Question 1

In the short-run an increase in the costs of production makes

Accepted Answer

A)  output and prices rise. 
B)  output rise and prices fall. 
C)  output fall and prices rise. 
D)  output and prices fall. 
A)  output and prices rise. 
B)  output rise and prices fall. 
C)  output fall and prices rise. 
D)  output and prices fall.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Assuming that a is positive,theories of short-run aggregate supply are expressed mathematically as

Accepted Answer

A)  quantity of output supplied = natural rate of output + a(actual price level - expected price level). 
B)  quantity of output supplied = natural rate of output + a(expected price level - actual price level). 
C)  quantity of output supplied = a(actual price level -expected price level)- natural rate of output. 
D)  quantity of output supplied = a(expected price level - actual price level)- natural rate of output. 
A)  quantity of output supplied = natural rate of output + a(actual price level - expected price level). 
B)  quantity of output supplied = natural rate of output + a(expected price level - actual price level). 
C)  quantity of output supplied = a(actual price level -expected price level)- natural rate of output. 
D)  quantity of output supplied = a(expected price level - actual price level)- natural rate of output.

Question 4

Investment is a

Accepted Answer

A)  small part of real GDP,so it accounts for a small share of the fluctuation in real GDP. 
B)  small part of real GDP,yet it accounts for a large share of the fluctuation in real GDP. 
C)  large part of real GDP,so it accounts for a large share of the fluctuation in real GDP. 
D)  large part of real GDP,yet it accounts for a small share of the fluctuation in real GDP. 
A)  small part of real GDP,so it accounts for a small share of the fluctuation in real GDP. 
B)  small part of real GDP,yet it accounts for a large share of the fluctuation in real GDP. 
C)  large part of real GDP,so it accounts for a large share of the fluctuation in real GDP. 
D)  large part of real GDP,yet it accounts for a small share of the fluctuation in real GDP.

Question 5

Some countries have high minimum wages and require a lengthy and costly process to get permission to open a business

Accepted Answer

A)  Reducing either the minimum wage or the time and cost to open a business would have no effect on the long-run aggregate supply curve. 
B)  Reducing the minimum wage and the time and cost to open a business would both shift the long-run aggregate supply curve to the right. 
C)  Reducing the minimum wage would shift long-run aggregate supply to the right.Reducing the time and cost to open a business would have no affect on the long-run aggregate supply curve. 
D)  Reducing the minimum wage would have no affect on the long-run aggregate supply curve.Reducing the time and cost to open a business would shift the long-run aggregate supply curve to the right. 
A)  Reducing either the minimum wage or the time and cost to open a business would have no effect on the long-run aggregate supply curve. 
B)  Reducing the minimum wage and the time and cost to open a business would both shift the long-run aggregate supply curve to the right. 
C)  Reducing the minimum wage would shift long-run aggregate supply to the right.Reducing the time and cost to open a business would have no affect on the long-run aggregate supply curve. 
D)  Reducing the minimum wage would have no affect on the long-run aggregate supply curve.Reducing the time and cost to open a business would shift the long-run aggregate supply curve to the right.

Question 6

Which of the following will reduce the price level and real output in the short run?

Accepted Answer

A)  an increase in the money supply 
B)  an increase in oil prices 
C)  a decrease in the money supply 
D)  technical progress 
A)  an increase in the money supply 
B)  an increase in oil prices 
C)  a decrease in the money supply 
D)  technical progress

Question 7

People will want to buy more when the

Accepted Answer

A)  price level rises,because the interest rate rises. 
B)  price level rises,because the interest rate falls. 
C)  price level falls,because the interest rate rises. 
D)  price level falls,because the interest rate falls. 
A)  price level rises,because the interest rate rises. 
B)  price level rises,because the interest rate falls. 
C)  price level falls,because the interest rate rises. 
D)  price level falls,because the interest rate falls.

Question 8

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 Pessimism.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 lower. 
D)  the price level is lower 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 lower. 
D)  the price level is lower and real GDP is the same.

Question 9

A change in the money supply changes only nominal variables in the long run.

Accepted Answer

A) True 
 B)False

Question 10

Other things the same,if the money supply rises by 2% and people were expecting it to rise by 5%,then some firms have

Accepted Answer

A)  higher than desired prices which increases their sales. 
B)  higher than desired prices which depresses their sales. 
C)  lower than desired prices which increases their sales. 
D)  lower than desired prices which depresses their sales. 
A)  higher than desired prices which increases their sales. 
B)  higher than desired prices which depresses their sales. 
C)  lower than desired prices which increases their sales. 
D)  lower than desired prices which depresses their sales.

Question 11

Which of the following shifts aggregate demand to the left?

Accepted Answer

A)  an increase in the price level 
B)  a decrease in the money supply 
C)  an increase in net exports 
D)  Congress passes a new investment tax credit 
A)  an increase in the price level 
B)  a decrease in the money supply 
C)  an increase in net exports 
D)  Congress passes a new investment tax credit

Question 12

Other things the same,if the capital stock increases,then in the long run

Accepted Answer

A)  both output and prices are higher. 
B)  output is higher and prices are lower. 
C)  output is lower and prices are higher. 
D)  both output and prices are lower. 
A)  both output and prices are higher. 
B)  output is higher and prices are lower. 
C)  output is lower and prices are higher. 
D)  both output and prices are lower.

