Question 1

According to the sticky wage theory, which of the following is consistent with an unexpected fall in the price level?

Accepted Answer

A) The real wage rises and employment rises. 
B) The real wage rises and employment falls. 
C) The real wage falls and employment rises. 
D) The real wage falls and employment falls. 
A) The real wage rises and employment rises. 
B) The real wage rises and employment falls. 
C) The real wage falls and employment rises. 
D) The real wage falls and employment falls.

Question 2

What are the effects of an increase in the price level?

Accepted Answer

A) The interest rate increases, the dollar depreciates, and net exports increase. 
B) The interest rate increases, the dollar appreciates, and net exports decrease. 
C) The interest rate decreases, the dollar depreciates, and net exports increase. 
D) The interest rate decreases, the dollar appreciates, and net exports decrease. 
A) The interest rate increases, the dollar depreciates, and net exports increase. 
B) The interest rate increases, the dollar appreciates, and net exports decrease. 
C) The interest rate decreases, the dollar depreciates, and net exports increase. 
D) The interest rate decreases, the dollar appreciates, and net exports decrease.

Question 3

When would the long-run aggregate supply curve shift right?

Accepted Answer

A) When immigration increases or the government makes a substantial increase in the minimum wage. 
B) When immigration decreases or the government abolishes the minimum wage. 
C) When immigration increases or the government abolishes the minimum wage. 
D) When immigration decreases or the government makes a substantial increase in the minimum wage. 
A) When immigration increases or the government makes a substantial increase in the minimum wage. 
B) When immigration decreases or the government abolishes the minimum wage. 
C) When immigration increases or the government abolishes the minimum wage. 
D) When immigration decreases or the government makes a substantial increase in the minimum wage.

Question 4

The explanations for the slopes of the aggregate demand and aggregate supply curves are the same as the explanations for the slope of demand and supply curves for specific goods and services.

Accepted Answer

A) True 
 B)False

Question 5

In addition to the price level, which of the following does the aggregate demand and aggregate supply model focus on?

Accepted Answer

A) real GDP 
B) nominal GDP 
C) the neutrality of money 
D) stock prices 
A) real GDP 
B) nominal GDP 
C) the neutrality of money 
D) stock prices

Question 6

Which of the following does the economy experience during a recession?

Accepted Answer

A) rising employment and income 
B) rising employment and falling income 
C) rising income and falling employment 
D) falling employment and income 
A) rising employment and income 
B) rising employment and falling income 
C) rising income and falling employment 
D) falling employment and income

Question 7

An increase in the money supply shifts the long-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 8

Scenario 14-1. The economy is in long-run equilibrium. Suddenly, due to improved international relations and the increased confidence of policymakers, citizens become more optimistic about the future and stay this way for a long time.
-Refer to Scenario 14-1. In the short run, which of the following describes the changes that take place in the economy?

Accepted Answer

A) Both the price level and real GDP rise. 
B) Both the price level and real GDP fall. 
C) The price level rises and real GDP falls. 
D) The price level falls and real GDP rises. 
A) Both the price level and real GDP rise. 
B) Both the price level and real GDP fall. 
C) The price level rises and real GDP falls. 
D) The price level falls and real GDP rises.

Question 9

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

Accepted Answer

A) an increase in the price level 
B) an increase in the expected price level 
C) an increase in the capital stock 
D) a decrease in taxes 
A) an increase in the price level 
B) an increase in the expected price level 
C) an increase in the capital stock 
D) a decrease in taxes

Question 10

Which of the following shifts aggregate demand to the right?

Accepted Answer

A) a decrease in the money supply 
B) a decrease in net exports at every exchange rate 
C) an investment tax 
D) a decrease in taxes 
A) a decrease in the money supply 
B) a decrease in net exports at every exchange rate 
C) an investment tax 
D) a decrease in taxes

Question 11

Suppose there is a decrease in the availability of an important major resource, such as oil. Which of the following shifts would most likely occur?

Accepted Answer

A) The aggregate supply would shift right. 
B) The aggregate supply would shift left. 
C) The aggregate demand would shift right. 
D) The aggregate demand would shift left. 
A) The aggregate supply would shift right. 
B) The aggregate supply would shift left. 
C) The aggregate demand would shift right. 
D) The aggregate demand would shift left.

Question 12

Which of the following has been suggested as a cause of the Great Depression?

Accepted Answer

A) a decline in output 
B) a decrease in prices 
C) strong bank regulations 
D) a decrease in the money supply 
A) a decline in output 
B) a decrease in prices 
C) strong bank regulations 
D) a decrease in the money supply

Question 13

During World War II, output increased by a larger percentage than government expenditures.

Accepted Answer

A) True 
 B)False

Question 14

In which of the following situations would the long-run aggregate supply curve shift right?

Accepted Answer

A) if the government were to increase the minimum-wage law 
B) if the government were to make unemployment benefits more generous 
C) if the government were to raise taxes on investment spending 
D) if immigration were to increase 
A) if the government were to increase the minimum-wage law 
B) if the government were to make unemployment benefits more generous 
C) if the government were to raise taxes on investment spending 
D) if immigration were to increase

Question 15

In 1982, Canada was in recession. Which of the following things would you expect NOT to have happened?

Accepted Answer

A) layoffs and firings 
B) a higher rate of bankruptcy 
C) increased claims for unemployment insurance 
D) increased investment spending 
A) layoffs and firings 
B) a higher rate of bankruptcy 
C) increased claims for unemployment insurance 
D) increased investment spending

Question 16

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is consistent with the theory of aggregate supply?

Accepted Answer

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

Question 18

What is the effect of bad weather for farming or some other temporary decrease in the availability of raw materials?

Accepted Answer

A) Aggregate supply shifts right. 
B) Output falls in the short run. 
C) Prices fall in the short run. 
D) Long-run aggregate supply shifts to the left. 
A) Aggregate supply shifts right. 
B) Output falls in the short run. 
C) Prices fall in the short run. 
D) Long-run aggregate supply shifts to the left.

Question 19

How does the aggregate demand and supply model reflect a decrease in taxes?

Accepted Answer

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

Question 20

Suppose the economy is in long-run equilibrium. Concerns about pollution cause the government to significantly restrict the production of electricity. At the same time, the value of the dollar falls. What would we expect to happen 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.

According to the sticky wage theory, which of the following is consistent with an unexpected fall in the price level?

What are the effects of an increase in the price level?

When would the long-run aggregate supply curve shift right?

The explanations for the slopes of the aggregate demand and aggregate supply curves are the same as the explanations for the slope of demand and supply curves for specific goods and services.

In addition to the price level, which of the following does the aggregate demand and aggregate supply model focus on?

Which of the following does the economy experience during a recession?

An increase in the money supply shifts the long-run aggregate supply curve to the right.

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

Which of the following shifts aggregate demand to the right?

Suppose there is a decrease in the availability of an important major resource, such as oil. Which of the following shifts would most likely occur?

Which of the following has been suggested as a cause of the Great Depression?

During World War II, output increased by a larger percentage than government expenditures.

In which of the following situations would the long-run aggregate supply curve shift right?

In 1982, Canada was in recession. Which of the following things would you expect NOT to have happened?

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

Which of the following is consistent with the theory of aggregate supply?

What is the effect of bad weather for farming or some other temporary decrease in the availability of raw materials?

How does the aggregate demand and supply model reflect a decrease in taxes?

Suppose the economy is in long-run equilibrium. Concerns about pollution cause the government to significantly restrict the production of electricity. At the same time, the value of the dollar falls. What would we expect to happen in the short run?

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

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Exam 14: Aggregate Demand and Aggregate Supply

According to the sticky wage theory, which of the following is consistent with an unexpected fall in the price level?

What are the effects of an increase in the price level?

When would the long-run aggregate supply curve shift right?

The explanations for the slopes of the aggregate demand and aggregate supply curves are the same as the explanations for the slope of demand and supply curves for specific goods and services.

In addition to the price level, which of the following does the aggregate demand and aggregate supply model focus on?

Which of the following does the economy experience during a recession?

An increase in the money supply shifts the long-run aggregate supply curve to the right.

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

Which of the following shifts aggregate demand to the right?

Suppose there is a decrease in the availability of an important major resource, such as oil. Which of the following shifts would most likely occur?

Which of the following has been suggested as a cause of the Great Depression?

During World War II, output increased by a larger percentage than government expenditures.

In which of the following situations would the long-run aggregate supply curve shift right?

In 1982, Canada was in recession. Which of the following things would you expect NOT to have happened?

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

Which of the following is consistent with the theory of aggregate supply?

What is the effect of bad weather for farming or some other temporary decrease in the availability of raw materials?

How does the aggregate demand and supply model reflect a decrease in taxes?

Suppose the economy is in long-run equilibrium. Concerns about pollution cause the government to significantly restrict the production of electricity. At the same time, the value of the dollar falls. What would we expect to happen in the short run?

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