Question 1

The open economy effect involves the way that

Accepted Answer

A)  investors alter their stock portfolios when the price level rises. 
B)  investors alter their stock portfolios when the interest rate rises. 
C)  the demand for imports is dependent on the domestic price level. 
D)  consumers change their planned purchases when the unemployment rate changes. 
A)  investors alter their stock portfolios when the price level rises. 
B)  investors alter their stock portfolios when the interest rate rises. 
C)  the demand for imports is dependent on the domestic price level. 
D)  consumers change their planned purchases when the unemployment rate changes.

Question 2

A decline in consumer confidence will increase aggregate supply.

Accepted Answer

A) True 
 B)False

Question 3

Tax cuts decrease aggregate demand.

Accepted Answer

A) True 
 B)False

Question 4

The model of aggregate supply and aggregate demand is based on the assumption that a firm expands output of its product when its selling price increases.

Accepted Answer

A) True 
 B)False

Question 5

An increase in investment spending by firms causes

Accepted Answer

A)  an increase in aggregate demand and a decrease in aggregate supply. 
B)  a decrease in aggregate supply only. 
C)  an increase in aggregate demand only. 
D)  an increase in the labor force participation rate. 
A)  an increase in aggregate demand and a decrease in aggregate supply. 
B)  a decrease in aggregate supply only. 
C)  an increase in aggregate demand only. 
D)  an increase in the labor force participation rate.

Question 6

An increase in the foreign exchange value of the dollar causes aggregate demand to _________ .

Accepted Answer

The answer of An increase in the foreign exchange value...

Question 7

In the circular flow model, business sell factor services to households.

Accepted Answer

A) True 
 B)False

Question 8

In product markets, households are the sellers and businesses are the buyers.

Accepted Answer

A) True 
 B)False

Question 9

Along a given aggregate demand curve, _____ is constant.

Accepted Answer

A)  the level of exports. 
B)  the level of imports. 
C)  the population. 
D)  the price level. 
A)  the level of exports. 
B)  the level of imports. 
C)  the population. 
D)  the price level.

Question 10

Which of the following factors causes the aggregate demand curve to slope downward and to the right?

Accepted Answer

A)  The substitution effect 
B)  The income effect 
C)  The open economy effect 
D)  The profit motive 
A)  The substitution effect 
B)  The income effect 
C)  The open economy effect 
D)  The profit motive

Question 11

The two reasons for the downward slope of aggregate demand are the _________ _________ effect and the _________ _________ effect.

Accepted Answer

real balan

Question 12

Aggregate demand shows the relationship between the amount of imports and the overall level of spending.

Accepted Answer

A) True 
 B)False

Question 13

In factor markets, households are the sellers and businesses are the buyers.

Accepted Answer

A) True 
 B)False

Question 14

The open economy effect explains the upward slope of aggregate supply.

Accepted Answer

A) True 
 B)False

Question 15

How are the price level and the level of real output affected if aggregate supply decreases?

Accepted Answer

The price level incr

Question 16

The U.S. aggregate demand curve would shift to the left if

Accepted Answer

A)  economic conditions in Europe improved. 
B)  there was a tax decrease. 
C)  there was a tax increase. 
D)  the aggregate supply curve shifts to the right. 
A)  economic conditions in Europe improved. 
B)  there was a tax decrease. 
C)  there was a tax increase. 
D)  the aggregate supply curve shifts to the right.

Question 17

The real-balance effect indicates that a higher price level causes

Accepted Answer

A)  the real value of financial assets to decrease. 
B)  the real value of financial assets to increase. 
C)  consumers to save more. 
D)  banks to be more restrictive in their lending practices. 
A)  the real value of financial assets to decrease. 
B)  the real value of financial assets to increase. 
C)  consumers to save more. 
D)  banks to be more restrictive in their lending practices.

