Question 1

If people expect higher income in the future,then spending today __________ and aggregate demand __________.

Accepted Answer

A)  increases; is unaffected 
B)  increases; increases 
C)  increases; decreases 
D)  decreases; decreases 
E)  is unaffected; is unaffected 
A)  increases; is unaffected 
B)  increases; increases 
C)  increases; decreases 
D)  decreases; decreases 
E)  is unaffected; is unaffected

Question 2

Refer to the following figure to answer the next five questions.
  
-Based on the figure,which points represent short-run equilibrium?

Accepted Answer

A)  A and B 
B)  A and C 
C)  A and D 
D)  B and D 
E)  A, B, C, and D 
A)  A and B 
B)  A and C 
C)  A and D 
D)  B and D 
E)  A, B, C, and D

Question 3

An increase in the value of the dollar will:

Accepted Answer

A)  have no effect on aggregate demand or supply. 
B)  decrease aggregate supply. 
C)  increase aggregate supply. 
D)  increase aggregate demand. 
E)  decrease aggregate demand. 
A)  have no effect on aggregate demand or supply. 
B)  decrease aggregate supply. 
C)  increase aggregate supply. 
D)  increase aggregate demand. 
E)  decrease aggregate demand.

Question 4

When the price level rises,__________ declines from the wealth effect,__________ declines from the interest rate effect,and __________ decline(s) from the international trade effect.

Accepted Answer

A)  consumption; investment; net exports 
B)  consumption; consumption; consumption 
C)  investment; investment; net exports 
D)  investment; consumption; net exports 
E)  investment; investment; investment 
A)  consumption; investment; net exports 
B)  consumption; consumption; consumption 
C)  investment; investment; net exports 
D)  investment; consumption; net exports 
E)  investment; investment; investment

Question 5

The aggregate demand curve is best represented by which of the following equations?

Accepted Answer

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

Question 6

Business-cycle theory focuses on time horizons of less than:

Accepted Answer

A)  five years. 
B)  ten years. 
C)  two years. 
D)  one year. 
E)  one month. 
A)  five years. 
B)  ten years. 
C)  two years. 
D)  one year. 
E)  one month.

Question 7

An increase in the price level that reduces the real value of wealth is likely to __________ consumption and __________ saving.

Accepted Answer

A)  increase; increase 
B)  decrease; decrease 
C)  decrease; increase 
D)  increase; decrease 
E)  have no effect on; have no effect on 
A)  increase; increase 
B)  decrease; decrease 
C)  decrease; increase 
D)  increase; decrease 
E)  have no effect on; have no effect on

Question 8

Which of the following is true?

Accepted Answer

A)  Long-run aggregate supply is independent of the price level. 
B)  Short-run aggregate supply is independent of the price level. 
C)  Long-run aggregate supply is positively related to the price level. 
D)  Short-run aggregate supply is inversely related to the price level. 
E)  Long-run aggregate supply is inversely related to the price level. 
A)  Long-run aggregate supply is independent of the price level. 
B)  Short-run aggregate supply is independent of the price level. 
C)  Long-run aggregate supply is positively related to the price level. 
D)  Short-run aggregate supply is inversely related to the price level. 
E)  Long-run aggregate supply is inversely related to the price level.

Question 9

Which of the following would cause an increase in employment in the short run?

Accepted Answer

A)  The minimum wage increases. 
B)  Exports decrease. 
C)  There is a negative supply shock. 
D)  There is an increase in the expected price level. 
E)  There is an increase in government spending. 
A)  The minimum wage increases. 
B)  Exports decrease. 
C)  There is a negative supply shock. 
D)  There is an increase in the expected price level. 
E)  There is an increase in government spending.

Question 10

Refer to the following figure to answer the next three questions.
  
-Based on the figure,which of the following would cause the aggregate demand curve to shift from AD₂ to AD₁?

Accepted Answer

A)  The economy has been producing more than its full employment output level and wages and input prices begin to rise. 
B)  There is an increase in the price of oil. 
C)  There is an increase in the general price level that reduces real wealth. 
D)  There is a reduction in consumer confidence about future growth in the economy. 
E)  There is a reduction in income tax rates. 
A)  The economy has been producing more than its full employment output level and wages and input prices begin to rise. 
B)  There is an increase in the price of oil. 
C)  There is an increase in the general price level that reduces real wealth. 
D)  There is a reduction in consumer confidence about future growth in the economy. 
E)  There is a reduction in income tax rates.

Question 11

Refer to the following figure to answer the next three questions.
  
-Based on the figure,which of the following would cause the long-run equilibrium point to change from point B to point D?

Accepted Answer

A)  The population has aged and there are fewer people in the labor force. 
B)  Firms and workers expected the price level to rise. 
C)  The economy experienced an increase in government spending. 
D)  The economy was in an expansion and has adjusted. 
E)  The country's overall productivity increased 
A)  The population has aged and there are fewer people in the labor force. 
B)  Firms and workers expected the price level to rise. 
C)  The economy experienced an increase in government spending. 
D)  The economy was in an expansion and has adjusted. 
E)  The country's overall productivity increased

Question 12

Refer to the following figure to answer the next two questions.
  
-Based on the figure,a negative supply shock is best represented by a movement from:

Accepted Answer

A)  C to B. 
B)  D to A. 
C)  A to D. 
D)  C to D. 
E)  A to B. 
A)  C to B. 
B)  D to A. 
C)  A to D. 
D)  C to D. 
E)  A to B.

Question 13

Adjustments in _________ naturally move the economy toward long-run equilibrium.

Accepted Answer

A)  aggregate demand 
B)  the price level 
C)  government spending 
D)  the productive capacity of firms 
E)  full employment output 
A)  aggregate demand 
B)  the price level 
C)  government spending 
D)  the productive capacity of firms 
E)  full employment output

Question 14

Shifts in the short-run aggregate supply curve are caused by:

Accepted Answer

A)  supply shocks. 
B)  menu costs. 
C)  money illusion. 
D)  changes in labor productivity. 
E)  changes in spending. 
A)  supply shocks. 
B)  menu costs. 
C)  money illusion. 
D)  changes in labor productivity. 
E)  changes in spending.

Question 15

When an economy has a more stable and well-developed financial system,it is reasonable to expect:

Accepted Answer

A)  an upward movement along the long-run aggregate supply curve. 
B)  a downward movement along the long-run aggregate supply curve. 
C)  a leftward shift of the long-run aggregate supply curve. 
D)  a rightward shift of the long-run aggregate supply curve. 
E)  no change in the long-run aggregate supply curve. 
A)  an upward movement along the long-run aggregate supply curve. 
B)  a downward movement along the long-run aggregate supply curve. 
C)  a leftward shift of the long-run aggregate supply curve. 
D)  a rightward shift of the long-run aggregate supply curve. 
E)  no change in the long-run aggregate supply curve.

Question 16

If large emerging economies continue to grow rapidly,we can expect U.S.aggregate:

Accepted Answer

A)  demand to increase. 
B)  demand to decrease. 
C)  supply to increase. 
D)  supply to decrease. 
E)  demand and supply to be unaffected. 
A)  demand to increase. 
B)  demand to decrease. 
C)  supply to increase. 
D)  supply to decrease. 
E)  demand and supply to be unaffected.

Question 17

The long-run aggregate supply curve is:

Accepted Answer

A)  vertical because full employment output is independent of the price level. 
B)  upward sloping because the economy grows over time. 
C)  horizontal because full employment output is independent of the price level. 
D)  upward sloping because as the price level rises, firms will increase output. 
E)  downward sloping because rising prices reduce real wealth and spending. 
A)  vertical because full employment output is independent of the price level. 
B)  upward sloping because the economy grows over time. 
C)  horizontal because full employment output is independent of the price level. 
D)  upward sloping because as the price level rises, firms will increase output. 
E)  downward sloping because rising prices reduce real wealth and spending.

Question 18

If the price level falls but workers are reluctant to accept a pay cut,this is an example of:

Accepted Answer

A)  menu cost. 
B)  money illusion. 
C)  a legally binding contract. 
D)  a supply shock. 
E)  an implicit contract. 
A)  menu cost. 
B)  money illusion. 
C)  a legally binding contract. 
D)  a supply shock. 
E)  an implicit contract.

Question 19

An economy has experienced a rightward shift of its long-run aggregate supply curve and is now producing on that new long-run aggregate supply curve.It is reasonable to expect that:

Accepted Answer

A)  the unemployment rate has fallen. 
B)  the unemployment rate has been unaffected. 
C)  the inflation rate has risen. 
D)  the price level has risen. 
E)  productivity has fallen. 
A)  the unemployment rate has fallen. 
B)  the unemployment rate has been unaffected. 
C)  the inflation rate has risen. 
D)  the price level has risen. 
E)  productivity has fallen.

Question 20

New computer technologies can be expected to:

Accepted Answer

A)  increase long-run aggregate supply. 
B)  increase the price level. 
C)  increase the unemployment rate. 
D)  decrease aggregate demand. 
E)  decrease aggregate supply. 
A)  increase long-run aggregate supply. 
B)  increase the price level. 
C)  increase the unemployment rate. 
D)  decrease aggregate demand. 
E)  decrease aggregate supply.

If people expect higher income in the future,then spending today and aggregate demand .

Refer to the following figure to answer the next five questions. -Based on the figure,which points represent short-run equilibrium?

An increase in the value of the dollar will:

When the price level rises, declines from the wealth effect, declines from the interest rate effect,and __ decline(s) from the international trade effect.

The aggregate demand curve is best represented by which of the following equations?

Business-cycle theory focuses on time horizons of less than:

An increase in the price level that reduces the real value of wealth is likely to consumption and saving.

Which of the following is true?

Which of the following would cause an increase in employment in the short run?

Refer to the following figure to answer the next three questions. -Based on the figure,which of the following would cause the aggregate demand curve to shift from AD₂ to AD₁?

Refer to the following figure to answer the next three questions. -Based on the figure,which of the following would cause the long-run equilibrium point to change from point B to point D?

Refer to the following figure to answer the next two questions. -Based on the figure,a negative supply shock is best represented by a movement from:

Adjustments in _________ naturally move the economy toward long-run equilibrium.

Shifts in the short-run aggregate supply curve are caused by:

When an economy has a more stable and well-developed financial system,it is reasonable to expect:

If large emerging economies continue to grow rapidly,we can expect U.S.aggregate:

The long-run aggregate supply curve is:

If the price level falls but workers are reluctant to accept a pay cut,this is an example of:

An economy has experienced a rightward shift of its long-run aggregate supply curve and is now producing on that new long-run aggregate supply curve.It is reasonable to expect that:

New computer technologies can be expected to:

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

Exam 13: The Aggregate Demandaggregate Supply Model

If people expect higher income in the future,then spending today __________ and aggregate demand __________.

Refer to the following figure to answer the next five questions. -Based on the figure,which points represent short-run equilibrium?

An increase in the value of the dollar will:

When the price level rises,__________ declines from the wealth effect,__________ declines from the interest rate effect,and __________ decline(s) from the international trade effect.

The aggregate demand curve is best represented by which of the following equations?

Business-cycle theory focuses on time horizons of less than:

An increase in the price level that reduces the real value of wealth is likely to __________ consumption and __________ saving.

Which of the following is true?

Which of the following would cause an increase in employment in the short run?

Refer to the following figure to answer the next three questions. -Based on the figure,which of the following would cause the aggregate demand curve to shift from AD₂ to AD₁?

Refer to the following figure to answer the next three questions. -Based on the figure,which of the following would cause the long-run equilibrium point to change from point B to point D?

Refer to the following figure to answer the next two questions. -Based on the figure,a negative supply shock is best represented by a movement from:

Adjustments in _________ naturally move the economy toward long-run equilibrium.

Shifts in the short-run aggregate supply curve are caused by:

When an economy has a more stable and well-developed financial system,it is reasonable to expect:

If large emerging economies continue to grow rapidly,we can expect U.S.aggregate:

The long-run aggregate supply curve is:

If the price level falls but workers are reluctant to accept a pay cut,this is an example of:

An economy has experienced a rightward shift of its long-run aggregate supply curve and is now producing on that new long-run aggregate supply curve.It is reasonable to expect that:

New computer technologies can be expected to:

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

If people expect higher income in the future,then spending today and aggregate demand .

When the price level rises, declines from the wealth effect, declines from the interest rate effect,and __ decline(s) from the international trade effect.

An increase in the price level that reduces the real value of wealth is likely to consumption and saving.