level at point A,and a return of real GDP to its full-employment level 
D)  the price level and real GDP to return to their original levels at point A 
E)  aggregate demand to increase until full employment is restored.

Question 4

In the short run,a decrease in government purchases would

Accepted Answer

A)  decrease real GDP because of the multiplier effect and price level changes,but be offset somewhat by decreases in the interest rate 
B)  decrease real GDP because of the increases in the price level and increases in the interest rate 
C)  decrease real GDP because of the multiplier effect and increase in the interest rate,but be offset somewhat by decreases in the price level 
D)  decrease real GDP because of the multiplier effect,but be offset somewhat by decreases in the price level and the interest rate 
E)  not change output because of the multiplier effect;price level and interest rate changes completely cancel each other out. 
A)  decrease real GDP because of the multiplier effect and price level changes,but be offset somewhat by decreases in the interest rate 
B)  decrease real GDP because of the increases in the price level and increases in the interest rate 
C)  decrease real GDP because of the multiplier effect and increase in the interest rate,but be offset somewhat by decreases in the price level 
D)  decrease real GDP because of the multiplier effect,but be offset somewhat by decreases in the price level and the interest rate 
E)  not change output because of the multiplier effect;price level and interest rate changes completely cancel each other out.

Question 5

Which of the following is a supply shock?

Accepted Answer

A)  A decrease in money demand 
B)  An increase in the money supply 
C)  An increase in investment spending 
D)  A change in oil prices 
E)  A change in taxes. 
A)  A decrease in money demand 
B)  An increase in the money supply 
C)  An increase in investment spending 
D)  A change in oil prices 
E)  A change in taxes.

If the Fed conducts an open market purchase of bonds,which of the following will happen?

In the long run

-Refer to Figure 15-13.Beginning at point A,suppose a supply shock shifts the aggregate supply curve to AS₂.In the long run,we would expect

In the short run,a decrease in government purchases would

Which of the following is a supply shock?

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters

Exam 15: Aggregate Demand and Aggregate Supply

If the Fed conducts an open market purchase of bonds,which of the following will happen?

In the long run

-Refer to Figure 15-13.Beginning at point A,suppose a supply shock shifts the aggregate supply curve to AS₂.In the long run,we would expect

In the short run,a decrease in government purchases would

Which of the following is a supply shock?

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters