Question 1

What happened in the first few years of the Great Depression?

Accepted Answer

A) Unemployment rose by about 10 percent, and prices rose about 27 percent. 
B) Unemployment rose by about 19 percent, and prices rose about 12 percent. 
C) Unemployment rose by about 20 percent, and prices fell about 12 percent. 
D) Unemployment rose by about 25 percent, and prices fell about 19 percent. 
A) Unemployment rose by about 10 percent, and prices rose about 27 percent. 
B) Unemployment rose by about 19 percent, and prices rose about 12 percent. 
C) Unemployment rose by about 20 percent, and prices fell about 12 percent. 
D) Unemployment rose by about 25 percent, and prices fell about 19 percent.

Question 2

What were the changes in output in the early 1930s and early 1940s in Canada, respectively?

Accepted Answer

A) a large increase and a large increase 
B) a large increase and a large decrease 
C) a large decrease and a large increase 
D) a large decrease and a large decrease 
A) a large increase and a large increase 
B) a large increase and a large decrease 
C) a large decrease and a large increase 
D) a large decrease and a large decrease

Question 3

Which of the following best describes the effects of a fall in the price level?

Accepted Answer

A) The real value of money and the real exchange rate rise. 
B) The real value of money and the real exchange rate fall. 
C) The real value of money rises, and the real exchange rate falls. 
D) The real value of money falls, and the real exchange rate rises. 
A) The real value of money and the real exchange rate rise. 
B) The real value of money and the real exchange rate fall. 
C) The real value of money rises, and the real exchange rate falls. 
D) The real value of money falls, and the real exchange rate rises.

Question 4

What happens to prices and output when the long-run aggregate supply curve shifts left?

Accepted Answer

A) Prices and output both increase. 
B) Prices and output both decrease. 
C) Prices increase and output decreases. 
D) Prices decrease and output increases. 
A) Prices and output both increase. 
B) Prices and output both decrease. 
C) Prices increase and output decreases. 
D) Prices decrease and output increases.

Question 5

What happens to sales and profit during recessions?

Accepted Answer

A) sales and profits fall 
B) sales and profits rise 
C) sales rise and profits fall 
D) profits fall and sales rise 
A) sales and profits fall 
B) sales and profits rise 
C) sales rise and profits fall 
D) profits fall and sales rise

Question 6

Which of the following government actions will shift the aggregate demand left?

Accepted Answer

A) a decrease in taxes 
B) cuts in military expenditures 
C) signing a free trade agreement 
D) repealing an import tariff 
A) a decrease in taxes 
B) cuts in military expenditures 
C) signing a free trade agreement 
D) repealing an import tariff

Question 7

Which of the following shifts aggregate demand to the right?

Accepted Answer

A) a decrease in the money supply 
B) technological progress that increases the profitability of capital goods 
C) the repeal of an investment tax credit 
D) a decrease in the price level 
A) a decrease in the money supply 
B) technological progress that increases the profitability of capital goods 
C) the repeal of an investment tax credit 
D) a decrease in the price level

Question 8

In the aggregate demand and aggregate supply model, when does the aggregate quantity of goods demanded decrease?

Accepted Answer

A) when real wealth increases 
B) when the interest rate falls 
C) when the dollar depreciates 
D) when stock prices fall 
A) when real wealth increases 
B) when the interest rate falls 
C) when the dollar depreciates 
D) when stock prices fall

Question 9

When all prices rise together, there is no change in the overall quantity of goods and services supplied.

Accepted Answer

A) True 
 B)False

Question 10

Scenario 14-2. The economy is in long-run equilibrium. Suddenly, due to corporate scandals, international tensions, and the loss of confidence among policymakers, citizens become pessimistic concerning the future. They maintain this level of pessimism for a long time.
-Refer to Scenario 14-2. Which of the following are consistent with the aggregate demand and aggregate supply theory?

Accepted Answer

A) The expected price level rises. Bargains are struck for higher increases in wages. 
B) The expected price level rises. Bargains are struck for lower increases in wages. 
C) The expected price level falls. Bargains are struck for higher increases in wages. 
D) The expected price level falls. Bargains are struck for lower increases in wages. 
A) The expected price level rises. Bargains are struck for higher increases in wages. 
B) The expected price level rises. Bargains are struck for lower increases in wages. 
C) The expected price level falls. Bargains are struck for higher increases in wages. 
D) The expected price level falls. Bargains are struck for lower increases in wages.

Question 11

What happens when the dollar appreciates?

Accepted Answer

A) Canadian exports decrease, while imports increase. 
B) Canadian exports and imports decrease. 
C) Canadian exports and imports increase. 
D) Canadian exports increase, while imports decrease. 
A) Canadian exports decrease, while imports increase. 
B) Canadian exports and imports decrease. 
C) Canadian exports and imports increase. 
D) Canadian exports increase, while imports decrease.

Question 12

Make a list of things that would shift the long-run aggregate supply curve to the right.

Accepted Answer

Examples in the text (or variations) inc

Question 13

Economists mostly agree that the Great Depression was the result of a very large adverse supply shock.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) by shifting the aggregate supply right 
B) by shifting the aggregate supply left 
C) by shifting the aggregate demand right 
D) by shifting the aggregate demand left 
A) by shifting the aggregate supply right 
B) by shifting the aggregate supply left 
C) by shifting the aggregate demand right 
D) by shifting the aggregate demand left

Question 15

How controversial is the theory concerning long-run economic performance compared with short-run theories?

