Question 1

In which situation are people most likely to spend more?

Accepted Answer

A)  when stock prices and interest rates rise 
B)  when their real wealth rises and interest rates fall 
C)  when stock prices fall and interest rates rise 
D)  when their real wealth and interest rates fall 
A)  when stock prices and interest rates rise 
B)  when their real wealth rises and interest rates fall 
C)  when stock prices fall and interest rates rise 
D)  when their real wealth and interest rates fall

Question 2

In the aggregate demand and aggregate supply model, when does the aggregate quantity of goods demanded decrease?

Accepted Answer

A)  when real wealth increases 
B)  when the interest rate falls 
C)  when the dollar depreciates 
D)  when stock prices fall 
A)  when real wealth increases 
B)  when the interest rate falls 
C)  when the dollar depreciates 
D)  when stock prices fall

Question 3

Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions, what would we expect to happen?

Accepted Answer

A)  In the short run, real GDP will rise, and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same, but real GDP will be unaffected. 
B)  In the short run, real GDP will fall, and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same, but real GDP will be unaffected. 
C)  In the short run, real GDP will rise, and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same, but real GDP will be lower. 
D)  In the short run, real GDP will fall, and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same, but real GDP will be lower. 
A)  In the short run, real GDP will rise, and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same, but real GDP will be unaffected. 
B)  In the short run, real GDP will fall, and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same, but real GDP will be unaffected. 
C)  In the short run, real GDP will rise, and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same, but real GDP will be lower. 
D)  In the short run, real GDP will fall, and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same, but real GDP will be lower.

Question 4

Which of the following shifts the short-run aggregate supply to the left?

Accepted Answer

A)  an increase in the price level 
B)  an increase in the expected price level 
C)  an increase in the capital stock 
D)  an increase in the money supply 
A)  an increase in the price level 
B)  an increase in the expected price level 
C)  an increase in the capital stock 
D)  an increase in the money supply

Question 5

Some economists argue that at low levels of GDP (lower than the long-run level of output), a shift to the right in the aggregate-demand curve increases output without a significant increase in the price levels (without inflation), while at higher levels of output (above the long-run level), a shift in the aggregate-demand significantly increases the price level without much effect on output. How would an aggregate-supply curve look like according to this theory?

Accepted Answer

This theory describes an AS cu

Question 6

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 7

Suppose the economy is in long-run equilibrium. Premier Aviary succeeds in getting a major new highway project for his province. At the same time, Premier Green succeeds in getting major new restrictions on logging enacted for her province. In the short run, what would we expect to happen?

Accepted Answer

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

Question 8

Which statement is consistent with an increase 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.

Question 9

If speculators bid up the value of the dollar in the market for foreign-currency exchange, aggregate demand will shift to the left.

Accepted Answer

A) True 
 B)False

Question 10

In which situation 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

Question 11

Which government action will shift the aggregate demand left?

Accepted Answer

A)  a decrease in taxes 
B)  a decrease in the money supply 
C)  signing a free trade agreement 
D)  repealing an import tariff 
A)  a decrease in taxes 
B)  a decrease in the money supply 
C)  signing a free trade agreement 
D)  repealing an import tariff

Question 12

What is an important determinant of the price at which Canadian producers can sell their oil?

Accepted Answer

A)  their ability to ship oil to the U.S. and to overseas markets 
B)  their ability to ship oil to the U.S. market only 
C)  their ability to ship oil to overseas markets only 
D)  their ability to ship oil domestically 
A)  their ability to ship oil to the U.S. and to overseas markets 
B)  their ability to ship oil to the U.S. market only 
C)  their ability to ship oil to overseas markets only 
D)  their ability to ship oil domestically

Question 13

What would cause prices and real GDP to rise in the short run?

Accepted Answer

A)  an increase in the expected price level 
B)  an increase in the money supply 
C)  a decrease in the capital stock 
D)  an import tariff 
A)  an increase in the expected price level 
B)  an increase in the money supply 
C)  a decrease in the capital stock 
D)  an import tariff

Question 14

What 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 15

Which statement best describes the effects of an increase in the price level?

Accepted Answer

A)  Real exchange rates and interest rates rise. 
B)  Real exchange rates and interest rates fall. 
C)  Real exchange rates fall, and interest rates rise. 
D)  Real exchange rates rise, and interest rates fall. 
A)  Real exchange rates and interest rates rise. 
B)  Real exchange rates and interest rates fall. 
C)  Real exchange rates fall, and interest rates rise. 
D)  Real exchange rates rise, and interest rates fall.

Question 16

Discuss what economists believe is different about the long and short run.

Accepted Answer

Most economists believe that in the long

Question 17

An unexpected increase in the price level does not shift the aggregate-supply curve, but an expected increase in the price level shifts the aggregate-supply curve to the left.

Accepted Answer

A) True 
 B)False

Question 18

Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp increase in the minimum wage. In the short run, what would we expect to happen?

Accepted Answer

A)  the price level to rise, and real GDP to fall 
B)  the price level to fall, and real GDP to remain unchanged 
C)  the price level to remain unchanged, and real GDP to fall 
D)  the price level to fall, and the real GDP to rise the same 
A)  the price level to rise, and real GDP to fall 
B)  the price level to fall, and real GDP to remain unchanged 
C)  the price level to remain unchanged, and real GDP to fall 
D)  the price level to fall, and the real GDP to rise the same

Question 19

What is one explanation for the instability of oil prices?

Accepted Answer

A)  inefficient production techniques that have made it unprofitable to develop oil 
B)  fluctuations in the inflation rate in major economies 
C)  pressure from environmental groups to reduce carbon emissions?d expansion in the market for Canadian oil due to new pipeline construction 
A)  inefficient production techniques that have made it unprofitable to develop oil 
B)  fluctuations in the inflation rate in major economies 
C)  pressure from environmental groups to reduce carbon emissions?d expansion in the market for Canadian oil due to new pipeline construction

Question 20

Which statement best explains an increase in consumer spending?

Accepted Answer

A)  People spend more when the price level rises because the dollars they hold are worth more. 
B)  People spend more when the price level rises because the dollars they hold are worth less. 
C)  People spend more when the price level falls because the dollars they hold are worth more. 
D)  People spend more when the price level falls because the dollars they hold are worth less. 
A)  People spend more when the price level rises because the dollars they hold are worth more. 
B)  People spend more when the price level rises because the dollars they hold are worth less. 
C)  People spend more when the price level falls because the dollars they hold are worth more. 
D)  People spend more when the price level falls because the dollars they hold are worth less.

In which situation are people most likely to spend more?

In the aggregate demand and aggregate supply model, when does the aggregate quantity of goods demanded decrease?

Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions, what would we expect to happen?

Which of the following shifts the short-run aggregate supply to the left?

Suppose the economy is in long-run equilibrium. Premier Aviary succeeds in getting a major new highway project for his province. At the same time, Premier Green succeeds in getting major new restrictions on logging enacted for her province. In the short run, what would we expect to happen?

Which statement is consistent with an increase in the price level?

If speculators bid up the value of the dollar in the market for foreign-currency exchange, aggregate demand will shift to the left.

In which situation would the long-run aggregate-supply curve shift right?

Which government action will shift the aggregate demand left?

What is an important determinant of the price at which Canadian producers can sell their oil?

What would cause prices and real GDP to rise in the short run?

What would cause prices and real GDP to rise in the short run?

Which statement best describes the effects of an increase in the price level?

Discuss what economists believe is different about the long and short run.

An unexpected increase in the price level does not shift the aggregate-supply curve, but an expected increase in the price level shifts the aggregate-supply curve to the left.

Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp increase in the minimum wage. In the short run, what would we expect to happen?

What is one explanation for the instability of oil prices?

Which statement best explains an increase in consumer spending?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations 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

In which situation are people most likely to spend more?

In the aggregate demand and aggregate supply model, when does the aggregate quantity of goods demanded decrease?

Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions, what would we expect to happen?

Which of the following shifts the short-run aggregate supply to the left?

Suppose the economy is in long-run equilibrium. Premier Aviary succeeds in getting a major new highway project for his province. At the same time, Premier Green succeeds in getting major new restrictions on logging enacted for her province. In the short run, what would we expect to happen?

Which statement is consistent with an increase in the price level?

If speculators bid up the value of the dollar in the market for foreign-currency exchange, aggregate demand will shift to the left.

In which situation would the long-run aggregate-supply curve shift right?

Which government action will shift the aggregate demand left?

What is an important determinant of the price at which Canadian producers can sell their oil?

What would cause prices and real GDP to rise in the short run?

What would cause prices and real GDP to rise in the short run?

Which statement best describes the effects of an increase in the price level?

Discuss what economists believe is different about the long and short run.

An unexpected increase in the price level does not shift the aggregate-supply curve, but an expected increase in the price level shifts the aggregate-supply curve to the left.

Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp increase in the minimum wage. In the short run, what would we expect to happen?

What is one explanation for the instability of oil prices?

Which statement best explains an increase in consumer spending?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations 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