Question 1

When a price index moves up or down, which of the following is true?

Accepted Answer

A) There is no substitution effect. 
B) Relative prices do not change. 
C) Overall prices do change. 
D) All of the above are correct. 
A) There is no substitution effect. 
B) Relative prices do not change. 
C) Overall prices do change. 
D) All of the above are correct.

Question 2

Which of the following is true?

Accepted Answer

A)  The Phillips curve trade-off holds in the long run but not necessarily in the short run because of randomness in markets. 
B)  A.W. Phillips' original work related changes in unemployment and changes in prices; later economists demonstrated that there was also a trade-off between changes in prices and changes in unemployment. 
C)  In the short run, there is a trade-off between inflation and unemployment even if the change in aggregate demand is expected. 
D)  Although a trade-off exists in the short run, in the long run, the Phillips curve is vertical. 
A)  The Phillips curve trade-off holds in the long run but not necessarily in the short run because of randomness in markets. 
B)  A.W. Phillips' original work related changes in unemployment and changes in prices; later economists demonstrated that there was also a trade-off between changes in prices and changes in unemployment. 
C)  In the short run, there is a trade-off between inflation and unemployment even if the change in aggregate demand is expected. 
D)  Although a trade-off exists in the short run, in the long run, the Phillips curve is vertical.

Question 3

Which of the following is false?

Accepted Answer

A) In long-run equilibrium, all prices, including wages, have fully adjusted to changes in aggregate demand or aggregate supply. 
B) The real wage is the nominal wage divided by the overall price level. 
C) The aggregate supply curve is always upward sloping. 
D) The aggregate demand curve is always downward sloping. 
A) In long-run equilibrium, all prices, including wages, have fully adjusted to changes in aggregate demand or aggregate supply. 
B) The real wage is the nominal wage divided by the overall price level. 
C) The aggregate supply curve is always upward sloping. 
D) The aggregate demand curve is always downward sloping.

Question 4

In the long run, what will happen when aggregate demand for goods and services increases unexpectedly?

Accepted Answer

A) prices will rise 
B) employment will rise 
C) output will rise 
D) All of the above are correct. 
A) prices will rise 
B) employment will rise 
C) output will rise 
D) All of the above are correct.

Question 5

Consumer spending is directly (positively) related to which of the following?

Accepted Answer

A) wealth and income 
B) the interest rate 
C) the unemployment rate 
D) apprehensions about the job market 
A) wealth and income 
B) the interest rate 
C) the unemployment rate 
D) apprehensions about the job market

Question 6

Aggregate demand is the sum total of

Accepted Answer

A) consumption spending, investment spending, government spending on goods and services and net exports. 
B) government spending and net exports 
C) the monetary base and reserves 
D) None of the above is correct. 
A) consumption spending, investment spending, government spending on goods and services and net exports. 
B) government spending and net exports 
C) the monetary base and reserves 
D) None of the above is correct.

Question 7

_________ tells us the price a firm must receive to induce it to produce various levels of output during a specified time period.

Accepted Answer

A) Supply 
B) Demand 
C) Projected costs 
D) Projected revenues 
A) Supply 
B) Demand 
C) Projected costs 
D) Projected revenues

Question 8

With regards to the Phillips curve, the ___________________is measured on the horizontal axis and the ______________________is measured on the vertical axis.

Accepted Answer

A) unemployment, inflation 
B) inflation, unemployment 
C) rate of wage changes, unemployment 
D) unemployment, rate of wage changes 
A) unemployment, inflation 
B) inflation, unemployment 
C) rate of wage changes, unemployment 
D) unemployment, rate of wage changes

Question 9

Gross investment demand by households and firms is directly (positively) related to which of the following?

Accepted Answer

A) income 
B) the interest rate 
C) the unemployment rate 
D) apprehensions about the job market 
A) income 
B) the interest rate 
C) the unemployment rate 
D) apprehensions about the job market

Question 10

When the price level changes for a given supply of nominal money balances, the supply of real balances changes. This effect is called the

Accepted Answer

A) wealth effect. 
B) constant nominal income effect. 
C) substitution of foreign goods effect. 
D) investment effect. 
A) wealth effect. 
B) constant nominal income effect. 
C) substitution of foreign goods effect. 
D) investment effect.

Question 11

The real wage is

Accepted Answer

A) the nominal wage adjusted for changes in the price level. 
B) the nominal wage inflated by the price level. 
C) the average wage of the average worker. 
D) the employment deflator. 
A) the nominal wage adjusted for changes in the price level. 
B) the nominal wage inflated by the price level. 
C) the average wage of the average worker. 
D) the employment deflator.