Question 18

Holding nominal money balances constant, a decrease in the price level

Accepted Answer

A)  causes the real value of the money balances to increase, in turn increasing the quantity of goods and services demanded. 
B)  causes the real value of the money balances to decrease, in turn decreasing the quantity of goods and services demanded. 
C)  causes the real value of the money balances to increase, thereby increasing the interest rate. 
D)  generates a reduction in the value of the money balances, leading to higher interest rates and a decrease in the quantity of goods and services demanded. 
A)  causes the real value of the money balances to increase, in turn increasing the quantity of goods and services demanded. 
B)  causes the real value of the money balances to decrease, in turn decreasing the quantity of goods and services demanded. 
C)  causes the real value of the money balances to increase, thereby increasing the interest rate. 
D)  generates a reduction in the value of the money balances, leading to higher interest rates and a decrease in the quantity of goods and services demanded.

The open economy effect involves the way that

A decline in consumer confidence will increase aggregate supply.

Tax cuts decrease aggregate demand.

The model of aggregate supply and aggregate demand is based on the assumption that a firm expands output of its product when its selling price increases.

An increase in investment spending by firms causes

An increase in the foreign exchange value of the dollar causes aggregate demand to _________ .

In the circular flow model, business sell factor services to households.

In product markets, households are the sellers and businesses are the buyers.

Along a given aggregate demand curve, _____ is constant.

Which of the following factors causes the aggregate demand curve to slope downward and to the right?

The two reasons for the downward slope of aggregate demand are the _____ _ effect and the _ _____ effect.

Aggregate demand shows the relationship between the amount of imports and the overall level of spending.

In factor markets, households are the sellers and businesses are the buyers.

The open economy effect explains the upward slope of aggregate supply.

How are the price level and the level of real output affected if aggregate supply decreases?

The U.S. aggregate demand curve would shift to the left if

The real-balance effect indicates that a higher price level causes

Holding nominal money balances constant, a decrease in the price level

Economics and the World of Scarcity

The United States Within the World Economy

Demand and Supply

Consumer Decision Making and Consumer Reaction to Price Changes

The Firm: Production and Cost

The Two Extremes: Perfect Competition and Pure Monopoly

In Between the Extremes: Imperfect Competition

Market and Government Failures

Labor Economics

Unemployment, Inflation, and the Business Cycle

The Fiscal Policy Approach to Stabilization

Money and Our Banking System

The Monetary Policy Approach to Stabilization

How Economies Grow

Trading With Other Nations

Financing World Trade

Filters

Exam 11: Aggregate Demand and Supply

The open economy effect involves the way that

A decline in consumer confidence will increase aggregate supply.

Tax cuts decrease aggregate demand.

The model of aggregate supply and aggregate demand is based on the assumption that a firm expands output of its product when its selling price increases.

An increase in investment spending by firms causes

An increase in the foreign exchange value of the dollar causes aggregate demand to _________ .

In the circular flow model, business sell factor services to households.

In product markets, households are the sellers and businesses are the buyers.

Along a given aggregate demand curve, _____ is constant.

Which of the following factors causes the aggregate demand curve to slope downward and to the right?

The two reasons for the downward slope of aggregate demand are the _________ _________ effect and the _________ _________ effect.

Aggregate demand shows the relationship between the amount of imports and the overall level of spending.

In factor markets, households are the sellers and businesses are the buyers.

The open economy effect explains the upward slope of aggregate supply.

How are the price level and the level of real output affected if aggregate supply decreases?

The U.S. aggregate demand curve would shift to the left if

The real-balance effect indicates that a higher price level causes

Holding nominal money balances constant, a decrease in the price level

Economics and the World of Scarcity

The United States Within the World Economy

Demand and Supply

Consumer Decision Making and Consumer Reaction to Price Changes

The Firm: Production and Cost

The Two Extremes: Perfect Competition and Pure Monopoly

In Between the Extremes: Imperfect Competition

Market and Government Failures

Labor Economics

Unemployment, Inflation, and the Business Cycle

The Fiscal Policy Approach to Stabilization

Money and Our Banking System

The Monetary Policy Approach to Stabilization

How Economies Grow

Trading With Other Nations

Financing World Trade

Filters

The two reasons for the downward slope of aggregate demand are the _____ _ effect and the _ _____ effect.