Question 1

The explanations for the downward slope of the aggregate demand curve say that as the price level rises,consumption,investment,and net exports all fall.

Accepted Answer

A) True 
 B)False  True

Question 2

In which of the following situations would the long-run aggregate-supply curve shift right?

Accepted Answer

A) if immigration from abroad decreases 
B) if the capital stock decreases 
C) if the money supply increases 
D) if technology advances 
A) if immigration from abroad decreases 
B) if the capital stock decreases 
C) if the money supply increases 
D) if technology advances D

Question 3

Which of the following does the economy experience during a recession?

Accepted Answer

A) rising employment and income 
B) rising employment and falling income 
C) rising income and falling employment 
D) falling employment and income 
A) rising employment and income 
B) rising employment and falling income 
C) rising income and falling employment 
D) falling employment and income D

Question 4

What does a fall in the economy's overall level of prices tend to do?

Accepted Answer

A) It tends to raise both the quantity demanded and supplied of goods and services. 
B) It tends to raise the quantity demanded of goods and services, but lower the quantity supplied. 
C) It tends to lower the quantity demanded of goods and services, but raise the quantity supplied. 
D) It tends to lower both the quantity demanded and the quantity supplied of goods and services. 
A) It tends to raise both the quantity demanded and supplied of goods and services. 
B) It tends to raise the quantity demanded of goods and services, but lower the quantity supplied. 
C) It tends to lower the quantity demanded of goods and services, but raise the quantity supplied. 
D) It tends to lower both the quantity demanded and the quantity supplied of goods and services.

Question 5

An increase in the money supply raises output in the long run.

Accepted Answer

A) True 
 B)False

Question 6

What happens to prices and output when the long-run aggregate-supply curve shifts right?

Accepted Answer

A) Prices and output both increase. 
B) Prices and output both decrease. 
C) Prices increase and output decreases. 
D) Prices decrease and output increases. 
A) Prices and output both increase. 
B) Prices and output both decrease. 
C) Prices increase and output decreases. 
D) Prices decrease and output increases.

Question 7

Which of the following would happen to Canadian net exports and aggregate demand if countries that imported from Canada went into recession?

Accepted Answer

A) Net exports would rise, and aggregate demand would shift right. 
B) Net exports would rise, and aggregate demand would shift left. 
C) Net exports would fall, and aggregate demand would shift right. 
D) Net exports would fall, and aggregate demand would shift left. 
A) Net exports would rise, and aggregate demand would shift right. 
B) Net exports would rise, and aggregate demand would shift left. 
C) Net exports would fall, and aggregate demand would shift right. 
D) Net exports would fall, and aggregate demand would shift left.

Question 8

What are the implications of a depreciation of the dollar?

Accepted Answer

A) The dollar buys more foreign currency, so it buys more foreign goods. 
B) The dollar buys more foreign currency, so it buys fewer foreign goods. 
C) The dollar buys less foreign currency, so it buys more foreign goods. 
D) The dollar buys less foreign currency, so it buys fewer foreign goods. 
A) The dollar buys more foreign currency, so it buys more foreign goods. 
B) The dollar buys more foreign currency, so it buys fewer foreign goods. 
C) The dollar buys less foreign currency, so it buys more foreign goods. 
D) The dollar buys less foreign currency, so it buys fewer foreign goods.

Question 9

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

Accepted Answer

A) True 
 B)False

Question 10

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

Accepted Answer

A) True 
 B)False

Question 11

Why is the aggregate demand curve downward sloping?