Question 12

The American Recovery and Reinvestment Act of 2009

Accepted Answer

A) provided a $787 billion stimulus package to bailout the economy. 
B) included spending initiatives and tax cuts.. 
C) is expected to increase the deficit. 
D) All of the above are true. 
A) provided a $787 billion stimulus package to bailout the economy. 
B) included spending initiatives and tax cuts.. 
C) is expected to increase the deficit. 
D) All of the above are true.

Question 13

An increase in personal income tax rates

Accepted Answer

A) decreases consumption expenditures. 
B) increases consumption expenditures. 
C) increases investment. 
D) increases government spending. 
A) decreases consumption expenditures. 
B) increases consumption expenditures. 
C) increases investment. 
D) increases government spending.

When a price index moves up or down, which of the following is true?

Which of the following is true?

Which of the following is false?

In the long run, what will happen when aggregate demand for goods and services increases unexpectedly?

Consumer spending is directly (positively) related to which of the following?

Aggregate demand is the sum total of

_________ tells us the price a firm must receive to induce it to produce various levels of output during a specified time period.

With regards to the Phillips curve, the _is measured on the horizontal axis and the ____is measured on the vertical axis.

Gross investment demand by households and firms is directly (positively) related to which of the following?

When the price level changes for a given supply of nominal money balances, the supply of real balances changes. This effect is called the

The real wage is

The American Recovery and Reinvestment Act of 2009

An increase in personal income tax rates

Introduction and Overview

Money and Its Role in the Economy

The Overseer: the Federal Reserve System

Financial Markets, Instruments, and Market Makers

Interest Rates and Bond Prices

The Structure of Interest Rates

Market Efficiency and the Flow of Funds Among Sectors

An Introduction to Financial Intermediaries and Risk

Commercial Banking Structure, Regulation, and Performance

Financial Innovation

Financial Instability and Strains on the Financial System

Regulation of the Banking System and the Financial Services Industry

The Debt Markets

The Stock Market

Securities Firms, Mutual Funds, and Financial Conglomerates

How Exchange Rates Are Determined

Forward, Futures, and Options Agreements

The International Financial System

The Fed, Depository Institutions, and the Money Supply Process

The Demand for Real Money Balances and Market Equilibrium

Financial Aspects of the Household, Business, Government, and Rest-Of-The-World Sectors

The Challenges of Monetary Policy

The Process of Monetary Policy Formation

Policy Implementation

Monetary Policy in a Globalized Financial System

Filters

Exam 22: Aggregate Demand and Aggregate Supply

When a price index moves up or down, which of the following is true?

Which of the following is true?

Which of the following is false?

In the long run, what will happen when aggregate demand for goods and services increases unexpectedly?

Consumer spending is directly (positively) related to which of the following?

Aggregate demand is the sum total of

_________ tells us the price a firm must receive to induce it to produce various levels of output during a specified time period.

With regards to the Phillips curve, the ___________________is measured on the horizontal axis and the ______________________is measured on the vertical axis.

Gross investment demand by households and firms is directly (positively) related to which of the following?

When the price level changes for a given supply of nominal money balances, the supply of real balances changes. This effect is called the

The real wage is

The American Recovery and Reinvestment Act of 2009

An increase in personal income tax rates

Introduction and Overview

Money and Its Role in the Economy

The Overseer: the Federal Reserve System

Financial Markets, Instruments, and Market Makers

Interest Rates and Bond Prices

The Structure of Interest Rates

Market Efficiency and the Flow of Funds Among Sectors

An Introduction to Financial Intermediaries and Risk

Commercial Banking Structure, Regulation, and Performance

Financial Innovation

Financial Instability and Strains on the Financial System

Regulation of the Banking System and the Financial Services Industry

The Debt Markets

The Stock Market

Securities Firms, Mutual Funds, and Financial Conglomerates

How Exchange Rates Are Determined

Forward, Futures, and Options Agreements

The International Financial System

The Fed, Depository Institutions, and the Money Supply Process

The Demand for Real Money Balances and Market Equilibrium

Financial Aspects of the Household, Business, Government, and Rest-Of-The-World Sectors

The Challenges of Monetary Policy

The Process of Monetary Policy Formation

Policy Implementation

Monetary Policy in a Globalized Financial System

Filters

With regards to the Phillips curve, the _is measured on the horizontal axis and the ____is measured on the vertical axis.