Question 1

Workers whose wages tend to adjust slowly include all of the following EXCEPT

Accepted Answer

A)  union workers. 
B)  unskilled, low wage workers. 
C)  those with long-term contracts. 
D)  movie stars, professional athletes, and rock stars. 
A)  union workers. 
B)  unskilled, low wage workers. 
C)  those with long-term contracts. 
D)  movie stars, professional athletes, and rock stars.

Question 2

If the multiplier = 2.5, the MPS would be

Accepted Answer

A)  0.25. 
B)  0.4. 
C)  0.6. 
D)  0.75. 
A)  0.25. 
B)  0.4. 
C)  0.6. 
D)  0.75.

Question 3

Recall the Application about the factors involved in causing recessions, and the causes of recessions in the United States from 1893 to 1990 to answer the following question(s).
-According to this Application, the recession of 1929 was primarily due to

Accepted Answer

A)  a decrease in aggregate demand caused by the private sector. 
B)  a decrease in aggregate demand resulting from decreases in government spending. 
C)  a decrease in aggregate supply due to rising gold prices. 
D)  an increase in aggregate supply resulting from European bank collapses. 
A)  a decrease in aggregate demand caused by the private sector. 
B)  a decrease in aggregate demand resulting from decreases in government spending. 
C)  a decrease in aggregate supply due to rising gold prices. 
D)  an increase in aggregate supply resulting from European bank collapses.

Question 4

Suppose consumer tastes and preferences shift from tacos to pizzas. In the short run, these changing tastes will result in pizza restaurants ________ pizza prices and taco restaurants ________ taco prices.

Accepted Answer

A)  increasing; decreasing 
B)  decreasing; increasing 
C)  decreasing; decreasing 
D)  increasing; increasing 
A)  increasing; decreasing 
B)  decreasing; increasing 
C)  decreasing; decreasing 
D)  increasing; increasing

Question 5

Name a supply shock that has affected the U.S. economy on more than one occasion.

Accepted Answer

increase o

Question 6

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

Question 7

The increase in spending that occurs because the demand for investment goods increases when the price level falls is known as the

Accepted Answer

A)  interest rate effect. 
B)  international trade effect. 
C)  price effect. 
D)  wealth effect. 
A)  interest rate effect. 
B)  international trade effect. 
C)  price effect. 
D)  wealth effect.

Question 8

When the price level is low, resulting in domestic goods being cheaper than imported foreign goods,

Accepted Answer

A)  consumers hold more money. 
B)  consumers spend less. 
C)  the demand for domestic goods will increase. 
D)  there will be a reduction in import tariffs. 
A)  consumers hold more money. 
B)  consumers spend less. 
C)  the demand for domestic goods will increase. 
D)  there will be a reduction in import tariffs.

Question 9

The relationship between the level of income and investment spending is known as the consumption function.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

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

Question 11

The increase in spending that occurs because domestic goods become cheaper relative to foreign goods when the price level falls is known as the

Accepted Answer

A)  interest rate effect. 
B)  international trade effect. 
C)  price effect. 
D)  wealth effect. 
A)  interest rate effect. 
B)  international trade effect. 
C)  price effect. 
D)  wealth effect.

Question 12

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

Accepted Answer

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

Question 13

Define the marginal propensity to consume (MPC) and the marginal propensity to save (MPS), and explain why MPC + MPS always equals 1.

Accepted Answer

MPC is the fraction of additional income

Question 14

The economic theory that emphasizes the role of difficulties in coordinating economic affairs as a cause of economic fluctuations is known as

Accepted Answer

A)  Keynesian economics. 
B)  investment cycle theory. 
C)  real business cycle theory. 
D)  technology shock theory. 
A)  Keynesian economics. 
B)  investment cycle theory. 
C)  real business cycle theory. 
D)  technology shock theory.

Question 15

Which of the following does NOT shift the U.S. aggregate demand curve?

Accepted Answer

A)  an increase in the supply of money 
B)  an increase in GDP in Japan 
C)  a decrease in taxes 
D)  a decrease in the price level 
A)  an increase in the supply of money 
B)  an increase in GDP in Japan 
C)  a decrease in taxes 
D)  a decrease in the price level

Question 16

Aggregate demand determines output in the short run if prices are flexible.

