Question 1

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

Accepted Answer

A) True 
 B)False

Question 2

When the money supply decreases

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 3

Make a list of expenditures whose sum equals GDP.

Accepted Answer

consumption,investme

Question 4

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

Accepted Answer

A) an increase in the actual price level 
B) an increase in the expected price level 
C) an increase in the capital stock 
D) None of the above is correct. 
A) an increase in the actual price level 
B) an increase in the expected price level 
C) an increase in the capital stock 
D) None of the above is correct.

Question 5

From 2001 to 2005 there was a dramatic rise in the price of houses.If this made people feel wealthier,then it would 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 6

Which of the following will cause stagflation?

Accepted Answer

A) an increase in the money supply 
B) an increase in oil prices 
C) a decrease in the money supply 
D) technical progress 
A) an increase in the money supply 
B) an increase in oil prices 
C) a decrease in the money supply 
D) technical progress

Question 7

If the dollar appreciates,perhaps because of speculation or government policy,then U.S.net exports

Accepted Answer

A) increase which shifts aggregate demand right. 
B) increase which shifts aggregate demand left. 
C) decrease which shifts aggregate demand right. 
D) decrease which shifts aggregate demand left. 
A) increase which shifts aggregate demand right. 
B) increase which shifts aggregate demand left. 
C) decrease which shifts aggregate demand right. 
D) decrease which shifts aggregate demand left.

Question 8

Consider the exhibit below for the following questions.
Figure 33-1
  
-Refer to Figure 33-1.If the economy starts at C,an increase in the money supply moves the economy

Accepted Answer

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

Question 9

An economic contraction caused by a shift in aggregate demand remedies itself over time as the expected price level

Accepted Answer

A) rises, shifting aggregate demand right. 
B) rises, shifting aggregate demand left. 
C) falls, shifting aggregate supply right. 
D) falls, shifting aggregate supply left. 
A) rises, shifting aggregate demand right. 
B) rises, shifting aggregate demand left. 
C) falls, shifting aggregate supply right. 
D) falls, shifting aggregate supply left.

Question 10

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

Accepted Answer

A) a decrease in the actual price level. 
B) an increase in the actual price level. 
C) a decrease in the expected price level. 
D) an increase in the expected price level. 
A) a decrease in the actual price level. 
B) an increase in the actual price level. 
C) a decrease in the expected price level. 
D) an increase in the expected price level.

Question 11

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,

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 12

Imagine 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. 
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 13

During a recession the economy experiences

Accepted Answer

A) rising employment and income. 
B) rising employment and falling income. 
C) rising income and falling employment. 
D) falling employment and income. 
A) rising employment and income. 
B) rising employment and falling income. 
C) rising income and falling employment. 
D) falling employment and income.

Question 14

Other things the same,if the money supply rises by 2% and people were expecting it to rise by 5%,then some firms 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 15

An increase in the price level causes the interest rate to

Accepted Answer

A) increase, the dollar to depreciate, and net exports to increase. 
B) increase, the dollar to appreciate, and net exports to decrease. 
C) decrease, the dollar to depreciate, and net exports to increase. 
D) decrease, the dollar to appreciate, and net exports to decrease. 
A) increase, the dollar to depreciate, and net exports to increase. 
B) increase, the dollar to appreciate, and net exports to decrease. 
C) decrease, the dollar to depreciate, and net exports to increase. 
D) decrease, the dollar to appreciate, and net exports to decrease.

Question 16

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 long run,the change in price expectations created by pessimism shifts

Accepted Answer

A) long-run aggregate supply right. 
B) long-run aggregate supply left. 
C) short-run aggregate supply right. 
D) short-run aggregate supply left. 
A) long-run aggregate supply right. 
B) long-run aggregate supply left. 
C) short-run aggregate supply right. 
D) short-run aggregate supply left.

Question 17

An increase in the price level and a reduction in real GDP could be created by

Accepted Answer

A) a fall in stock prices. 
B) natural disasters such as hurricanes and famines. 
C) declining government expenditures. 
D) tax rebates. 
A) a fall in stock prices. 
B) natural disasters such as hurricanes and famines. 
C) declining government expenditures. 
D) tax rebates.

Question 18

Pessimism about the future leads to falling prices and rising unemployment in the short run.

Accepted Answer

A) True 
 B)False

Question 19

According to the misperceptions theory of aggregate supply,if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent,then the firm would believe that the relative price of what they produce had

Accepted Answer

A) increased, so they would increase production. 
B) increased, so they would decrease production. 
C) decreased, so they would increase production. 
D) decreased, so they would decrease production. 
A) increased, so they would increase production. 
B) increased, so they would decrease production. 
C) decreased, so they would increase production. 
D) decreased, so they would decrease production.

Question 20

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,

Accepted Answer

A) production is more profitable and employment rises. 
B) production is more profitable and employment falls. 
C) production is less profitable and employment rises. 
D) production is less profitable and employment falls. 
A) production is more profitable and employment rises. 
B) production is more profitable and employment falls. 
C) production is less profitable and employment rises. 
D) production is less profitable and employment falls.

Exam 33: Aggregate Demand and Aggregate Supply

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

When the money supply decreases

Make a list of expenditures whose sum equals GDP.

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

From 2001 to 2005 there was a dramatic rise in the price of houses.If this made people feel wealthier,then it would shift

Which of the following will cause stagflation?

If the dollar appreciates,perhaps because of speculation or government policy,then U.S.net exports

Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.If the economy starts at C,an increase in the money supply moves the economy

An economic contraction caused by a shift in aggregate demand remedies itself over time as the expected price level

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

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,

Imagine 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,

During a recession the economy experiences

Other things the same,if the money supply rises by 2% and people were expecting it to rise by 5%,then some firms have

An increase in the price level causes the interest rate to

An increase in the price level and a reduction in real GDP could be created by

Pessimism about the future leads to falling prices and rising unemployment in the short run.

According to the misperceptions theory of aggregate supply,if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent,then the firm would believe that the relative price of what they produce had

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,

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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