Question 1

According to the classical model, which of the following would double if the quantity of money doubled?

Accepted Answer

A) prices but not nominal income 
B) nominal income but not prices 
C) both prices and nominal income 
D) neither prices nor nominal income 
A) prices but not nominal income 
B) nominal income but not prices 
C) both prices and nominal income 
D) neither prices nor nominal income

Question 2

The model of aggregate demand and aggregate supply

Accepted Answer

A) is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution of resources between markets to explain aggregate relationships. 
B) is different from the model of supply and demand for a particular market, in that we have to separate real and nominal variables in the aggregate model. 
C) is a straightforward extension of the model of supply and demand for a particular market, in which substitution of resources between markets is highlighted. 
D) is a straightforward extension of the model of supply and demand for a particular market, in which the interaction between real and nominal variables is highlighted. 
A) is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution of resources between markets to explain aggregate relationships. 
B) is different from the model of supply and demand for a particular market, in that we have to separate real and nominal variables in the aggregate model. 
C) is a straightforward extension of the model of supply and demand for a particular market, in which substitution of resources between markets is highlighted. 
D) is a straightforward extension of the model of supply and demand for a particular market, in which the interaction between real and nominal variables is highlighted.

Question 3

Suppose the economy is in long-run equilibrium. If there is a tax cut at the same time that major new sources of oil are discovered in the country, then in the short-run

Accepted Answer

A) real GDP will rise and the price level might rise, fall, or stay the same. 
B) real GDP will fall and the price level might rise, fall, or stay the same. 
C) the price level will rise, and real GDP might rise, fall, or stay the same. 
D) the price level will fall, and real GDP might rise, fall, or stay the same. 
A) real GDP will rise and the price level might rise, fall, or stay the same. 
B) real GDP will fall and the price level might rise, fall, or stay the same. 
C) the price level will rise, and real GDP might rise, fall, or stay the same. 
D) the price level will fall, and real GDP might rise, fall, or stay the same.

Question 4

Other things the same, as the price level rises, the real value of money

Accepted Answer

A) and the exchange rate rise. 
B) and the exchange rate fall. 
C) rises and the exchange rate falls. 
D) falls and the exchange rate rises. 
A) and the exchange rate rise. 
B) and the exchange rate fall. 
C) rises and the exchange rate falls. 
D) falls and the exchange rate rises.

Question 5

The effect of an increase in the price level on the aggregate-demand curve is represented by a

Accepted Answer

A) shift to the right of the aggregate-demand curve. 
B) shift to the left of the aggregate-demand curve. 
C) movement to the left along a given aggregate-demand curve. 
D) movement to the right along a given aggregate-demand curve. 
A) shift to the right of the aggregate-demand curve. 
B) shift to the left of the aggregate-demand curve. 
C) movement to the left along a given aggregate-demand curve. 
D) movement to the right along a given aggregate-demand curve.

Question 6

An increase in the expected price level shifts short-run aggregate supply to the

Accepted Answer

A) right, and an increase in the actual price level shifts short-run aggregate supply to the right. 
B) right, and an increase in the actual price level does not shift short-run aggregate supply. 
C) left, and an increase in the actual price level shifts short-run aggregate supply to the left. 
D) left, and an increase in the actual price level does not shift short-run aggregate supply. 
A) right, and an increase in the actual price level shifts short-run aggregate supply to the right. 
B) right, and an increase in the actual price level does not shift short-run aggregate supply. 
C) left, and an increase in the actual price level shifts short-run aggregate supply to the left. 
D) left, and an increase in the actual price level does not shift short-run aggregate supply.

Question 7

Figure 20-2.  
-Refer to Figure 20-2. Point B represents

Accepted Answer

A) a short-run equilibrium and a long-run equilibrium. 
B) a short-run equilibrium but not a long-run equilibrium. 
C) a long-run equilibrium but not a short-run equilibrium. 
D) neither a short-run equilibrium nor a long-run equilibrium. 
A) a short-run equilibrium and a long-run equilibrium. 
B) a short-run equilibrium but not a long-run equilibrium. 
C) a long-run equilibrium but not a short-run equilibrium. 
D) neither a short-run equilibrium nor a long-run equilibrium.

Question 8

If the price level falls, the real value of a dollar

Accepted Answer

A) rises, so people will want to buy more. This response helps explain the slope of the aggregate demand curve. 
B) rises, so people will want to buy more. This response shifts aggregate demand to the right. 
C) falls, so people will want to buy less. This response helps explain the slope of the aggregate demand curve. 
D) falls, so people will want to buy less. This response shifts aggregate demand to the left. 
A) rises, so people will want to buy more. This response helps explain the slope of the aggregate demand curve. 
B) rises, so people will want to buy more. This response shifts aggregate demand to the right. 
C) falls, so people will want to buy less. This response helps explain the slope of the aggregate demand curve. 
D) falls, so people will want to buy less. This response shifts aggregate demand to the left.

Question 9

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following both shift aggregate demand left?

Accepted Answer

A) a decrease in taxes and at a given price level consumers feel more wealthy 
B) a decrease in taxes and at a given price level consumers feel less wealthy 
C) an increase in taxes and at a given price level consumers feel more wealthy 
D) an increase in taxes and at a given price level consumers feel less wealthy 
A) a decrease in taxes and at a given price level consumers feel more wealthy 
B) a decrease in taxes and at a given price level consumers feel less wealthy 
C) an increase in taxes and at a given price level consumers feel more wealthy 
D) an increase in taxes and at a given price level consumers feel less wealthy

Question 11

Suppose a shift in aggregate demand creates an economic contraction. If policymakers can respond with sufficient speed and precision, they can offset the initial shift by shifting

Accepted Answer

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

According to the classical model, which of the following would double if the quantity of money doubled?

The model of aggregate demand and aggregate supply

Suppose the economy is in long-run equilibrium. If there is a tax cut at the same time that major new sources of oil are discovered in the country, then in the short-run

Other things the same, as the price level rises, the real value of money

The effect of an increase in the price level on the aggregate-demand curve is represented by a

An increase in the expected price level shifts short-run aggregate supply to the

Figure 20-2. -Refer to Figure 20-2. Point B represents

If the price level falls, the real value of a dollar

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Which of the following both shift aggregate demand left?

Suppose a shift in aggregate demand creates an economic contraction. If policymakers can respond with sufficient speed and precision, they can offset the initial shift by shifting

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

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Exam 20: Aggregate Demand and Aggregate Supply

According to the classical model, which of the following would double if the quantity of money doubled?

The model of aggregate demand and aggregate supply

Suppose the economy is in long-run equilibrium. If there is a tax cut at the same time that major new sources of oil are discovered in the country, then in the short-run

Other things the same, as the price level rises, the real value of money

The effect of an increase in the price level on the aggregate-demand curve is represented by a

An increase in the expected price level shifts short-run aggregate supply to the

Figure 20-2. -Refer to Figure 20-2. Point B represents

If the price level falls, the real value of a dollar

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Which of the following both shift aggregate demand left?

Suppose a shift in aggregate demand creates an economic contraction. If policymakers can respond with sufficient speed and precision, they can offset the initial shift by shifting

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