Accepted Answer

A) because the more people buy, the fewer additional purchases they need 
B) because people buy something else when the price goes up 
C) because people feel poorer and buy less when prices go up 
D) because the more people wish to consume, the lower the price is 
A) because the more people buy, the fewer additional purchases they need 
B) because people buy something else when the price goes up 
C) because people feel poorer and buy less when prices go up 
D) because the more people wish to consume, the lower the price is

Question 12

An economy is described by the aggregate-demand curve Y=70-P and the short-run the aggregate-supply curve Y=10+2P.
a)If the economy is in long-run equilibrium,what are the long-run level of output,the actual,and the expected price level?
b)Suppose consumers' confidence in the economy declines so that the aggregate demand declines by 10 percent.Calculate the new short-run equilibrium.What is the rate of change in output induced by the decline in confidence? What is the inflation rate?
c)After a while,when some people observe the reduced economic activity and unemployment rises,they accept lower wages.Calculate the long-run output and price level.

Accepted Answer

a) If the economy is in equilibrium,the

Question 13

Which of the following would cause prices and real GDP to rise in the short run?

Accepted Answer

A) Short-run aggregate supply shifts right. 
B) Short-run aggregate supply shifts left. 
C) Aggregate demand shifts right. 
D) Aggregate demand shifts left. 
A) Short-run aggregate supply shifts right. 
B) Short-run aggregate supply shifts left. 
C) Aggregate demand shifts right. 
D) Aggregate demand shifts left.

Question 14

We know the theories that explain why the short-run aggregate-supply is upward sloping.But what determines how steep is the short-run aggregate-supply curve,and why is this important?

Accepted Answer

I will only refer to one of the short-ru

Question 15

How does the size of investment as a fraction of GDP compare to its importance in creating economic fluctuations?

Accepted Answer

A) Investment is a small part of real GDP, and it accounts for a small share of the fluctuation in real GDP. 
B) Investment is a small part of real GDP, yet it accounts for a large share of the fluctuation in real GDP. 
C) Investment is a large part of real GDP, and it accounts for a large share of the fluctuation in real GDP. 
D) Investment is a large part of real GDP, yet it accounts for a small share of the fluctuation in real GDP. 
A) Investment is a small part of real GDP, and it accounts for a small share of the fluctuation in real GDP. 
B) Investment is a small part of real GDP, yet it accounts for a large share of the fluctuation in real GDP. 
C) Investment is a large part of real GDP, and it accounts for a large share of the fluctuation in real GDP. 
D) Investment is a large part of real GDP, yet it accounts for a small share of the fluctuation in real GDP.

Question 16

Which of the following characterizes the long-run aggregate-supply curve?

Accepted Answer

A) It is determined by the things that determine output in the classical model. 
B) It is located at the point where unemployment is zero. 
C) It shifts to the right when the price level increases. 
D) It is positioned at the point where the economy would cease to grow. 
A) It is determined by the things that determine output in the classical model. 
B) It is located at the point where unemployment is zero. 
C) It shifts to the right when the price level increases. 
D) It is positioned at the point where the economy would cease to grow.

Question 17

Which of the following happened during World War II?

Accepted Answer

A) Government purchases of goods and services increased. 
B) The real GDP per person decreased by 60 percent. 
C) The unemployment rate increased to 15 percent. 
D) The long-run aggregate supply shifted to the right. 
A) Government purchases of goods and services increased. 
B) The real GDP per person decreased by 60 percent. 
C) The unemployment rate increased to 15 percent. 
D) The long-run aggregate supply shifted to the right.

Question 18

Which of the following characterizes business cycles?

Accepted Answer

A) They are mainly fluctuations in consumption. 
B) They are no longer very important due to government policy. 
C) They are fluctuations in real GDP and related variables over time. 
D) They are easily predicted by competent economists. 
A) They are mainly fluctuations in consumption. 
B) They are no longer very important due to government policy. 
C) They are fluctuations in real GDP and related variables over time. 
D) They are easily predicted by competent economists.

Question 19

Suppose the economy is in long-run equilibrium.In a short span of time,there is a large influx of skilled immigrants,a major new discovery of oil,and a major new technological advance in electricity production.In the short run,what would we expect to happen?