Accepted Answer

A) True 
 B)False

Question 17

Define the "consumption function."

Accepted Answer

The consumption func

Question 18

What are some reasons why coordination of economic affairs through the price system may not work perfectly?

Accepted Answer

There are a number of correct answers he

Question 19

If the government increased its purchases of goods and services by $12,000, and this resulted in an eventual increase in GDP and income of $60,000, the MPS would be equal to

Accepted Answer

A)  0.2. 
B)  0.4. 
C)  0.8. 
D)  2. 
A)  0.2. 
B)  0.4. 
C)  0.8. 
D)  2.

Question 20

The relationship between consumer spending and income is known as the

Accepted Answer

A)  rate of income. 
B)  consumption function. 
C)  inflation rate. 
D)  rate of individual wealth. 
A)  rate of income. 
B)  consumption function. 
C)  inflation rate. 
D)  rate of individual wealth.

Workers whose wages tend to adjust slowly include all of the following EXCEPT

If the multiplier = 2.5, the MPS would be

Recall the Application about the factors involved in causing recessions, and the causes of recessions in the United States from 1893 to 1990 to answer the following question(s). -According to this Application, the recession of 1929 was primarily due to

Suppose consumer tastes and preferences shift from tacos to pizzas. In the short run, these changing tastes will result in pizza restaurants pizza prices and taco restaurants taco prices.

Name a supply shock that has affected the U.S. economy on more than one occasion.

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)

The increase in spending that occurs because the demand for investment goods increases when the price level falls is known as the

When the price level is low, resulting in domestic goods being cheaper than imported foreign goods,

The relationship between the level of income and investment spending is known as the consumption function.

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

The increase in spending that occurs because domestic goods become cheaper relative to foreign goods when the price level falls is known as the

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

Define the marginal propensity to consume (MPC) and the marginal propensity to save (MPS), and explain why MPC + MPS always equals 1.

The economic theory that emphasizes the role of difficulties in coordinating economic affairs as a cause of economic fluctuations is known as

Which of the following does NOT shift the U.S. aggregate demand curve?

Aggregate demand determines output in the short run if prices are flexible.

Define the "consumption function."

What are some reasons why coordination of economic affairs through the price system may not work perfectly?

If the government increased its purchases of goods and services by $12,000, and this resulted in an eventual increase in GDP and income of $60,000, the MPS would be equal to

The relationship between consumer spending and income is known as the

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

Workers whose wages tend to adjust slowly include all of the following EXCEPT

If the multiplier = 2.5, the MPS would be

Recall the Application about the factors involved in causing recessions, and the causes of recessions in the United States from 1893 to 1990 to answer the following question(s). -According to this Application, the recession of 1929 was primarily due to

Suppose consumer tastes and preferences shift from tacos to pizzas. In the short run, these changing tastes will result in pizza restaurants ________ pizza prices and taco restaurants ________ taco prices.

Name a supply shock that has affected the U.S. economy on more than one occasion.

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)

The increase in spending that occurs because the demand for investment goods increases when the price level falls is known as the

When the price level is low, resulting in domestic goods being cheaper than imported foreign goods,

The relationship between the level of income and investment spending is known as the consumption function.

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

The increase in spending that occurs because domestic goods become cheaper relative to foreign goods when the price level falls is known as the

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

Define the marginal propensity to consume (MPC) and the marginal propensity to save (MPS), and explain why MPC + MPS always equals 1.

The economic theory that emphasizes the role of difficulties in coordinating economic affairs as a cause of economic fluctuations is known as

Which of the following does NOT shift the U.S. aggregate demand curve?

Aggregate demand determines output in the short run if prices are flexible.

Define the "consumption function."

What are some reasons why coordination of economic affairs through the price system may not work perfectly?

If the government increased its purchases of goods and services by $12,000, and this resulted in an eventual increase in GDP and income of $60,000, the MPS would be equal to

The relationship between consumer spending and income is known as the

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

Suppose consumer tastes and preferences shift from tacos to pizzas. In the short run, these changing tastes will result in pizza restaurants pizza prices and taco restaurants taco prices.