Question 1

Which of the following is a lesson concerning shifts in aggregate demand?

Accepted Answer

A)  they contribute to fluctuations in output. 
B)  in the long-run they change real output,but not the price level. 
C)  policymakers are unable to mitigate the severity of economic fluctuations. 
D)  All of the above are correct. 
A)  they contribute to fluctuations in output. 
B)  in the long-run they change real output,but not the price level. 
C)  policymakers are unable to mitigate the severity of economic fluctuations. 
D)  All of the above are correct.

Question 2

Increased output and prices in the United States in the early 1940s were mostly the result of increased government expenditures.

Accepted Answer

A) True 
 B)False

Question 3

During recessions

Accepted Answer

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

Question 4

Which of the following would cause prices to fall and output 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 5

Which of the following shifts the long-run aggregate supply curve to the right?

Accepted Answer

A)  both an increase in the capital stock and technological improvements. 
B)  an increase in the capital stock but not technological improvements 
C)  an increase in the capital stock but not technological improvements . 
D)  neither an increase in the capital stock nor an technological  improvements 
A)  both an increase in the capital stock and technological improvements. 
B)  an increase in the capital stock but not technological improvements 
C)  an increase in the capital stock but not technological improvements . 
D)  neither an increase in the capital stock nor an technological  improvements

Question 6

Which of the following can explain the upward slope of the short-run aggregate supply curve?

Accepted Answer

A)  nominal wages are slow to adjust to changing economic conditions 
B)  as the price level falls,the exchange rate falls 
C)  an increase in the money supply lowers the interest rate 
D)  an increase in the interest rate increases investment spending 
A)  nominal wages are slow to adjust to changing economic conditions 
B)  as the price level falls,the exchange rate falls 
C)  an increase in the money supply lowers the interest rate 
D)  an increase in the interest rate increases investment spending

Question 7

Changes in the price of oil

Accepted Answer

A)  can only lead to recessions. 
B)  have not contributed much to output fluctuations in the United States. 
C)  change the economy principally by changing aggregate demand. 
D)  created both inflation and recession in the United States in the 1970s. 
A)  can only lead to recessions. 
B)  have not contributed much to output fluctuations in the United States. 
C)  change the economy principally by changing aggregate demand. 
D)  created both inflation and recession in the United States in the 1970s.

Question 8

Which of the following would shift long-run aggregate supply to the right?

Accepted Answer

A)  increased immigration from abroad 
B)  a decrease in the price of an imported natural resource 
C)  opening the economy to international trade 
D)  All of the above are correct. 
A)  increased immigration from abroad 
B)  a decrease in the price of an imported natural resource 
C)  opening the economy to international trade 
D)  All of the above are correct.

Question 9

Other things the same,a decrease in the price level makes the dollars people hold worth

Accepted Answer

A)  more,so they can buy more. 
B)  more,so they can buy less. 
C)  less,so they can buy more. 
D)  less,so they can buy less. 
A)  more,so they can buy more. 
B)  more,so they can buy less. 
C)  less,so they can buy more. 
D)  less,so they can buy less.

Question 10

If the price level rises above what was expected and nominal wages are fixed,then

Accepted Answer

A)  production becomes less profitable so firms will hire fewer workers. 
B)  production becomes less profitable so firms will hire more workers. 
C)  production becomes more profitable so firms will hire fewer workers. 
D)  production become more profitable so firms will hire more workers. 
A)  production becomes less profitable so firms will hire fewer workers. 
B)  production becomes less profitable so firms will hire more workers. 
C)  production becomes more profitable so firms will hire fewer workers. 
D)  production become more profitable so firms will hire more workers.

Question 11

The economic boom of the early 1940s resulted mostly from

Accepted Answer

A)  increased government expenditures. 
B)  falling prices of oil and other natural resources. 
C)  an increase in the growth rate of the money supply. 
D)  rapid developments in transportation,electronics,and communication. 
A)  increased government expenditures. 
B)  falling prices of oil and other natural resources. 
C)  an increase in the growth rate of the money supply. 
D)  rapid developments in transportation,electronics,and communication.

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 Pessimism.What happens to the expected price level and what's the result for wage bargaining?

Accepted Answer

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

Question 13

Which of the following would increase output in the short run?

Accepted Answer

A)  an increase in stock prices makes people feel wealthier 
B)  government spending increases 
C)  firms chose to purchase more investment goods 
D)  All of the above are correct. 
A)  an increase in stock prices makes people feel wealthier 
B)  government spending increases 
C)  firms chose to purchase more investment goods 
D)  All of the above are correct.

Question 14

As the price level rises

Accepted Answer

A)  people are more willing to lend,so interest rates rise. 
B)  people are more willing to lend,so interest rates fall. 
C)  people are less willing to lend,so interest rates fall. 
D)  people are less willing to lend,so interest rates rise. 
A)  people are more willing to lend,so interest rates rise. 
B)  people are more willing to lend,so interest rates fall. 
C)  people are less willing to lend,so interest rates fall. 
D)  people are less willing to lend,so interest rates rise.

Question 15

Over the last fifty years both real GDP and prices have trended upward in most countries.Continuing real GDP growth and inflation can be explained by

Accepted Answer

A)  continuing technological progress alone. 
B)  continuing increases in the money supply alone. 
C)  continued technological progress and continuing increases in the money supply. 
D)  None of the above can explain continuing real GDP growth and inflation. 
A)  continuing technological progress alone. 
B)  continuing increases in the money supply alone. 
C)  continued technological progress and continuing increases in the money supply. 
D)  None of the above can explain continuing real GDP growth and inflation.

Question 16

If the actual price level is 165,but people had been expecting it to be 160,then

Accepted Answer

A)  the quantity of output supplied rises,but only in the short run. 
B)  the quantity of output supplied rises in the short run and the long run. 
C)  the quantity of output supplied falls,but only in the short run. 
D)  the quantity of output supplied falls in the short run and the long run. 
A)  the quantity of output supplied rises,but only in the short run. 
B)  the quantity of output supplied rises in the short run and the long run. 
C)  the quantity of output supplied falls,but only in the short run. 
D)  the quantity of output supplied falls in the short run and the long run.

Question 17

Other things the same,if the long-run aggregate supply curve shifts right,prices

Accepted Answer

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

Question 18

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.

Question 19

Suppose a stock market boom makes people feel wealthier.The increase in wealth would cause people to desire

Accepted Answer

A)  increased consumption,which shifts the aggregate-demand curve right. 
B)  increased consumption,which shifts the aggregate-demand curve left. 
C)  decreased consumption,which shifts the aggregate-demand curve right. 
D)  decreased consumption,which shifts the aggregate-demand curve left. 
A)  increased consumption,which shifts the aggregate-demand curve right. 
B)  increased consumption,which shifts the aggregate-demand curve left. 
C)  decreased consumption,which shifts the aggregate-demand curve right. 
D)  decreased consumption,which shifts the aggregate-demand curve left.

Question 20

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,

Accepted Answer

A)  production is more profitable and employment rises. 
B)  production is more profitable and employment falls. 
C)  production is less profitable and employment rises. 
D)  production is less profitable and employment falls. 
A)  production is more profitable and employment rises. 
B)  production is more profitable and employment falls. 
C)  production is less profitable and employment rises. 
D)  production is less profitable and employment falls.

Exam 33: Aggregate Demand and Aggregate Supply

Which of the following is a lesson concerning shifts in aggregate demand?

Increased output and prices in the United States in the early 1940s were mostly the result of increased government expenditures.

During recessions

Which of the following would cause prices to fall and output to rise in the short run?

Which of the following shifts the long-run aggregate supply curve to the right?

Which of the following can explain the upward slope of the short-run aggregate supply curve?

Changes in the price of oil

Which of the following would shift long-run aggregate supply to the right?

Other things the same,a decrease in the price level makes the dollars people hold worth

If the price level rises above what was expected and nominal wages are fixed,then

The economic boom of the early 1940s resulted mostly from

Which of the following would increase output in the short run?

As the price level rises

Over the last fifty years both real GDP and prices have trended upward in most countries.Continuing real GDP growth and inflation can be explained by

If the actual price level is 165,but people had been expecting it to be 160,then

Other things the same,if the long-run aggregate supply curve shifts right,prices

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

Suppose a stock market boom makes people feel wealthier.The increase in wealth would cause people to desire

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,

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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