Accepted Answer

A) The price level will rise, and real GDP will fall. 
B) The price level will fall, and real GDP will rise. 
C) The price level and real GDP will both stay the same. 
D) The price level and real GDP will both fall. 
A) The price level will rise, and real GDP will fall. 
B) The price level will fall, and real GDP will rise. 
C) The price level and real GDP will both stay the same. 
D) The price level and real GDP will both fall.

Question 20

Figure 14-1
  
-Refer to the Figure 14-1.How would an adverse shift in aggregate supply move the economy?

Accepted Answer

A) from A to B 
B) from C to D 
C) from B to A 
D) from D to C 
A) from A to B 
B) from C to D 
C) from B to A 
D) from D to C

The explanations for the downward slope of the aggregate demand curve say that as the price level rises,consumption,investment,and net exports all fall.

In which of the following situations would the long-run aggregate-supply curve shift right?

Which of the following does the economy experience during a recession?

What does a fall in the economy's overall level of prices tend to do?

An increase in the money supply raises output in the long run.

What happens to prices and output when the long-run aggregate-supply curve shifts right?

Which of the following would happen to Canadian net exports and aggregate demand if countries that imported from Canada went into recession?

What are the implications of a depreciation of the dollar?

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

Why is the aggregate demand curve downward sloping?

Which of the following would cause prices and real GDP to rise in the short run?

We know the theories that explain why the short-run aggregate-supply is upward sloping.But what determines how steep is the short-run aggregate-supply curve,and why is this important?

How does the size of investment as a fraction of GDP compare to its importance in creating economic fluctuations?

Which of the following characterizes the long-run aggregate-supply curve?

Which of the following happened during World War II?

Which of the following characterizes business cycles?

Suppose the economy is in long-run equilibrium.In a short span of time,there is a large influx of skilled immigrants,a major new discovery of oil,and a major new technological advance in electricity production.In the short run,what would we expect to happen?

Figure 14-1 -Refer to the Figure 14-1.How would an adverse shift in aggregate supply move the economy?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains from Trade

The Market Forces of Supply and Demand (PART 1)

The Market Forces of Supply and Demand (PART 2)

Measuring a Nation's Income

Measuring the Cost of Living

Production and Growth

Saving,Investment,and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff between Inflation and Unemployment

Five Debates over Macroeconomic Policy

Filters

Exam 14: Aggregate Demand and Aggregate Supply

The explanations for the downward slope of the aggregate demand curve say that as the price level rises,consumption,investment,and net exports all fall.

In which of the following situations would the long-run aggregate-supply curve shift right?

Which of the following does the economy experience during a recession?

What does a fall in the economy's overall level of prices tend to do?

An increase in the money supply raises output in the long run.

What happens to prices and output when the long-run aggregate-supply curve shifts right?

Which of the following would happen to Canadian net exports and aggregate demand if countries that imported from Canada went into recession?

What are the implications of a depreciation of the dollar?

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

Why is the aggregate demand curve downward sloping?

Which of the following would cause prices and real GDP to rise in the short run?

We know the theories that explain why the short-run aggregate-supply is upward sloping.But what determines how steep is the short-run aggregate-supply curve,and why is this important?

How does the size of investment as a fraction of GDP compare to its importance in creating economic fluctuations?

Which of the following characterizes the long-run aggregate-supply curve?

Which of the following happened during World War II?

Which of the following characterizes business cycles?

Suppose the economy is in long-run equilibrium.In a short span of time,there is a large influx of skilled immigrants,a major new discovery of oil,and a major new technological advance in electricity production.In the short run,what would we expect to happen?

Figure 14-1 -Refer to the Figure 14-1.How would an adverse shift in aggregate supply move the economy?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains from Trade

The Market Forces of Supply and Demand (PART 1)

The Market Forces of Supply and Demand (PART 2)

Measuring a Nation's Income

Measuring the Cost of Living

Production and Growth

Saving,Investment,and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff between Inflation and Unemployment

Five Debates over Macroeconomic Policy

Filters