Question 1

Changes in the price of oil

Accepted Answer

A) can only lead to recessions. 
B) have not contributed much to output fluctuations in the United States. 
C) change the economy principally by changing aggregate demand. 
D) created both inflation and recession in the United States in the 1970s. 
A) can only lead to recessions. 
B) have not contributed much to output fluctuations in the United States. 
C) change the economy principally by changing aggregate demand. 
D) created both inflation and recession in the United States in the 1970s.

Question 2

A decrease in the availability of an important major resource such as oil shifts

Accepted Answer

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

Question 3

An increase in the expected price level shifts short-run aggregate supply to the

Accepted Answer

A) right, and an increase in the actual price level shifts short-run aggregate supply to the right. 
B) right, and an increase in the actual price level does not shift short-run aggregate supply. 
C) left, and an increase in the actual price level shifts short-run aggregate supply to the left. 
D) left, and an increase in the actual price level does not shift short-run aggregate supply. 
A) right, and an increase in the actual price level shifts short-run aggregate supply to the right. 
B) right, and an increase in the actual price level does not shift short-run aggregate supply. 
C) left, and an increase in the actual price level shifts short-run aggregate supply to the left. 
D) left, and an increase in the actual price level does not shift short-run aggregate supply.

Question 4

Aggregate demand shifts right when the government

Accepted Answer

A) raises personal income taxes. 
B) increases the money supply. 
C) repeals an investment tax credit. 
D) All of the above are correct. 
A) raises personal income taxes. 
B) increases the money supply. 
C) repeals an investment tax credit. 
D) All of the above are correct.

Question 5

Which of the following shifts aggregate demand to the left?

Accepted Answer

A) The price level rises. 
B) The price level falls. 
C) The dollar depreciates for some reason other than a change in the price level. 
D) Stock prices fall for some reason other than a change in the price level. 
A) The price level rises. 
B) The price level falls. 
C) The dollar depreciates for some reason other than a change in the price level. 
D) Stock prices fall for some reason other than a change in the price level.

Question 6

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

Accepted Answer

A) an increase in price expectations 
B) an increase in the actual price level 
C) a decrease in the money supply 
D) a decrease in the price of oil 
A) an increase in price expectations 
B) an increase in the actual price level 
C) a decrease in the money supply 
D) a decrease in the price of oil

Question 7

Which of the following is not a determinant of the long-run level of real GDP?

Accepted Answer

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

Question 8

The long-run aggregate supply curve

Accepted Answer

A) is vertical. 
B) is a graphical representation of the classical dichotomy. 
C) indicates monetary neutrality in the long run. 
D) All of the above are correct. 
A) is vertical. 
B) is a graphical representation of the classical dichotomy. 
C) indicates monetary neutrality in the long run. 
D) All of the above are correct.

Question 9

Political Instability Abroad
Suppose that political instability in other countries makes people fear for the value of their assets in these countries so that they desire to purchase more U.S assets.
-Refer to Political Instability Abroad.What would the change in the exchange rate make happen to U.S.net exports and U.S.aggregate demand?

Accepted Answer

A) Net exports would rise and so U.S.aggregate demand would fall. 
B) Net exports would rise and so U.S.aggregate demand would rise. 
C) Net exports would fall and so U.S.aggregate demand would fall. 
D) Net exports would fall and so U.S.aggregate demand would rise. 
A) Net exports would rise and so U.S.aggregate demand would fall. 
B) Net exports would rise and so U.S.aggregate demand would rise. 
C) Net exports would fall and so U.S.aggregate demand would fall. 
D) Net exports would fall and so U.S.aggregate demand would rise.

Question 10

The long-run trend in real GDP is upward.How is this possible given business cycles? What explains the upward trend?

Accepted Answer

There are occasional short-lived periods

Question 11

When the dollar depreciates,U.S.

Accepted Answer

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

Question 12

If the actual price level is 165,but people had been expecting it to be 160,then

Accepted Answer

A) the quantity of output supplied rises, but only in the short run. 
B) the quantity of output supplied rises in the short run and the long run. 
C) the quantity of output supplied falls, but only in the short run. 
D) the quantity of output supplied falls in the short run and the long run. 
A) the quantity of output supplied rises, but only in the short run. 
B) the quantity of output supplied rises in the short run and the long run. 
C) the quantity of output supplied falls, but only in the short run. 
D) the quantity of output supplied falls in the short run and the long run.

Question 13

During World War II,

Accepted Answer

A) government purchases of goods and services increased fivefold. 
B) the economy's production increased about 25 percent. 
C) unemployment fell to about 1%. 
D) All of the above are correct. 
A) government purchases of goods and services increased fivefold. 
B) the economy's production increased about 25 percent. 
C) unemployment fell to about 1%. 
D) All of the above are correct.

Question 14

The aggregate demand and aggregate supply model implies monetary neutrality

Accepted Answer

A) only in the short run. 
B) only in the long run. 
C) in both the short run and the long run. 
D) in neither the short run nor long run. 
A) only in the short run. 
B) only in the long run. 
C) in both the short run and the long run. 
D) in neither the short run nor long run.

Question 15

Most economists use the aggregate demand and aggregate supply model primarily to analyze

Accepted Answer

A) short-run fluctuations in the economy. 
B) the effects of macroeconomic policy on the prices of individual goods. 
C) the long-run effects of international trade policies. 
D) productivity and economic growth. 
A) short-run fluctuations in the economy. 
B) the effects of macroeconomic policy on the prices of individual goods. 
C) the long-run effects of international trade policies. 
D) productivity and economic growth.

Question 16

Which of the following would shift the long-run aggregate supply curve to the right?

Accepted Answer

A) an increase in the actual price level 
B) an increase in the money supply 
C) increased international trade 
D) None of the above is correct. 
A) an increase in the actual price level 
B) an increase in the money supply 
C) increased international trade 
D) None of the above is correct.

Question 17

Other things the same,when the price level rises,

Accepted Answer

A) interest rates rise, so firms increase investment. 
B) interest rates rise, so firms decrease investment. 
C) interest rates fall, so firms increase investment. 
D) interest rates fall, so firms decrease investment. 
A) interest rates rise, so firms increase investment. 
B) interest rates rise, so firms decrease investment. 
C) interest rates fall, so firms increase investment. 
D) interest rates fall, so firms decrease investment.

Question 18

If businesses in general decide that they have overbuilt and so now have too much capital,their response to this would initially shift

Accepted Answer

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

Question 19

Most economists believe that classical macroeconomic theory is a good description of the world

Accepted Answer

A) in neither the short nor long run. 
B) in the short run and in the long run. 
C) in the short run, but not in the long run. 
D) in the long run, but not in the short run. 
A) in neither the short nor long run. 
B) in the short run and in the long run. 
C) in the short run, but not in the long run. 
D) in the long run, but not in the short run.

Question 20

Suppose the economy is in long-run equilibrium.If there is a sharp decline in the stock market combined with a significant increase in immigration of skilled workers,then we would expect that in the short run,

Accepted Answer

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

Exam 33: Aggregate Demand and Aggregate Supply

Changes in the price of oil

A decrease in the availability of an important major resource such as oil shifts

An increase in the expected price level shifts short-run aggregate supply to the

Aggregate demand shifts right when the government

Which of the following shifts aggregate demand to the left?

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

Which of the following is not a determinant of the long-run level of real GDP?

The long-run aggregate supply curve

The long-run trend in real GDP is upward.How is this possible given business cycles? What explains the upward trend?

When the dollar depreciates,U.S.

If the actual price level is 165,but people had been expecting it to be 160,then

During World War II,

The aggregate demand and aggregate supply model implies monetary neutrality

Most economists use the aggregate demand and aggregate supply model primarily to analyze

Which of the following would shift the long-run aggregate supply curve to the right?

Other things the same,when the price level rises,

If businesses in general decide that they have overbuilt and so now have too much capital,their response to this would initially shift

Most economists believe that classical macroeconomic theory is a good description of the world

Suppose the economy is in long-run equilibrium.If there is a sharp decline in the stock market combined with a significant increase in immigration of skilled workers,then we would expect that in the short run,

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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