Question 13

Consider the exhibit below for the following questions.
Figure 33-1  
-Refer to Figure 33-1.If the economy is in long-run equilibrium,then an adverse shift in aggregate supply would move the economy from

Accepted Answer

A)  A to B. 
B)  C to D. 
C)  B to A. 
D)  D to C. 
A)  A to B. 
B)  C to D. 
C)  B to A. 
D)  D to C.

Question 14

As recessions begin,production

Accepted Answer

A)  and unemployment both rise. 
B)  rises and unemployment falls. 
C)  falls and unemployment rises. 
D)  and unemployment both fall. 
A)  and unemployment both rise. 
B)  rises and unemployment falls. 
C)  falls and unemployment rises. 
D)  and unemployment both fall.

Question 15

When the price level falls

Accepted Answer

A)  the interest rate rises,so the quantity of goods and services demand rises. 
B)  the interest rate rises,so the quantity of goods and services demand falls. 
C)  the interest rate falls,so the quantity of goods and services demand rises. 
D)  the interest rate falls,so the quantity of goods and services demand falls. 
A)  the interest rate rises,so the quantity of goods and services demand rises. 
B)  the interest rate rises,so the quantity of goods and services demand falls. 
C)  the interest rate falls,so the quantity of goods and services demand rises. 
D)  the interest rate falls,so the quantity of goods and services demand falls.

Question 16

Which of the following effects helps to explain the downward slope of the aggregate-demand curve?

Accepted Answer

A)  the exchange-rate effect 
B)  the wealth effect 
C)  the interest-rate effect 
D)  All of the above are correct. 
A)  the exchange-rate effect 
B)  the wealth effect 
C)  the interest-rate effect 
D)  All of the above are correct.

Question 17

The misperceptions theory of the short-run aggregate supply curve says that the quantity of output supplied will increase if the price level

Accepted Answer

A)  increases by less than expected so that firms believe the relative price of their output has increased. 
B)  increases by less than expected so that firms believe the relative price of their output has decreased. 
C)  increases by more than expected so that firms believe the relative price of their output has increased. 
D)  increases by more than expected so that firms believe the relative price of their output has decreased. 
A)  increases by less than expected so that firms believe the relative price of their output has increased. 
B)  increases by less than expected so that firms believe the relative price of their output has decreased. 
C)  increases by more than expected so that firms believe the relative price of their output has increased. 
D)  increases by more than expected so that firms believe the relative price of their output has decreased.

Question 18

The aggregate-demand curve shows the quantity of domestic goods and services that households,firms,the government,and customers abroad want to buy at each price level.

Accepted Answer

A) True 
 B)False

Question 19

Historically,the change in real GDP during recessions has been

Accepted Answer

A)  mostly a change in investment spending. 
B)  mostly a change in consumption spending. 
C)  about equally divided between consumption and investment spending. 
D)  sometimes mostly a change in consumption and sometimes mostly a change in investment. 
A)  mostly a change in investment spending. 
B)  mostly a change in consumption spending. 
C)  about equally divided between consumption and investment spending. 
D)  sometimes mostly a change in consumption and sometimes mostly a change in investment.

Question 20

Other things the same,as the price level falls,the real value of a dollar

Accepted Answer

A)  rises,and interest rates rise. 
B)  rises,and interest rates fall. 
C)  falls,and interest rates rise. 
D)  falls,and interest rates fall. 
A)  rises,and interest rates rise. 
B)  rises,and interest rates fall. 
C)  falls,and interest rates rise. 
D)  falls,and interest rates fall.

Exam 33: Aggregate Demand and Aggregate Supply

In the short-run an increase in the costs of production makes

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

Assuming that a is positive,theories of short-run aggregate supply are expressed mathematically as

Investment is a

Some countries have high minimum wages and require a lengthy and costly process to get permission to open a business

Which of the following will reduce the price level and real output in the short run?

People will want to buy more when the

A change in the money supply changes only nominal variables in the long run.

Other things the same,if the money supply rises by 2% and people were expecting it to rise by 5%,then some firms have

Which of the following shifts aggregate demand to the left?

Other things the same,if the capital stock increases,then in the long run

Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.If the economy is in long-run equilibrium,then an adverse shift in aggregate supply would move the economy from

As recessions begin,production

When the price level falls

Which of the following effects helps to explain the downward slope of the aggregate-demand curve?

The misperceptions theory of the short-run aggregate supply curve says that the quantity of output supplied will increase if the price level

The aggregate-demand curve shows the quantity of domestic goods and services that households,firms,the government,and customers abroad want to buy at each price level.

Historically,the change in real GDP during recessions has been

Other things the same,as the price level falls,the real value of a dollar

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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 Macroeconomics: Basic Concepts

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

Five Debates Over Macroeconomic Policy

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