Question 1

An increase in the exchange rate value of the U.S.dollar,relative to the Japanese yen,will cause U.S.imports from Japan to

Accepted Answer

A) increase and exports to Japan to decrease. 
B) increase and exports to Japan to increase. 
C) decrease and exports to Japan to decrease. 
D) decrease and exports to Japan to increase. 
A) increase and exports to Japan to decrease. 
B) increase and exports to Japan to increase. 
C) decrease and exports to Japan to decrease. 
D) decrease and exports to Japan to increase.

Question 2

If an economy was initially in long-run equilibrium,an unanticipated increase in aggregate demand will tend to cause

Accepted Answer

A) an increase in unemployment. 
B) a decrease in the price of resources. 
C) a reduction in real output that will spiral downward into a prolonged recession. 
D) a temporarily high level of output and employment that cannot be maintained. 
A) an increase in unemployment. 
B) a decrease in the price of resources. 
C) a reduction in real output that will spiral downward into a prolonged recession. 
D) a temporarily high level of output and employment that cannot be maintained.

Question 3

Which of the following will most likely occur as the result of an unanticipated increase in aggregate demand?

Accepted Answer

A) an increase in output and a move to a higher price level 
B) an increase in prices and a long-run increase in output 
C) an increase in long-run aggregate supply (LRAS shifts to the right) 
D) a decrease in the natural rate of unemployment 
A) an increase in output and a move to a higher price level 
B) an increase in prices and a long-run increase in output 
C) an increase in long-run aggregate supply (LRAS shifts to the right) 
D) a decrease in the natural rate of unemployment

Question 4

An unanticipated economic event is a change that

Accepted Answer

A) catches most people by surprise. 
B) was foreseen by most economic participants. 
C) is the result of a steady long-term trend in an economic variable. 
D) was forecast by most economists. 
A) catches most people by surprise. 
B) was foreseen by most economic participants. 
C) is the result of a steady long-term trend in an economic variable. 
D) was forecast by most economists.

Question 5

Which will cause a larger short-run increase in prices: an anticipated or unanticipated increase in aggregate demand? Will they cause the same increase in prices in the long run?

Accepted Answer

An anticipated increase in aggregate dem

Question 6

If an unanticipated increase in aggregate demand results in an output beyond the economy's long-run capacity,long-run equilibrium will eventually be restored by

Accepted Answer

A) an increase in the economy's productive capacity (LRAS shifts to the right). 
B) higher resource prices,an increase in SRAS,and a decrease in the general level of prices. 
C) higher resource prices,a decrease in SRAS,and an increase in the general level of prices. 
D) a decrease in the natural rate of unemployment. 
A) an increase in the economy's productive capacity (LRAS shifts to the right). 
B) higher resource prices,an increase in SRAS,and a decrease in the general level of prices. 
C) higher resource prices,a decrease in SRAS,and an increase in the general level of prices. 
D) a decrease in the natural rate of unemployment.

Question 7

Use the figure below to answer the following question(s).
Figure 10-17
  
-With the passage of time,which of the following will tend to direct this economy in Figure 10-17 toward its long-run sustainable rate of output?

Accepted Answer

A) lower interest rates that will stimulate AD and lower resource prices that will increase SRAS 
B) higher interest rates that will reduce aggregate demand and higher resource prices that will reduce SRAS 
C) lower interest rates and higher resource prices,both of which will stimulate aggregate demand 
D) higher interest rates that will reduce SRAS and lower resource prices that will stimulate aggregate demand 
A) lower interest rates that will stimulate AD and lower resource prices that will increase SRAS 
B) higher interest rates that will reduce aggregate demand and higher resource prices that will reduce SRAS 
C) lower interest rates and higher resource prices,both of which will stimulate aggregate demand 
D) higher interest rates that will reduce SRAS and lower resource prices that will stimulate aggregate demand

Question 8

If an economy is in equilibrium at a given price level and a given output level,the aggregate demand/aggregate supply (AD/AS)model indicates that an unanticipated decrease in aggregate demand will cause

Accepted Answer

A) real output to decline. 
B) the price level to fall. 
C) unemployment to increase. 
D) all of the above. 
A) real output to decline. 
B) the price level to fall. 
C) unemployment to increase. 
D) all of the above.

Question 9

Within the AD/AS model,how does an economy adjust to an output beyond its long-run capacity as a result of an unanticipated increase in aggregate demand?

Accepted Answer

A) Wage rates and resource prices will fall,causing a decrease in aggregate demand and the restoration of equilibrium at a higher price level. 
B) Long-run aggregate supply will increase,leading to a new equilibrium at a lower price level. 
C) Resource prices and real interest rates will rise causing output to fall back to its long-run sustainable rate. 
D) Lower real interest rates will stimulate demand and restore equilibrium at the initial price level. 
A) Wage rates and resource prices will fall,causing a decrease in aggregate demand and the restoration of equilibrium at a higher price level. 
B) Long-run aggregate supply will increase,leading to a new equilibrium at a lower price level. 
C) Resource prices and real interest rates will rise causing output to fall back to its long-run sustainable rate. 
D) Lower real interest rates will stimulate demand and restore equilibrium at the initial price level.

Question 10

If a currency appreciates,a country's net exports

Accepted Answer

A) fall and AD increases. 
B) rise and AD increases. 
C) fall and AD decreases. 
D) rise and AD decreases. 
A) fall and AD increases. 
B) rise and AD increases. 
C) fall and AD decreases. 
D) rise and AD decreases.

Question 11

When an economy experiences long-run economic growth,a larger output can be achieved

Accepted Answer

A) only if there is a reduction in the natural rate of unemployment. 
B) only if the economy's actual unemployment is less than the natural rate. 
C) if prices increase. 
D) even though unemployment remains at its natural rate. 
A) only if there is a reduction in the natural rate of unemployment. 
B) only if the economy's actual unemployment is less than the natural rate. 
C) if prices increase. 
D) even though unemployment remains at its natural rate.

Question 12

Use the figure below to answer the following question(s).
Figure 10-14
  
-At which of the following points in Figure 10-14 would short-run equilibrium occur immediately following an adverse supply-side shock?

Accepted Answer

A) F 
B) G 
C) H 
D) I 
E) J 
A) F 
B) G 
C) H 
D) I 
E) J

Question 13

Figure 10-12
  
-In Figure 10-12,which of the following would most likely cause the movement from point E₁ to point e₂ for the United States?

Accepted Answer

A) a severe drought in agricultural areas 
B) a major technological improvement 
C) business and consumer pessimism about the future direction of the economy 
D) a decrease in the expected inflation rate 
A) a severe drought in agricultural areas 
B) a major technological improvement 
C) business and consumer pessimism about the future direction of the economy 
D) a decrease in the expected inflation rate

Question 14

Use the figure below to answer the following question(s).
Figure 10-7
  
-At what output level would the actual rate of unemployment equal the economy's natural rate of unemployment in Figure 10-7?

Accepted Answer

A) Y₁ 
B) Y₂ 
C) at any output greater than Y₂ 
D) at any output less than Y₁ 
A) Y₁ 
B) Y₂ 
C) at any output greater than Y₂ 
D) at any output less than Y₁

Question 15

Use the figure below to answer the following question(s).
Figure 10-1
  
-At which point in Figure 10-1 is the economy experiencing an economic boom?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 16

Other things constant,an increase in resource prices will

Accepted Answer

A) increase aggregate demand. 
B) decrease aggregate demand. 
C) decrease short-run aggregate supply. 
D) increase short-run aggregate supply. 
A) increase aggregate demand. 
B) decrease aggregate demand. 
C) decrease short-run aggregate supply. 
D) increase short-run aggregate supply.

Question 17

Which of the following will most likely accompany an unanticipated increase in short-run aggregate supply?

Accepted Answer

A) an increase in real GDP 
B) an increase in the general level of prices 
C) an increase in the actual rate of unemployment 
D) an increase in the natural rate of unemployment 
A) an increase in real GDP 
B) an increase in the general level of prices 
C) an increase in the actual rate of unemployment 
D) an increase in the natural rate of unemployment

Question 18

When an economy is in a recession,

Accepted Answer

A) strong demand for investment funds will push interest rates upward. 
B) strong demand for resources will push the prices of resources upward. 
C) the real interest rate will tend to rise. 
D) the unemployment rate will rise above its natural rate. 
A) strong demand for investment funds will push interest rates upward. 
B) strong demand for resources will push the prices of resources upward. 
C) the real interest rate will tend to rise. 
D) the unemployment rate will rise above its natural rate.

Question 19

An increase in the general level of prices in the goods and services market that is accompanied by a short-run expansion in output is most likely caused by

Accepted Answer

A) an unanticipated decrease in aggregate demand. 
B) an unanticipated increase in aggregate demand. 
C) a favorable supply shock that shifts SRAS to the right. 
D) an unfavorable supply shock that shifts SRAS to the left. 
A) an unanticipated decrease in aggregate demand. 
B) an unanticipated increase in aggregate demand. 
C) a favorable supply shock that shifts SRAS to the right. 
D) an unfavorable supply shock that shifts SRAS to the left.

Question 20

When the short-run aggregate supply curve is steep,then for a given increase in aggregate demand,

Accepted Answer

A) the increase in real GDP will be relatively small and the increase in the price level will be relatively large 
B) the increase in real GDP will be relatively large and the increase in the price level will be relatively small 
C) the increases in real GDP and the price level will be large 
D) the increases in real GDP and the price level will be small 
E) the decrease in real GDP will be larger than the decrease in the price level 
A) the increase in real GDP will be relatively small and the increase in the price level will be relatively large 
B) the increase in real GDP will be relatively large and the increase in the price level will be relatively small 
C) the increases in real GDP and the price level will be large 
D) the increases in real GDP and the price level will be small 
E) the decrease in real GDP will be larger than the decrease in the price level

Exam 10: Dynamic Change, economic Fluctuations, and the Ad-As Model

An increase in the exchange rate value of the U.S.dollar,relative to the Japanese yen,will cause U.S.imports from Japan to

If an economy was initially in long-run equilibrium,an unanticipated increase in aggregate demand will tend to cause

Which of the following will most likely occur as the result of an unanticipated increase in aggregate demand?

An unanticipated economic event is a change that

Which will cause a larger short-run increase in prices: an anticipated or unanticipated increase in aggregate demand? Will they cause the same increase in prices in the long run?

If an unanticipated increase in aggregate demand results in an output beyond the economy's long-run capacity,long-run equilibrium will eventually be restored by

Use the figure below to answer the following question(s). Figure 10-17 -With the passage of time,which of the following will tend to direct this economy in Figure 10-17 toward its long-run sustainable rate of output?

If an economy is in equilibrium at a given price level and a given output level,the aggregate demand/aggregate supply (AD/AS)model indicates that an unanticipated decrease in aggregate demand will cause

Within the AD/AS model,how does an economy adjust to an output beyond its long-run capacity as a result of an unanticipated increase in aggregate demand?

If a currency appreciates,a country's net exports

When an economy experiences long-run economic growth,a larger output can be achieved

Use the figure below to answer the following question(s). Figure 10-14 -At which of the following points in Figure 10-14 would short-run equilibrium occur immediately following an adverse supply-side shock?

Figure 10-12 -In Figure 10-12,which of the following would most likely cause the movement from point E₁ to point e₂ for the United States?

Use the figure below to answer the following question(s). Figure 10-7 -At what output level would the actual rate of unemployment equal the economy's natural rate of unemployment in Figure 10-7?

Use the figure below to answer the following question(s). Figure 10-1 -At which point in Figure 10-1 is the economy experiencing an economic boom?

Other things constant,an increase in resource prices will

Which of the following will most likely accompany an unanticipated increase in short-run aggregate supply?

When an economy is in a recession,

An increase in the general level of prices in the goods and services market that is accompanied by a short-run expansion in output is most likely caused by

When the short-run aggregate supply curve is steep,then for a given increase in aggregate demand,

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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