Question 1

Assuming that a is positive,theories of short-run aggregate supply are expressed mathematically as

Accepted Answer

A) quantity of output supplied = natural rate of output + a(actual price level - expected price level). 
B) quantity of output supplied = natural rate of output + a(expected price level - actual price level). 
C) quantity of output supplied = a(actual price level -expected price level) - natural rate of output. 
D) quantity of output supplied = a(expected price level - actual price level) - natural rate of output. 
A) quantity of output supplied = natural rate of output + a(actual price level - expected price level). 
B) quantity of output supplied = natural rate of output + a(expected price level - actual price level). 
C) quantity of output supplied = a(actual price level -expected price level) - natural rate of output. 
D) quantity of output supplied = a(expected price level - actual price level) - natural rate of output.

Question 2

If speculators gained greater confidence so that they wanted to buy more assets of foreign countries and fewer U.S.bonds,

Accepted Answer

A) the dollar would appreciate which would cause aggregate demand to shift right. 
B) the dollar would appreciate which would cause aggregate demand to shift left. 
C) the dollar would depreciate which would cause aggregate demand to shift right. 
D) the dollar would depreciate which would cause aggregate demand to shift left. 
A) the dollar would appreciate which would cause aggregate demand to shift right. 
B) the dollar would appreciate which would cause aggregate demand to shift left. 
C) the dollar would depreciate which would cause aggregate demand to shift right. 
D) the dollar would depreciate which would cause aggregate demand to shift left.

Question 3

According to the sticky-wage theory of the short-run aggregate supply curve,if workers and firms expected prices to rise by 4 percent,but instead they rise by 2 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.

Question 4

The slope of the U.S.aggregate demand curve is based partly on the conclusion that as the price level rises,

Accepted Answer

A) the dollar depreciates. 
B) the interest rate falls. 
C) people feel less wealthy. 
D) All of the above are correct. 
A) the dollar depreciates. 
B) the interest rate falls. 
C) people feel less wealthy. 
D) All of the above are correct.

Question 5

Make a list of things that would shift the aggregate demand curve to the right.

Accepted Answer

Examples (and variations on examples)in

Question 6

When taxes increase,consumption

Accepted Answer

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

Question 7

The long-run aggregate supply curve shifts right if

Accepted Answer

A) technology improves. 
B) the price level decreases. 
C) the money supply increases. 
D) All of the above are correct. 
A) technology improves. 
B) the price level decreases. 
C) the money supply increases. 
D) All of the above are correct.

Question 8

The classical dichotomy refers to the separation of

Accepted Answer

A) variables that move with the business cycle and variables that do not. 
B) changes in money and changes in government expenditures. 
C) decisions made by the public and decisions made by the government. 
D) real and nominal variables. 
A) variables that move with the business cycle and variables that do not. 
B) changes in money and changes in government expenditures. 
C) decisions made by the public and decisions made by the government. 
D) real and nominal variables.

Question 9

Other things the same,as the price level decreases it induces greater spending on

Accepted Answer

A) both net exports and investment. 
B) net exports but not investment. 
C) investment but not net exports. 
D) neither net exports nor investment. 
A) both net exports and investment. 
B) net exports but not investment. 
C) investment but not net exports. 
D) neither net exports nor investment.

Question 10

Other things the same,when the government spends more,the initial effect is that

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 11

Suppose the economy is in long-run equilibrium.In a short span of time,there is a sharp increase in the minimum wage,a major new discovery of oil,a large influx of immigrants,and new environmental regulations that reduce electricity production.In the short run,we would expect

Accepted Answer

A) the price level to rise and real GDP to fall. 
B) the price level to fall and real GDP to rise. 
C) the price level and real GDP both to stay the same. 
D) All of the above are possible. 
A) the price level to rise and real GDP to fall. 
B) the price level to fall and real GDP to rise. 
C) the price level and real GDP both to stay the same. 
D) All of the above are possible.

Question 12

Consider the exhibit below for the following questions.
Figure 33-1
  
-Refer to Figure 33-1.The economy would be moving to long-run equilibrium if it started at

Accepted Answer

A) A and moved to B. 
B) C and moved to B. 
C) D and moved to C. 
D) None of the above is correct. 
A) A and moved to B. 
B) C and moved to B. 
C) D and moved to C. 
D) None of the above is correct.

Question 13

The misperceptions theory of the short-run aggregate supply curve says that if the price level is higher than people expected,then some firms believe that the relative price of what they produce has

Accepted Answer

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

Question 14

Other things the same,if the price level rises,households

Accepted Answer

A) increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. 
B) increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. 
C) decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. 
D) decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. 
A) increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. 
B) increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. 
C) decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. 
D) decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases.

Question 15

Which of the following would cause prices and real GDP to rise in the short run?

Accepted Answer

A) Short-run aggregate supply shifts right. 
B) Short-run aggregate supply shifts left. 
C) Aggregate demand shifts right. 
D) Aggregate demand shifts left. 
A) Short-run aggregate supply shifts right. 
B) Short-run aggregate supply shifts left. 
C) Aggregate demand shifts right. 
D) Aggregate demand shifts left.

Question 16

Suppose the economy is in long-run equilibrium.If there is a tax cut at the same time that major new sources of oil are discovered in the country,then 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 17

In the mid-1970s the price of oil rose dramatically.This

Accepted Answer

A) shifted aggregate supply left. 
B) caused U.S.prices to fall. 
C) was the consequence of OPEC increasing oil production. 
D) All of the above are correct. 
A) shifted aggregate supply left. 
B) caused U.S.prices to fall. 
C) was the consequence of OPEC increasing oil production. 
D) All of the above are correct.

Question 18

Suppose the economy is in long-run equilibrium.Concerns about pollution cause the government to significantly restrict the production of electricity.At the same time,the value of the dollar falls.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 19

As recessions begin,production

Accepted Answer

A) and unemployment both rise. 
B) rises and unemployment falls. 
C) falls and unemployment rises. 
D) and unemployment both fall. 
A) and unemployment both rise. 
B) rises and unemployment falls. 
C) falls and unemployment rises. 
D) and unemployment both fall.

Question 20

Which of the following shifts aggregate demand to the right?

Accepted Answer

A) an increase in the money supply 
B) an increase in net exports due to something other than a change in domestic prices 
C) an investment tax credit 
D) All of the above are correct. 
A) an increase in the money supply 
B) an increase in net exports due to something other than a change in domestic prices 
C) an investment tax credit 
D) All of the above are correct.

Exam 33: Aggregate Demand and Aggregate Supply

Assuming that a is positive,theories of short-run aggregate supply are expressed mathematically as

If speculators gained greater confidence so that they wanted to buy more assets of foreign countries and fewer U.S.bonds,

According to the sticky-wage theory of the short-run aggregate supply curve,if workers and firms expected prices to rise by 4 percent,but instead they rise by 2 percent,then

The slope of the U.S.aggregate demand curve is based partly on the conclusion that as the price level rises,

Make a list of things that would shift the aggregate demand curve to the right.

When taxes increase,consumption

The long-run aggregate supply curve shifts right if

The classical dichotomy refers to the separation of

Other things the same,as the price level decreases it induces greater spending on

Other things the same,when the government spends more,the initial effect is that

Suppose the economy is in long-run equilibrium.In a short span of time,there is a sharp increase in the minimum wage,a major new discovery of oil,a large influx of immigrants,and new environmental regulations that reduce electricity production.In the short run,we would expect

Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.The economy would be moving to long-run equilibrium if it started at

The misperceptions theory of the short-run aggregate supply curve says that if the price level is higher than people expected,then some firms believe that the relative price of what they produce has

Other things the same,if the price level rises,households

Which of the following would cause prices and real GDP to rise in the short run?

Suppose the economy is in long-run equilibrium.If there is a tax cut at the same time that major new sources of oil are discovered in the country,then in the short-run we would expect

In the mid-1970s the price of oil rose dramatically.This

Suppose the economy is in long-run equilibrium.Concerns about pollution cause the government to significantly restrict the production of electricity.At the same time,the value of the dollar falls.In the short-run we would expect

As recessions begin,production

Which of the following shifts aggregate demand to the right?

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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