Question 1

When there is a shift the aggregate supply curve caused by factors external to a nation's economy, it is called

Accepted Answer

A)  a trade imbalance. 
B)  government control. 
C)  a supply shock. 
D)  an economic anomaly. 
A)  a trade imbalance. 
B)  government control. 
C)  a supply shock. 
D)  an economic anomaly.

Question 2

Figure 14.1
-Figure 14.1 shows three aggregate demand curves. A movement from curve AD₁ to curve AD₀ could be caused by a(n)

Accepted Answer

A)  decrease in the money supply. 
B)  decrease in taxes. 
C)  increase in the price level. 
D)  increase in government spending. 
A)  decrease in the money supply. 
B)  decrease in taxes. 
C)  increase in the price level. 
D)  increase in government spending.

Question 3

In the long run

Accepted Answer

A)  price and output levels are mutually dependent. 
B)  the level of output depends on the price level. 
C)  the level of output is independent of the price level. 
D)  the price level depends on the level of output. 
A)  price and output levels are mutually dependent. 
B)  the level of output depends on the price level. 
C)  the level of output is independent of the price level. 
D)  the price level depends on the level of output.

Question 4

Recall the Application about the behavior of prices in retail catalogs to answer the following question(s). Economist Anil Kashyap of the University of Chicago examined the prices of 12 selected goods from L.L. Bean, REI, and The Orvis Company, Inc. Kashyap tracked the prices from the companies' catalogs which were reissued every six months.
-According to this Application, the prices which were tracked in the retail catalogs exemplified the macroeconomic concept of the short run, a period of time in which

Accepted Answer

A)  price changes are significant because the aggregate supply curve is vertical. 
B)  prices never change because the aggregate demand curve is vertical. 
C)  prices change frequently because of changes in aggregate supply. 
D)  prices don't change very much, implying that the aggregate supply curve is relatively flat. 
A)  price changes are significant because the aggregate supply curve is vertical. 
B)  prices never change because the aggregate demand curve is vertical. 
C)  prices change frequently because of changes in aggregate supply. 
D)  prices don't change very much, implying that the aggregate supply curve is relatively flat.

Question 5

As the price level ________, the purchasing power of money ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; decreases 
D)  decreases; stays the same 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; decreases 
D)  decreases; stays the same

Question 6

The purchasing power of money decreases as the

Accepted Answer

A)  production decreases. 
B)  price level increases. 
C)  employment increases. 
D)  demand increases. 
A)  production decreases. 
B)  price level increases. 
C)  employment increases. 
D)  demand increases.

Question 7

When interest rates are lower, consumers and companies are able to borrow money cheaply in order to make major purchases. As a result, the demand for goods in an economy will generally

Accepted Answer

A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  be minimally affected. 
A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  be minimally affected.

Question 8

The level of output determined by the intersection of the short-run aggregate supply curve and the aggregate demand curve

Accepted Answer

A)  is always below full-employment output. 
B)  is always above full-employment output. 
C)  always corresponds to full-employment output. 
D)  may be above, below, or equal to full-employment output. 
A)  is always below full-employment output. 
B)  is always above full-employment output. 
C)  always corresponds to full-employment output. 
D)  may be above, below, or equal to full-employment output.

Question 9

An increase in government spending will shift the aggregate demand curve to the left.

Accepted Answer

A) True 
 B)False

Question 10

Define "autonomous consumption spending."

Accepted Answer

Autonomous spending

Question 11

Which of the following would cause a decrease in aggregate demand?

Accepted Answer

A)  a rise in wages 
B)  an increase in the price level 
C)  an increase in the money supply 
D)  a fall in investor confidence 
A)  a rise in wages 
B)  an increase in the price level 
C)  an increase in the money supply 
D)  a fall in investor confidence

Question 12

When there is a recession (a fall in output) and prices are increasing, and this situation is caused by adverse supply shocks, the term economists use to describe it is

Accepted Answer

A)  aggregate shifts. 
B)  stagnation. 
C)  inflation. 
D)  stagflation. 
A)  aggregate shifts. 
B)  stagnation. 
C)  inflation. 
D)  stagflation.

Question 13

If potential output exceeds actual output, the aggregate demand curve shifts downward over time.

Accepted Answer

A) True 
 B)False

Question 14

The short run in macroeconomics is the period in which

Accepted Answer

A)  prices change significantly. 
B)  no contracts or agreements exist to fix prices. 
C)  demand determines output. 
D)  the demand curve is vertical. 
A)  prices change significantly. 
B)  no contracts or agreements exist to fix prices. 
C)  demand determines output. 
D)  the demand curve is vertical.

Question 15

Figure 14.1
-Figure 14.1 shows three aggregate demand curves. A movement from curve AD₂ to curve AD₁ could be caused by a(n)

Accepted Answer

A)  increase in the money supply. 
B)  increase in taxes. 
C)  increase in the price level. 
D)  increase in government spending. 
A)  increase in the money supply. 
B)  increase in taxes. 
C)  increase in the price level. 
D)  increase in government spending.

Question 16

Higher prices lead to higher levels of real wealth.

Accepted Answer

A) True 
 B)False

Question 17

The real value of money ________ as the price level falls.

Accepted Answer

A)  remains the same 
B)  decreases 
C)  increases 
D)  none of the above 
A)  remains the same 
B)  decreases 
C)  increases 
D)  none of the above

Question 18

Figure 14.2
-Refer to Figure 14.2. A movement from point c to point a could be caused by a(n)

Accepted Answer

A)  decrease in government spending. 
B)  increase in the price of oil. 
C)  decrease in taxes. 
D)  decrease in short-run aggregate supply. 
A)  decrease in government spending. 
B)  increase in the price of oil. 
C)  decrease in taxes. 
D)  decrease in short-run aggregate supply.

Question 19

If the MPS = 0.2, the multiplier would be

Accepted Answer

A)  0.5. 
B)  1. 
C)  2. 
D)  5. 
A)  0.5. 
B)  1. 
C)  2. 
D)  5.

Question 20

When considering the aggregate demand curve, the wealth effect, interest rate effect and effects from international trade reinforce each other.

Accepted Answer

A) True 
 B)False

When there is a shift the aggregate supply curve caused by factors external to a nation's economy, it is called

Figure 14.1 -Figure 14.1 shows three aggregate demand curves. A movement from curve AD₁ to curve AD₀ could be caused by a(n)

In the long run

As the price level , the purchasing power of money .

The purchasing power of money decreases as the

When interest rates are lower, consumers and companies are able to borrow money cheaply in order to make major purchases. As a result, the demand for goods in an economy will generally

The level of output determined by the intersection of the short-run aggregate supply curve and the aggregate demand curve

An increase in government spending will shift the aggregate demand curve to the left.

Define "autonomous consumption spending."

Which of the following would cause a decrease in aggregate demand?

When there is a recession (a fall in output) and prices are increasing, and this situation is caused by adverse supply shocks, the term economists use to describe it is

If potential output exceeds actual output, the aggregate demand curve shifts downward over time.

The short run in macroeconomics is the period in which

Figure 14.1 -Figure 14.1 shows three aggregate demand curves. A movement from curve AD₂ to curve AD₁ could be caused by a(n)

Higher prices lead to higher levels of real wealth.

The real value of money ________ as the price level falls.

Figure 14.2 -Refer to Figure 14.2. A movement from point c to point a could be caused by a(n)

If the MPS = 0.2, the multiplier would be

When considering the aggregate demand curve, the wealth effect, interest rate effect and effects from international trade reinforce each other.

Introduction: What Is Economics

The Key Principles of Economics

Demand, Supply, and Market Equilibrium

Elasticity: A Measure of Responsiveness

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry, Monopolistic Competition, and Oligopoly

Imperfect Information, External Benefits, and External Costs

The Labor Market and the Distribution of Income

Measuring a Nations Production and Income

Unemployment and Inflation

Why Do Economies Grow

Fiscal Policy

Money and the Banking System

Monetary Policy and Inflation

International Trade and Finance

Filters

Exam 14: Aggregate Demand and Aggregate Supply

When there is a shift the aggregate supply curve caused by factors external to a nation's economy, it is called

Figure 14.1 -Figure 14.1 shows three aggregate demand curves. A movement from curve AD₁ to curve AD₀ could be caused by a(n)

In the long run

As the price level ________, the purchasing power of money ________.

The purchasing power of money decreases as the

When interest rates are lower, consumers and companies are able to borrow money cheaply in order to make major purchases. As a result, the demand for goods in an economy will generally

The level of output determined by the intersection of the short-run aggregate supply curve and the aggregate demand curve

An increase in government spending will shift the aggregate demand curve to the left.

Define "autonomous consumption spending."

Which of the following would cause a decrease in aggregate demand?

When there is a recession (a fall in output) and prices are increasing, and this situation is caused by adverse supply shocks, the term economists use to describe it is

If potential output exceeds actual output, the aggregate demand curve shifts downward over time.

The short run in macroeconomics is the period in which

Figure 14.1 -Figure 14.1 shows three aggregate demand curves. A movement from curve AD₂ to curve AD₁ could be caused by a(n)

Higher prices lead to higher levels of real wealth.

The real value of money ________ as the price level falls.

Figure 14.2 -Refer to Figure 14.2. A movement from point c to point a could be caused by a(n)

If the MPS = 0.2, the multiplier would be

When considering the aggregate demand curve, the wealth effect, interest rate effect and effects from international trade reinforce each other.

Introduction: What Is Economics

The Key Principles of Economics

Demand, Supply, and Market Equilibrium

Elasticity: A Measure of Responsiveness

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry, Monopolistic Competition, and Oligopoly

Imperfect Information, External Benefits, and External Costs

The Labor Market and the Distribution of Income

Measuring a Nations Production and Income

Unemployment and Inflation

Why Do Economies Grow

Fiscal Policy

Money and the Banking System

Monetary Policy and Inflation

International Trade and Finance

Filters

As the price level , the purchasing power of money .