Accepted Answer

A) It is less controversial than short-run theories. 
B) It is equally controversial as short-run theories. 
C) It is more controversial than short-run theories. 
D) Neither the long-run theory nor the short-run theories are controversial. 
A) It is less controversial than short-run theories. 
B) It is equally controversial as short-run theories. 
C) It is more controversial than short-run theories. 
D) Neither the long-run theory nor the short-run theories are controversial.

Question 16

Which of the following happens to aggregate demand if people want to save more for retirement and the government raises taxes?

Accepted Answer

A) Aggregate demand shifts right. 
B) Aggregate demand shifts left. 
C) If people save more, aggregate demand shifts right; f the government raises taxes, aggregate demand shifts left. 
D) If people save more, aggregate demand shifts left; if the government raises taxes, aggregate demand shifts right. 
A) Aggregate demand shifts right. 
B) Aggregate demand shifts left. 
C) If people save more, aggregate demand shifts right; f the government raises taxes, aggregate demand shifts left. 
D) If people save more, aggregate demand shifts left; if the government raises taxes, aggregate demand shifts right.

Question 17

Which of the following relationships does the model of aggregate demand and aggregate supply explain?

Accepted Answer

A) the relationship between the price and quantity of a particular good 
B) the relationship between unemployment and output 
C) the relationship between wages and employment 
D) the relationship between real GDP and the price level 
A) the relationship between the price and quantity of a particular good 
B) the relationship between unemployment and output 
C) the relationship between wages and employment 
D) the relationship between real GDP and the price level

Question 18

How are the effects of an increase in the price level that is greater than expected shown in the aggregate demand and aggregate supply model?

Accepted Answer

A) by shifting the short-run aggregate supply curve right 
B) by shifting the short-run aggregate supply curve left 
C) by moving to the right along a given aggregate supply curve 
D) by moving to the left along a given aggregate supply curve 
A) by shifting the short-run aggregate supply curve right 
B) by shifting the short-run aggregate supply curve left 
C) by moving to the right along a given aggregate supply curve 
D) by moving to the left along a given aggregate supply curve

Question 19

Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp increase in the minimum wage, a major new discovery of oil, a large influx of immigrants, and new environmental regulations that reduce electricity production. In the short run, what would we expect to happen?

Accepted Answer

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

Question 20

What happens when the price level rises?

Accepted Answer

A) The value of money rises, and exchange rates and interest rates also rise. 
B) The value of money rises, while exchange rates and interest rates fall. 
C) The value of money falls, while exchange rates and interest rates rise. 
D) The value of money falls, and exchange rates and interest rates also fall. 
A) The value of money rises, and exchange rates and interest rates also rise. 
B) The value of money rises, while exchange rates and interest rates fall. 
C) The value of money falls, while exchange rates and interest rates rise. 
D) The value of money falls, and exchange rates and interest rates also fall.

What happened in the first few years of the Great Depression?

What were the changes in output in the early 1930s and early 1940s in Canada, respectively?

Which of the following best describes the effects of a fall in the price level?

What happens to prices and output when the long-run aggregate supply curve shifts left?

What happens to sales and profit during recessions?

Which of the following government actions will shift the aggregate demand left?

Which of the following shifts aggregate demand to the right?

In the aggregate demand and aggregate supply model, when does the aggregate quantity of goods demanded decrease?

When all prices rise together, there is no change in the overall quantity of goods and services supplied.

What happens when the dollar appreciates?

Make a list of things that would shift the long-run aggregate supply curve to the right.

Economists mostly agree that the Great Depression was the result of a very large adverse supply shock.

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

How controversial is the theory concerning long-run economic performance compared with short-run theories?

Which of the following happens to aggregate demand if people want to save more for retirement and the government raises taxes?

Which of the following relationships does the model of aggregate demand and aggregate supply explain?

How are the effects of an increase in the price level that is greater than expected shown in the aggregate demand and aggregate supply model?

Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp increase in the minimum wage, a major new discovery of oil, a large influx of immigrants, and new environmental regulations that reduce electricity production. In the short run, what would we expect to happen?

What happens when the price level rises?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters

Exam 14: Aggregate Demand and Aggregate Supply

What happened in the first few years of the Great Depression?

What were the changes in output in the early 1930s and early 1940s in Canada, respectively?

Which of the following best describes the effects of a fall in the price level?

What happens to prices and output when the long-run aggregate supply curve shifts left?

What happens to sales and profit during recessions?

Which of the following government actions will shift the aggregate demand left?

Which of the following shifts aggregate demand to the right?

In the aggregate demand and aggregate supply model, when does the aggregate quantity of goods demanded decrease?

When all prices rise together, there is no change in the overall quantity of goods and services supplied.

What happens when the dollar appreciates?

Make a list of things that would shift the long-run aggregate supply curve to the right.

Economists mostly agree that the Great Depression was the result of a very large adverse supply shock.

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

How controversial is the theory concerning long-run economic performance compared with short-run theories?

Which of the following happens to aggregate demand if people want to save more for retirement and the government raises taxes?

Which of the following relationships does the model of aggregate demand and aggregate supply explain?

How are the effects of an increase in the price level that is greater than expected shown in the aggregate demand and aggregate supply model?

Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp increase in the minimum wage, a major new discovery of oil, a large influx of immigrants, and new environmental regulations that reduce electricity production. In the short run, what would we expect to happen?

What happens when the price level rises?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters