Question 1

Which of the following best describes what happens when the price level falls?

Accepted Answer

A) Households increase foreign bond purchases, and the supply of dollars increases. 
B) Households increase foreign bond purchases, and the supply of dollars decreases. 
C) Households decrease foreign bond purchases, and the supply of dollars increases. 
D) Households decrease foreign bond purchases, and the supply of dollars decreases. 
A) Households increase foreign bond purchases, and the supply of dollars increases. 
B) Households increase foreign bond purchases, and the supply of dollars decreases. 
C) Households decrease foreign bond purchases, and the supply of dollars increases. 
D) Households decrease foreign bond purchases, and the supply of dollars decreases.

Question 2

We could explain continued increases in both output and the price level by supposing that only long-run aggregate supply shifted right over time.

Accepted Answer

A) True 
 B)False

Question 3

What did The General Theory,a 1936 book by John Maynard Keynes,attempt to explain?

Accepted Answer

A) stagflation 
B) the classical dichotomy 
C) short-run economic fluctuations 
D) how changes in the money supply had created the Great Depression 
A) stagflation 
B) the classical dichotomy 
C) short-run economic fluctuations 
D) how changes in the money supply had created the Great Depression

Question 4

Which of the following shifts the short-run aggregate supply right?

Accepted Answer

A) an increase in the price level 
B) an increase in the minimum wage 
C) a decrease in the price of oil 
D) a decrease in immigration from abroad 
A) an increase in the price level 
B) an increase in the minimum wage 
C) a decrease in the price of oil 
D) a decrease in immigration from abroad

Question 5

What happens when the dollar appreciates?

Accepted Answer

A) Net exports increase, and aggregate demand shifts right. 
B) Net exports increase, and aggregate demand shifts left. 
C) Net exports decrease, and aggregate demand shifts right. 
D) Net exports decrease, and aggregate demand shifts left. 
A) Net exports increase, and aggregate demand shifts right. 
B) Net exports increase, and aggregate demand shifts left. 
C) Net exports decrease, and aggregate demand shifts right. 
D) Net exports decrease, and aggregate demand shifts left.

Question 6

Which of the following best describes the effects of a fall in the price level?

Accepted Answer

A) The real exchange rate and interest rates rise. 
B) The real exchange rate and interest rates fall. 
C) The real exchange rate falls, and interest rates rise. 
D) The real exchange rate rises, and interest rates fall. 
A) The real exchange rate and interest rates rise. 
B) The real exchange rate and interest rates fall. 
C) The real exchange rate falls, and interest rates rise. 
D) The real exchange rate rises, and interest rates fall.

Question 7

Which of the following does NOT determine the long-run level of real GDP?

Accepted Answer

A) the price level 
B) the supply of labour 
C) available natural resources 
D) available technology 
A) the price level 
B) the supply of labour 
C) available natural resources 
D) available technology

Question 8

Explain how an increase in the price level changes interest rates.How does this change in interest rates lead to changes in investment and net exports?

Accepted Answer

When the price level increases,the purch

Question 9

An increase in the price level makes consumers feel less wealthy.How is this situation represented?

Accepted Answer

A) Aggregate demand shifts right. 
B) Aggregate demand shifts left. 
C) There is a movement to right along a given aggregate-demand curve. 
D) There is a movement to the left along a given aggregate-demand curve. 
A) Aggregate demand shifts right. 
B) Aggregate demand shifts left. 
C) There is a movement to right along a given aggregate-demand curve. 
D) There is a movement to the left along a given aggregate-demand curve.

Question 10

Illustrate the classical analysis of growth and inflation with aggregate-demand and long-run aggregate-supply curves.

Accepted Answer

See graph. @#IMG-DLM& Over time,technological adva

Question 11

Which of the following shifts aggregate demand to the right?

Accepted Answer

A) a decrease in the money supply 
B) technological progress that increases the profitability of capital goods 
C) the repeal of an investment tax credit 
D) a decrease in the price level 
A) a decrease in the money supply 
B) technological progress that increases the profitability of capital goods 
C) the repeal of an investment tax credit 
D) a decrease in the price level

Question 12

What changes are likely to happen in an economy when production costs rise?

Accepted Answer

A) Output and prices rise. 
B) Output rises and prices fall. 
C) Output falls and prices rise. 
D) Output and prices fall. 
A) Output and prices rise. 
B) Output rises and prices fall. 
C) Output falls and prices rise. 
D) Output and prices fall.

Question 13

Which of the following best describes the beginning of a recession?

Accepted Answer

A) Production and unemployment both rise. 
B) Production rises and unemployment falls. 
C) Production falls and unemployment rises. 
D) Production and unemployment both fall. 
A) Production and unemployment both rise. 
B) Production rises and unemployment falls. 
C) Production falls and unemployment rises. 
D) Production and unemployment both fall.

Question 14

What did Keynes believe that economies experiencing high unemployment should do?

Accepted Answer

A) adopt policies to reduce the money supply 
B) adopt policies to reduce government expenditures 
C) adopt policies to increase aggregate demand 
D) adopt policies to increase aggregate supply 
A) adopt policies to reduce the money supply 
B) adopt policies to reduce government expenditures 
C) adopt policies to increase aggregate demand 
D) adopt policies to increase aggregate supply

Question 15

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

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 16

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

Accepted Answer

A) if technology improves 
B) if the price level decreases 
C) if the price of oil increases 
D) if the money supply increases 
A) if technology improves 
B) if the price level decreases 
C) if the price of oil increases 
D) if the money supply increases

Question 17

Scenario 14-1
The economy is in long-run equilibrium. Suddenly, due to improved international relations and the increased confidence of policymakers, citizens become more optimistic about the future and stay this way for a long time.
-Refer to the Scenario 14-1.Initially,which curve shifts in which direction?

Accepted Answer

A) AD shifts right. 
B) AD shifts left. 
C) Short-run AS shifts right. 
D) Short-run AS shifts left. 
A) AD shifts right. 
B) AD shifts left. 
C) Short-run AS shifts right. 
D) Short-run AS shifts left.

Question 18

In addition to the price level,which of the following does the aggregate demand and aggregate supply model focus on?

Accepted Answer

A) real GDP 
B) nominal GDP 
C) the neutrality of money 
D) stock prices 
A) real GDP 
B) nominal GDP 
C) the neutrality of money 
D) stock prices

Question 19

What are the variables on the vertical and horizontal axes of the aggregate supply and demand curve?

Accepted Answer

A) the price level and real output 
B) real output and employment 
C) employment and the inflation rate 
D) inflation rate and the price level 
A) the price level and real output 
B) real output and employment 
C) employment and the inflation rate 
D) inflation rate and the price level

Question 20

Which of the following best describes the effects of a fall in the price level?

Accepted Answer

A) Dollars become more valuable, and interest rates rise. 
B) Dollars become more valuable, and interest rates fall. 
C) Dollars become less valuable, and interest rates rise. 
D) Dollars become less valuable, and interest rates fall. 
A) Dollars become more valuable, and interest rates rise. 
B) Dollars become more valuable, and interest rates fall. 
C) Dollars become less valuable, and interest rates rise. 
D) Dollars become less valuable, and interest rates fall.

Which of the following best describes what happens when the price level falls?

We could explain continued increases in both output and the price level by supposing that only long-run aggregate supply shifted right over time.

What did The General Theory,a 1936 book by John Maynard Keynes,attempt to explain?

Which of the following shifts the short-run aggregate supply right?

What happens when the dollar appreciates?

Which of the following best describes the effects of a fall in the price level?

Which of the following does NOT determine the long-run level of real GDP?

Explain how an increase in the price level changes interest rates.How does this change in interest rates lead to changes in investment and net exports?

An increase in the price level makes consumers feel less wealthy.How is this situation represented?

Illustrate the classical analysis of growth and inflation with aggregate-demand and long-run aggregate-supply curves.

Which of the following shifts aggregate demand to the right?

What changes are likely to happen in an economy when production costs rise?

Which of the following best describes the beginning of a recession?

What did Keynes believe that economies experiencing high unemployment should do?

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

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

In addition to the price level,which of the following does the aggregate demand and aggregate supply model focus on?

What are the variables on the vertical and horizontal axes of the aggregate supply and demand curve?

Which of the following best describes the effects of a fall in the price level?

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

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Exam 14: Aggregate Demand and Aggregate Supply

Which of the following best describes what happens when the price level falls?

We could explain continued increases in both output and the price level by supposing that only long-run aggregate supply shifted right over time.

What did The General Theory,a 1936 book by John Maynard Keynes,attempt to explain?

Which of the following shifts the short-run aggregate supply right?

What happens when the dollar appreciates?

Which of the following best describes the effects of a fall in the price level?

Which of the following does NOT determine the long-run level of real GDP?

Explain how an increase in the price level changes interest rates.How does this change in interest rates lead to changes in investment and net exports?

An increase in the price level makes consumers feel less wealthy.How is this situation represented?

Illustrate the classical analysis of growth and inflation with aggregate-demand and long-run aggregate-supply curves.

Which of the following shifts aggregate demand to the right?

What changes are likely to happen in an economy when production costs rise?

Which of the following best describes the beginning of a recession?

What did Keynes believe that economies experiencing high unemployment should do?

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

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

In addition to the price level,which of the following does the aggregate demand and aggregate supply model focus on?

What are the variables on the vertical and horizontal axes of the aggregate supply and demand curve?

Which of the following best describes the effects of a fall in the price level?

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