Question 1

Other things the same,when the price level falls,interest rates

Accepted Answer

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

Question 2

The aggregate supply curve is upward sloping in

Accepted Answer

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

Question 3

Other things the same,a fall in the economy's overall level of prices tends to

Accepted Answer

A) raise both the quantity demanded and supplied of goods and services. 
B) raise the quantity demanded of goods and services, but lower the quantity supplied. 
C) lower the quantity demanded of goods and services, but raise the quantity supplied. 
D) lower both the quantity demanded and the quantity supplied of goods and services. 
A) raise both the quantity demanded and supplied of goods and services. 
B) raise the quantity demanded of goods and services, but lower the quantity supplied. 
C) lower the quantity demanded of goods and services, but raise the quantity supplied. 
D) lower both the quantity demanded and the quantity supplied of goods and services.

Question 4

Other things the same,as the price level falls,a country's exchange rate

Accepted Answer

A) and interest rates rise. 
B) and interest rates fall. 
C) falls and interest rates rise. 
D) rises and interest rates fall. 
A) and interest rates rise. 
B) and interest rates fall. 
C) falls and interest rates rise. 
D) rises and interest rates fall.

Question 5

A short period of falling incomes and rising unemployment is called a

Accepted Answer

A) depression. 
B) recession. 
C) expansion. 
D) business cycle. 
A) depression. 
B) recession. 
C) expansion. 
D) business cycle.

Question 6

Policymakers who control monetary and fiscal policy and want to offset the effects on output of an economic contraction caused by a shift in aggregate supply could use policy to shift

Accepted Answer

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

Question 7

Which of the following shifts aggregate demand to the right?

Accepted Answer

A) Congress reduces purchases of new weapons systems. 
B) The Fed buys bonds in the open market. 
C) The price level falls. 
D) Net exports fall. 
A) Congress reduces purchases of new weapons systems. 
B) The Fed buys bonds in the open market. 
C) The price level falls. 
D) Net exports fall.

Question 8

Suppose the economy is in long-run equilibrium.Senator Aviary succeeds in getting a major new highway project for his state.At the same time,Senator Green succeeds in getting major new restrictions on logging enacted.In the short run,we would expect

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 9

Other things the same,as the price level falls,

Accepted Answer

A) the money supply falls. 
B) interest rates rise. 
C) a dollar buys more domestic goods. 
D) the aggregate demand curve shifts right. 
A) the money supply falls. 
B) interest rates rise. 
C) a dollar buys more domestic goods. 
D) the aggregate demand curve shifts right.

Question 10

Which of the following explains why production rises in most years?

Accepted Answer

A) increases in the labor force 
B) increases in the capital stock 
C) advances in technological knowledge 
D) All of the above are correct. 
A) increases in the labor force 
B) increases in the capital stock 
C) advances in technological knowledge 
D) All of the above are correct.

Question 11

Because we understand what things change GDP,we can predict recessions with a fair amount of accuracy.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) either an increase in the price of imported natural resources or opening up international trade 
B) neither an increase in the price of imported natural resources or opening up international trade 
C) an increase in the price of imported natural resources, but not opening up international trade 
D) opening up international trade, but not an increase in the price of imported natural resources 
A) either an increase in the price of imported natural resources or opening up international trade 
B) neither an increase in the price of imported natural resources or opening up international trade 
C) an increase in the price of imported natural resources, but not opening up international trade 
D) opening up international trade, but not an increase in the price of imported natural resources

Question 13

The average price level is measured by

Accepted Answer

A) any real variable. 
B) the rate of inflation. 
C) the level of the money supply. 
D) the CPI or the GDP deflator. 
A) any real variable. 
B) the rate of inflation. 
C) the level of the money supply. 
D) the CPI or the GDP deflator.

Question 14

Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage.They may infer that the reward to working is

Accepted Answer

A) temporarily low and so supply a smaller quantity of labor. 
B) temporarily low and so supply a larger quantity of labor. 
C) temporarily high and so supply a smaller quantity of labor. 
D) temporarily high and so supply a larger quantity of labor. 
A) temporarily low and so supply a smaller quantity of labor. 
B) temporarily low and so supply a larger quantity of labor. 
C) temporarily high and so supply a smaller quantity of labor. 
D) temporarily high and so supply a larger quantity of labor.

Question 15

Other things the same,an increase in the price level makes the dollars people hold worth

Accepted Answer

A) more, so they spend more. 
B) more, so they spend less. 
C) less, so they spend more. 
D) less, so they spend less. 
A) more, so they spend more. 
B) more, so they spend less. 
C) less, so they spend more. 
D) less, so they spend less.

Question 16

A decrease in the expected price level would shift

Accepted Answer

A) only the long-run aggregate supply curve right. 
B) only the short-run aggregate supply curve right. 
C) both the short-run and the long-run aggregate supply curve right. 
D) Neither the short-run nor the long-run aggregate supply curve right. 
A) only the long-run aggregate supply curve right. 
B) only the short-run aggregate supply curve right. 
C) both the short-run and the long-run aggregate supply curve right. 
D) Neither the short-run nor the long-run aggregate supply curve right.

Question 17

In the short run Recessions in South Korea and Indonesia will cause

Accepted Answer

A) the U.S.price level and real GDP to rise. 
B) the U.S.price level and real GDP to fall. 
C) the U.S.price level to rise and real GDP to fall. 
D) the U.S.price level to fall and real GDP to rise. 
A) the U.S.price level and real GDP to rise. 
B) the U.S.price level and real GDP to fall. 
C) the U.S.price level to rise and real GDP to fall. 
D) the U.S.price level to fall and real GDP to rise.

Question 18

During recessions

Accepted Answer

A) workers are laid off. 
B) factories are idle. 
C) firms may find they are unable to sell all they produce. 
D) All of the above are correct. 
A) workers are laid off. 
B) factories are idle. 
C) firms may find they are unable to sell all they produce. 
D) All of the above are correct.

Question 19

Consider the exhibit below for the following questions.
Figure 33-1
  
-Refer to Figure 33-1.In the short run,a favorable shift in aggregate supply would move the economy from

Accepted Answer

A) A to B. 
B) B to C. 
C) C to D. 
D) D to A. 
A) A to B. 
B) B to C. 
C) C to D. 
D) D to A.

Question 20

Other things the same,a decrease in the price level makes the interest rate increase,which leads to an appreciation of the dollar in the foreign-currency exchange.

Accepted Answer

A) True 
 B)False

Exam 33: Aggregate Demand and Aggregate Supply

Other things the same,when the price level falls,interest rates

The aggregate supply curve is upward sloping in

Other things the same,a fall in the economy's overall level of prices tends to

Other things the same,as the price level falls,a country's exchange rate

A short period of falling incomes and rising unemployment is called a

Policymakers who control monetary and fiscal policy and want to offset the effects on output of an economic contraction caused by a shift in aggregate supply could use policy to shift

Which of the following shifts aggregate demand to the right?

Suppose the economy is in long-run equilibrium.Senator Aviary succeeds in getting a major new highway project for his state.At the same time,Senator Green succeeds in getting major new restrictions on logging enacted.In the short run,we would expect

Other things the same,as the price level falls,

Which of the following explains why production rises in most years?

Because we understand what things change GDP,we can predict recessions with a fair amount of accuracy.

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

The average price level is measured by

Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage.They may infer that the reward to working is

Other things the same,an increase in the price level makes the dollars people hold worth

A decrease in the expected price level would shift

In the short run Recessions in South Korea and Indonesia will cause

During recessions

Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.In the short run,a favorable shift in aggregate supply would move the economy from

Other things the same,a decrease in the price level makes the interest rate increase,which leads to an appreciation of the dollar in the foreign-currency exchange.

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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