Question 1

Which of the following shifts short-run aggregate supply left?

Accepted Answer

A) an increase in price expectations 
B) an increase in the actual price level 
C) a decrease in the money supply 
D) a decrease in the price of oil 
A) an increase in price expectations 
B) an increase in the actual price level 
C) a decrease in the money supply 
D) a decrease in the price of oil

Question 2

When the price level falls the quantity of

Accepted Answer

A) consumption goods demanded rises, while the quantity of net exports demanded falls. 
B) consumption goods demanded and the quantity of net exports demanded both rise. 
C) consumption goods demanded and the quantity of net exports demanded both fall. 
D) consumption goods demanded falls, while the quantity of net exports demand rises. 
A) consumption goods demanded rises, while the quantity of net exports demanded falls. 
B) consumption goods demanded and the quantity of net exports demanded both rise. 
C) consumption goods demanded and the quantity of net exports demanded both fall. 
D) consumption goods demanded falls, while the quantity of net exports demand rises.

Question 3

Which of the following alone can explain the change in the price level and output during World War II?

Accepted Answer

A) aggregate demand shifted right 
B) aggregate demand shifted left 
C) aggregate supply shifted right 
D) aggregate supply shifted left 
A) aggregate demand shifted right 
B) aggregate demand shifted left 
C) aggregate supply shifted right 
D) aggregate supply shifted left

Question 4

What do most economists believe concerning the relation between the price level and real output?

Accepted Answer

Most economists believe that in the long

Question 5

U.S. Financial Crisis
Suppose that foreigners had reduced confidence in U.S. financial institutions and believed that privately issued U.S. bonds were more likely to be defaulted on.
-Refer to U.S. Financial Crisis. U.S. net exports would

Accepted Answer

A) rise which by itself would increase aggregate demand. 
B) rise which by itself would decrease aggregate demand. 
C) fall which by itself would increase aggregate demand. 
D) fall which by itself would decrease aggregate demand. 
A) rise which by itself would increase aggregate demand. 
B) rise which by itself would decrease aggregate demand. 
C) fall which by itself would increase aggregate demand. 
D) fall which by itself would decrease aggregate demand.

Question 6

Which of the following shifts short-run aggregate supply left?

Accepted Answer

A) an increase in the actual price level 
B) an increase in the expected price level 
C) an increase in the capital stock 
D) None of the above is correct. 
A) an increase in the actual price level 
B) an increase in the expected price level 
C) an increase in the capital stock 
D) None of the above is correct.

Question 7

Which of the following would cause prices and real GDP to rise in the short run?

Accepted Answer

A) short-run aggregate supply shifts right 
B) short-run aggregate supply shifts left 
C) aggregate demand shifts right 
D) aggregate demand shifts left 
A) short-run aggregate supply shifts right 
B) short-run aggregate supply shifts left 
C) aggregate demand shifts right 
D) aggregate demand shifts left

Question 8

When the price level changes, which of the following variables will change and thereby cause a change in the aggregate quantity of goods and services demanded?

Accepted Answer

A) the real value of wealth 
B) the interest rate 
C) the value of currency in the market for foreign exchange 
D) All of the above are correct. 
A) the real value of wealth 
B) the interest rate 
C) the value of currency in the market for foreign exchange 
D) All of the above are correct.

Question 9

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U.S. Which pair of GDP growth rates and unemployment rates is realistic?

Accepted Answer

A) 6 percent, 0 percent 
B) 3 percent, 10 percent 
C) -1 percent, 6 percent 
D) -3 percent, 2 percent 
A) 6 percent, 0 percent 
B) 3 percent, 10 percent 
C) -1 percent, 6 percent 
D) -3 percent, 2 percent

Question 10

When taxes decrease, consumption

Accepted Answer

A) increases, so aggregate demand shifts right. 
B) increases, so aggregate supply shifts right. 
C) decreases, so aggregate demand shifts left. 
D) decreases, so aggregate supply shifts left. 
A) increases, so aggregate demand shifts right. 
B) increases, so aggregate supply shifts right. 
C) decreases, so aggregate demand shifts left. 
D) decreases, so aggregate supply shifts left.

Question 11

At a given price level, an increase in which of the following shifts aggregate demand to the right?

Accepted Answer

A) consumption 
B) investment 
C) government expenditures 
D) All of the above are correct. 
A) consumption 
B) investment 
C) government expenditures 
D) All of the above are correct.

Question 12

Optimism
Imagine that the economy is in long-run equilibrium. Then, perhaps because of improved international relations and increased confidence in policy makers, people become more optimistic about the future and stay this way for some time.
-Refer to Optimism. How is the new long-run equilibrium different from the original one?

Accepted Answer

A) both price and real GDP are higher 
B) both price and real GDP are lower. 
C) the price level is the same and GDP is higher. 
D) the price level is higher and real GDP is the same. 
A) both price and real GDP are higher 
B) both price and real GDP are lower. 
C) the price level is the same and GDP is higher. 
D) the price level is higher and real GDP is the same.

Question 13

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is correct?

Accepted Answer

A) Short run fluctuations in economic activity happen only in developing countries. 
B) During economic contractions most firms experience rising sales. 
C) Recessions come at regular intervals and are easy to predict. 
D) When real GDP falls, the rate of unemployment rises. 
A) Short run fluctuations in economic activity happen only in developing countries. 
B) During economic contractions most firms experience rising sales. 
C) Recessions come at regular intervals and are easy to predict. 
D) When real GDP falls, the rate of unemployment rises.

Question 15

The long-run aggregate supply curve shifts right if

Accepted Answer

A) the price level rises. 
B) the price level falls. 
C) the capital stock increases. 
D) the capital stock decreases. 
A) the price level rises. 
B) the price level falls. 
C) the capital stock increases. 
D) the capital stock decreases.

Question 16

Of the following theories, which is consistent with a vertical long-run aggregate supply curve?

Accepted Answer

A) the sticky-wage theory 
B) misperceptions theory 
C) both the sticky-wage and misperceptions theories. 
D) neither the sticky-wage nor the misperceptions theory. 
A) the sticky-wage theory 
B) misperceptions theory 
C) both the sticky-wage and misperceptions theories. 
D) neither the sticky-wage nor the misperceptions theory.

Question 17

Aggregate demand includes

Accepted Answer

A) both the quantity of goods and services the government and customers abroad want to buy. 
B) neither the quantity of goods and services the government wants to buy nor the quantity of goods and services customers abroad want to buy. 
C) the quantity of goods and service the government wants to buy, but not the quantity of goods and services customers abroad want to buy. 
D) the quantity of goods and services customers abroad want to buy, but not the quantity of goods and services the government wants to buy. 
A) both the quantity of goods and services the government and customers abroad want to buy. 
B) neither the quantity of goods and services the government wants to buy nor the quantity of goods and services customers abroad want to buy. 
C) the quantity of goods and service the government wants to buy, but not the quantity of goods and services customers abroad want to buy. 
D) the quantity of goods and services customers abroad want to buy, but not the quantity of goods and services the government wants to buy.

Question 18

Suppose the economy is in long-run equilibrium. In a short span of time, there is a large influx of skilled immigrants, a major new discovery of oil, and a major new technological advance in electricity production. In the short run, we would expect

Accepted Answer

A) the price level to rise and real GDP to fall. 
B) the price level to fall and real GDP to rise. 
C) the price level and real GDP both to stay the same. 
D) All of the above are possible. 
A) the price level to rise and real GDP to fall. 
B) the price level to fall and real GDP to rise. 
C) the price level and real GDP both to stay the same. 
D) All of the above are possible.

Question 19

Suppose that during World War II the long-run aggregate supply curve shifted right. In order for price and output to have changed in the direction they did, what would have to have happened to aggregate demand?

Accepted Answer

A) It would have to have shifted left by less than aggregate supply shifted 
B) It would have to have to shifted left by more than aggregate supply shifted. 
C) It would have to have shifted right by less than aggregate supply shifted 
D) It would have to have to shifted right by more than aggregate supply shifted. 
A) It would have to have shifted left by less than aggregate supply shifted 
B) It would have to have to shifted left by more than aggregate supply shifted. 
C) It would have to have shifted right by less than aggregate supply shifted 
D) It would have to have to shifted right by more than aggregate supply shifted.

Question 20

The aggregate demand and aggregate supply graph has

Accepted Answer

A) the price level on the horizontal axis. The price level can be measured by the GDP deflator. 
B) the price level on the horizontal axis. The price level can be measured by real GDP. 
C) the price level on the vertical axis. The price level can be measured by the GDP deflator. 
D) the price level on the vertical axis. The price level can be measured by GDP. 
A) the price level on the horizontal axis. The price level can be measured by the GDP deflator. 
B) the price level on the horizontal axis. The price level can be measured by real GDP. 
C) the price level on the vertical axis. The price level can be measured by the GDP deflator. 
D) the price level on the vertical axis. The price level can be measured by GDP.

Exam 20: Aggregate Demand and Aggregate Supply

Which of the following shifts short-run aggregate supply left?

When the price level falls the quantity of

Which of the following alone can explain the change in the price level and output during World War II?

What do most economists believe concerning the relation between the price level and real output?

U.S. Financial Crisis Suppose that foreigners had reduced confidence in U.S. financial institutions and believed that privately issued U.S. bonds were more likely to be defaulted on. -Refer to U.S. Financial Crisis. U.S. net exports would

Which of the following shifts short-run aggregate supply left?

Which of the following would cause prices and real GDP to rise in the short run?

When the price level changes, which of the following variables will change and thereby cause a change in the aggregate quantity of goods and services demanded?

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U.S. Which pair of GDP growth rates and unemployment rates is realistic?

When taxes decrease, consumption

At a given price level, an increase in which of the following shifts aggregate demand to the right?

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

Which of the following is correct?

The long-run aggregate supply curve shifts right if

Of the following theories, which is consistent with a vertical long-run aggregate supply curve?

Aggregate demand includes

Suppose the economy is in long-run equilibrium. In a short span of time, there is a large influx of skilled immigrants, a major new discovery of oil, and a major new technological advance in electricity production. In the short run, we would expect

Suppose that during World War II the long-run aggregate supply curve shifted right. In order for price and output to have changed in the direction they did, what would have to have happened to aggregate demand?

The aggregate demand and aggregate supply graph has

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters