Question 1

When the money supply increases

Accepted Answer

A) interest rates fall and so aggregate demand shifts right. 
B) interest rates fall and so aggregate demand shifts left. 
C) interest rates rise and so aggregate demand shifts right. 
D) interest rates rise and so aggregate demand shifts left. 
A) interest rates fall and so aggregate demand shifts right. 
B) interest rates fall and so aggregate demand shifts left. 
C) interest rates rise and so aggregate demand shifts right. 
D) interest rates rise and so aggregate demand shifts left.

Question 2

Other things the same,if the long-run aggregate supply curve shifts right,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 3

According to classical macroeconomic theory,changes in the money supply affect

Accepted Answer

A) real GDP and the price level. 
B) real GDP but not the price level. 
C) the price level, but not real GDP. 
D) neither the price level nor real GDP. 
A) real GDP and the price level. 
B) real GDP but not the price level. 
C) the price level, but not real GDP. 
D) neither the price level nor real GDP.

Question 4

If the government increased the money supply in response to a decrease in short-run aggregate supply,unemployment would return towards its natural rate,but prices would rise even more.

Accepted Answer

A) True 
 B)False

Question 5

The variables on the vertical and horizontal axes of the aggregate demand and supply graph are

Accepted Answer

A) the price level, real output. 
B) real output, employment. 
C) employment, the inflation rate. 
D) the value of money, the price level. 
A) the price level, real output. 
B) real output, employment. 
C) employment, the inflation rate. 
D) the value of money, the price level.

Question 6

Increased output and prices in the United States in the early 1940s were mostly the result of increased government expenditures.

Accepted Answer

A) True 
 B)False

Question 7

Some countries have high minimum wages and require a lengthy and costly process to get permission to open a business

Accepted Answer

A) Reducing either the minimum wage or the time and cost to open a business would have no effect on the long-run aggregate supply curve. 
B) Reducing the minimum wage and the time and cost to open a business would both shift the long-run aggregate supply curve to the right. 
C) Reducing the minimum wage would shift long-run aggregate supply to the right.Reducing the time and cost to open a business would have no affect on the long-run aggregate supply curve. 
D) Reducing the minimum wage would have no affect on the long-run aggregate supply curve.Reducing the time and cost to open a business would shift the long-run aggregate supply curve to the right. 
A) Reducing either the minimum wage or the time and cost to open a business would have no effect on the long-run aggregate supply curve. 
B) Reducing the minimum wage and the time and cost to open a business would both shift the long-run aggregate supply curve to the right. 
C) Reducing the minimum wage would shift long-run aggregate supply to the right.Reducing the time and cost to open a business would have no affect on the long-run aggregate supply curve. 
D) Reducing the minimum wage would have no affect on the long-run aggregate supply curve.Reducing the time and cost to open a business would shift the long-run aggregate supply curve to the right.

Question 8

The downward slope of the aggregate demand curve is based on logic that as the price level rises,consumption,investment,and net exports all fall.

Accepted Answer

A) True 
 B)False

Question 9

On average over the past 50 years,the U.S.economy has grown at the rate of about

Accepted Answer

A) 1 percent per year. 
B) 3 percent per year. 
C) 4 percent per year. 
D) 6 percent per year. 
A) 1 percent per year. 
B) 3 percent per year. 
C) 4 percent per year. 
D) 6 percent per year.

Question 10

The equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level),where a is a positive number,represents

Accepted Answer

A) an upward-sloping, short-run aggregate supply curve. 
B) a vertical, long-run supply curve. 
C) a downward-sloping aggregate demand curve. 
D) None of the above is correct. 
A) an upward-sloping, short-run aggregate supply curve. 
B) a vertical, long-run supply curve. 
C) a downward-sloping aggregate demand curve. 
D) None of the above is correct.

Question 11

Real and nominal variables are highly intertwined,and changes in the money supply change real GDP.Most economists would agree that this statement accurately describes

Accepted Answer

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

Question 12

Changes in the price level affect which components of aggregate demand?

Accepted Answer

A) only consumption and investment 
B) only consumption and net exports 
C) only investment 
D) consumption, investment, and net exports 
A) only consumption and investment 
B) only consumption and net exports 
C) only investment 
D) consumption, investment, and net exports

Question 13

An increase in the money supply causes output to rise in the long run.

Accepted Answer

A) True 
 B)False

Question 14

If people want to save more for retirement

Accepted Answer

A) or if the government raises taxes, aggregate demand shifts right. 
B) or if the government raises taxes, aggregate demand shifts left. 
C) aggregate demand shifts right.If the government raises taxes, aggregate demand shifts left. 
D) aggregate demand shifts left.If the government raises taxes, aggregate demand shifts right. 
A) or if the government raises taxes, aggregate demand shifts right. 
B) or if the government raises taxes, aggregate demand shifts left. 
C) aggregate demand shifts right.If the government raises taxes, aggregate demand shifts left. 
D) aggregate demand shifts left.If the government raises taxes, aggregate demand shifts right.

Question 15

An increase in the money supply shifts the long-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 16

Other things the same,a decrease in the price level induces people to hold

Accepted Answer

A) less money, so they lend less, and the interest rate rises. 
B) less money, so they lend more, and the interest rate falls. 
C) more money, so they lend more, and the interest rate rises. 
D) more money, so they lend less, and the interest rate falls. 
A) less money, so they lend less, and the interest rate rises. 
B) less money, so they lend more, and the interest rate falls. 
C) more money, so they lend more, and the interest rate rises. 
D) more money, so they lend less, and the interest rate falls.

Question 17

When taxes decrease,consumption

Accepted Answer

A) increases, so aggregate demand shifts right. 
B) increases, so aggregate supply shifts right. 
C) decreases, so aggregate demand shifts left. 
D) decreases, so aggregate supply shifts left. 
A) increases, so aggregate demand shifts right. 
B) increases, so aggregate supply shifts right. 
C) decreases, so aggregate demand shifts left. 
D) decreases, so aggregate supply shifts left.

Question 18

The quantity of money has no real impact on things people really care about like whether or not they have a job.Most economists would agree that this statement is appropriate concerning

Accepted Answer

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

Question 19

Consider the exhibit below for the following questions.
Figure 33-1
  
-Refer to Figure 33-1.If the economy starts at A and moves to D in the short run,the economy

Accepted Answer

A) moves to A in the long run. 
B) moves to B in the long run. 
C) moves to C in the long run. 
D) stays at D in the long run. 
A) moves to A in the long run. 
B) moves to B in the long run. 
C) moves to C in the long run. 
D) stays at D in the long run.

Question 20

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers people become pessimistic regarding the future and retain that level of pessimism for some time.
-Refer to Pessimism.In the short run what happens to the price level and real GDP?

Accepted Answer

A) Both the price level and real GDP rise. 
B) Both the price level and real GDP fall. 
C) The price level rises and real GDP falls. 
D) The price level falls and real GDP rises. 
A) Both the price level and real GDP rise. 
B) Both the price level and real GDP fall. 
C) The price level rises and real GDP falls. 
D) The price level falls and real GDP rises.

Exam 33: Aggregate Demand and Aggregate Supply

When the money supply increases

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

According to classical macroeconomic theory,changes in the money supply affect

If the government increased the money supply in response to a decrease in short-run aggregate supply,unemployment would return towards its natural rate,but prices would rise even more.

The variables on the vertical and horizontal axes of the aggregate demand and supply graph are

Increased output and prices in the United States in the early 1940s were mostly the result of increased government expenditures.

Some countries have high minimum wages and require a lengthy and costly process to get permission to open a business

The downward slope of the aggregate demand curve is based on logic that as the price level rises,consumption,investment,and net exports all fall.

On average over the past 50 years,the U.S.economy has grown at the rate of about

The equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level),where a is a positive number,represents

Real and nominal variables are highly intertwined,and changes in the money supply change real GDP.Most economists would agree that this statement accurately describes

Changes in the price level affect which components of aggregate demand?

An increase in the money supply causes output to rise in the long run.

If people want to save more for retirement

An increase in the money supply shifts the long-run aggregate supply curve to the right.

Other things the same,a decrease in the price level induces people to hold

When taxes decrease,consumption

The quantity of money has no real impact on things people really care about like whether or not they have a job.Most economists would agree that this statement is appropriate concerning

Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.If the economy starts at A and moves to D in the short run,the economy

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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