Question 1

In 1986,OPEC countries increased their production of oil.This caused

Accepted Answer

A) the price level to rise. 
B) aggregate supply to shift right. 
C) unemployment to rise. 
D) None of the above is correct. 
A) the price level to rise. 
B) aggregate supply to shift right. 
C) unemployment to rise. 
D) None of the above is correct. B

Question 2

Optimism
Imagine that the economy is in long-run equilibrium. Then, perhaps because of improved international relations and increased confidence in policy makers, people become more optimistic about the future and stay this way for some time.
-Refer to Optimism.Which curve shifts and in which direction?

Accepted Answer

A) aggregate demand shifts right 
B) aggregate demand shifts left 
C) aggregate supply shifts right. 
D) aggregate supply shifts left. 
A) aggregate demand shifts right 
B) aggregate demand shifts left 
C) aggregate supply shifts right. 
D) aggregate supply shifts left. A

Question 3

An increase in the money supply

Accepted Answer

A) and the investment tax credit both cause aggregate demand to shift right. 
B) and the investment tax credit both cause aggregate demand to shift left. 
C) causes aggregate demand to shift right, while the investment tax credit causes aggregate demand to shift left. 
D) causes aggregate demand to shift left, while the investment tax credit causes aggregate demand to shift right. 
A) and the investment tax credit both cause aggregate demand to shift right. 
B) and the investment tax credit both cause aggregate demand to shift left. 
C) causes aggregate demand to shift right, while the investment tax credit causes aggregate demand to shift left. 
D) causes aggregate demand to shift left, while the investment tax credit causes aggregate demand to shift right. A

Question 4

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,then we would expect that in the short run,real GDP will

Accepted Answer

A) 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) 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) 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) 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) 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) 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) 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) 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 5

Which of the following would cause stagflation?

Accepted Answer

A) aggregate demand shifts right 
B) aggregate demand shifts left 
C) aggregate supply shifts right 
D) aggregate supply shifts left 
A) aggregate demand shifts right 
B) aggregate demand shifts left 
C) aggregate supply shifts right 
D) aggregate supply shifts left

Question 6

Which of the following adjusts to bring aggregate supply and demand into balance?

Accepted Answer

A) the price level and real output 
B) the real rate of interest and the money supply 
C) government expenditures and taxes 
D) the saving rate and net exports 
A) the price level and real output 
B) the real rate of interest and the money supply 
C) government expenditures and taxes 
D) the saving rate and net exports

Question 7

When the dollar appreciates,U.S.

Accepted Answer

A) exports decrease, while imports increase. 
B) exports and imports decrease. 
C) exports and imports increase. 
D) exports increase, while imports decrease. 
A) exports decrease, while imports increase. 
B) exports and imports decrease. 
C) exports and imports increase. 
D) exports increase, while imports decrease.

Question 8

People will spend more if the price level

Accepted Answer

A) rises because rising prices increase the real value of a dollar. 
B) rises because rising prices decrease the real value of a dollar. 
C) falls because falling prices increase the real value of a dollar. 
D) falls because falling prices decrease the real value of a dollar. 
A) rises because rising prices increase the real value of a dollar. 
B) rises because rising prices decrease the real value of a dollar. 
C) falls because falling prices increase the real value of a dollar. 
D) falls because falling prices decrease the real value of a dollar.

Question 9

Which of the following shifts both short-run and long-run aggregate supply left?

Accepted Answer

A) a decrease in the actual price level 
B) a decrease in the expected price level 
C) a decrease in the capital stock 
D) a decrease in the money supply 
A) a decrease in the actual price level 
B) a decrease in the expected price level 
C) a decrease in the capital stock 
D) a decrease in the money supply

Question 10

Other things the same,the aggregate quantity of goods demanded in the U.S.increases if

Accepted Answer

A) real wealth falls. 
B) the interest rate rises. 
C) the dollar depreciates. 
D) None of the above is correct. 
A) real wealth falls. 
B) the interest rate rises. 
C) the dollar depreciates. 
D) None of the above is correct.

Question 11

The Stock Market Boom of 2010
Imagine that in 2010 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time.
-Refer to Stock Market Boom 2010.What happens to the expected price level and what impact does this have on wage bargaining?

Accepted Answer

A) The expected price level falls.Bargains are struck for higher wages. 
B) The expected price level falls.Bargains are struck for lower wages. 
C) The expected price level rises.Bargains are struck for higher wages. 
D) The expected price level rises.Bargains are struck for lower wages. 
A) The expected price level falls.Bargains are struck for higher wages. 
B) The expected price level falls.Bargains are struck for lower wages. 
C) The expected price level rises.Bargains are struck for higher wages. 
D) The expected price level rises.Bargains are struck for lower wages.

Question 12

Other things the same,the aggregate quantity of output supplied will decrease if the price level

Accepted Answer

A) is lower than expected so that firms believe the relative price of their output has increased. 
B) is lower than expected so that firms believe the relative price of their output has decreased. 
C) is higher than expected so that firms believe the relative price of their output has increased. 
D) is higher than expected so that firms believe the relative price of their output has decreased. 
A) is lower than expected so that firms believe the relative price of their output has increased. 
B) is lower than expected so that firms believe the relative price of their output has decreased. 
C) is higher than expected so that firms believe the relative price of their output has increased. 
D) is higher than expected so that firms believe the relative price of their output has decreased.

Question 13

Other things the same,if the long-run aggregate supply curve shifts left,prices

Accepted Answer

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

Question 14

The Stock Market Boom of 2010
Imagine that in 2010 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time.
-Refer to Stock Market Boom 2010.Which curve shifts and in which direction?

Accepted Answer

A) aggregate demand shifts right 
B) aggregate demand shifts left 
C) aggregate supply shifts right 
D) aggregate supply shifts left. 
A) aggregate demand shifts right 
B) aggregate demand shifts left 
C) aggregate supply shifts right 
D) aggregate supply shifts left.

Question 15

Consider the exhibit below for the following questions.
Figure 33-1
  
-Refer to Figure 33-1.An increase in the money supply would move the economy from C to

Accepted Answer

A) B in the short run and the long run. 
B) D in the short run and the long run. 
C) B in the short run and A in the long run. 
D) D in the short run and C in the long run. 
A) B in the short run and the long run. 
B) D in the short run and the long run. 
C) B in the short run and A in the long run. 
D) D in the short run and C in the long run.

Question 16

Other things the same,when the price level rises more than expected,some firms will have

Accepted Answer

A) higher than desired prices which increases their sales. 
B) higher than desired prices which depresses their sales. 
C) lower than desired prices which increases their sales. 
D) lower than desired prices which depresses their sales. 
A) higher than desired prices which increases their sales. 
B) higher than desired prices which depresses their sales. 
C) lower than desired prices which increases their sales. 
D) lower than desired prices which depresses their sales.

Question 17

Consider the exhibit below for the following questions.
Figure 33-1
  
-Refer to Figure 33-1.If the economy starts at A and there is a fall in aggregate demand,the economy moves

Accepted Answer

A) back to A in the long run. 
B) to B in the long run. 
C) to C in the long run. 
D) to D in the long run. 
A) back to A in the long run. 
B) to B in the long run. 
C) to C in the long run. 
D) to D in the long run.

Question 18

When taxes decrease,consumption

Accepted Answer

A) increases as shown by a movement to the right along a given aggregate demand curve. 
B) increases, shifting aggregate demand to the right. 
C) decreases, shifting aggregate supply to the right. 
D) None of the above is correct. 
A) increases as shown by a movement to the right along a given aggregate demand curve. 
B) increases, shifting aggregate demand to the right. 
C) decreases, shifting aggregate supply to the right. 
D) None of the above is correct.

Question 19

Imagine two economies that are identical except that for a long time,economy A has had a money supply of $1,000 billion while economy B has had a money supply of $500 billion.It follows that

Accepted Answer

A) real GDP and the price level are lower in country B. 
B) real GDP, but not the price level, is lower in country B. 
C) the price level, but not real GDP is lower in country B. 
D) neither the price level or real GDP is lower in country B. 
A) real GDP and the price level are lower in country B. 
B) real GDP, but not the price level, is lower in country B. 
C) the price level, but not real GDP is lower in country B. 
D) neither the price level or real GDP is lower in country B.

Question 20

Other things the same,if workers and firms expected prices to rise by 2 percent but instead they rise by 3 percent,then

Accepted Answer

A) employment and production rise. 
B) employment rises and production falls. 
C) employment falls and production rises. 
D) employment and production fall. 
A) employment and production rise. 
B) employment rises and production falls. 
C) employment falls and production rises. 
D) employment and production fall.

Exam 33: Aggregate Demand and Aggregate Supply

In 1986,OPEC countries increased their production of oil.This caused

An increase in the money supply

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,then we would expect that in the short run,real GDP will

Which of the following would cause stagflation?

Which of the following adjusts to bring aggregate supply and demand into balance?

When the dollar appreciates,U.S.

People will spend more if the price level

Which of the following shifts both short-run and long-run aggregate supply left?

Other things the same,the aggregate quantity of goods demanded in the U.S.increases if

The Stock Market Boom of 2010 Imagine that in 2010 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time. -Refer to Stock Market Boom 2010.What happens to the expected price level and what impact does this have on wage bargaining?

Other things the same,the aggregate quantity of output supplied will decrease if the price level

Other things the same,if the long-run aggregate supply curve shifts left,prices

The Stock Market Boom of 2010 Imagine that in 2010 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time. -Refer to Stock Market Boom 2010.Which curve shifts and in which direction?

Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.An increase in the money supply would move the economy from C to

Other things the same,when the price level rises more than expected,some firms will have

Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.If the economy starts at A and there is a fall in aggregate demand,the economy moves

When taxes decrease,consumption

Imagine two economies that are identical except that for a long time,economy A has had a money supply of $1,000 billion while economy B has had a money supply of $500 billion.It follows that

Other things the same,if workers and firms expected prices to rise by 2 percent but instead they rise by 3 percent,then

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

Supply, demand, and Government Policies

Consumers, producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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