Question 1

Other things the same,when the price level rises,interest rates

Accepted Answer

A)  rise,which means consumers will want to spend more on homebuilding. 
B)  rise,which means consumers will want to spend less on homebuilding. 
C)  fall,which means consumers will want to spend more on homebuilding. 
D)  fall,which means consumers will want to spend less on homebuilding. 
A)  rise,which means consumers will want to spend more on homebuilding. 
B)  rise,which means consumers will want to spend less on homebuilding. 
C)  fall,which means consumers will want to spend more on homebuilding. 
D)  fall,which means consumers will want to spend less on homebuilding.

Question 2

Which of the following is correct?

Accepted Answer

A)  An increase in the money supply causes the interest rate to decrease so that aggregate demand shifts left. 
B)  An increase in stock prices reduces consumption spending so that aggregate demand shifts left. 
C)  An increase in the price level causes the exchange rate to rise so that aggregate demand shifts left. 
D)  A recession in other countries reduces U.S.net exports so that U.S.aggregate demand shifts left. 
A)  An increase in the money supply causes the interest rate to decrease so that aggregate demand shifts left. 
B)  An increase in stock prices reduces consumption spending so that aggregate demand shifts left. 
C)  An increase in the price level causes the exchange rate to rise so that aggregate demand shifts left. 
D)  A recession in other countries reduces U.S.net exports so that U.S.aggregate demand shifts left.

Question 3

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

Accepted Answer

A)  a decrease in the actual price level 
B)  an increase in the actual price level 
C)  a decrease in the expected price level 
D)  an increase in the expected price level 
A)  a decrease in the actual price level 
B)  an increase in the actual price level 
C)  a decrease in the expected price level 
D)  an increase in the expected price level

Question 4

Other things the same,an increase 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 5

Figure 33-2.  
-Refer to Stock Market Boom 2014.What happens to the expected price level and what impact does this have on wage bargaining?

Accepted Answer

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

Question 6

Other things the same,when the price level falls,interest rates

Accepted Answer

A)  rise,which means consumers will want to spend more on homebuilding. 
B)  rise,which means consumers will want to spend less on homebuilding. 
C)  fall,which means consumers will want to spend more on homebuilding. 
D)  fall,which means consumers will want to spend less on homebuilding. 
A)  rise,which means consumers will want to spend more on homebuilding. 
B)  rise,which means consumers will want to spend less on homebuilding. 
C)  fall,which means consumers will want to spend more on homebuilding. 
D)  fall,which means consumers will want to spend less on homebuilding.

Question 7

Consider the exhibit below for the following questions.
Figure 33-1  
-Refer to Figure 33-1.If the economy is at A and there is a fall in aggregate demand,in the short run the economy

Accepted Answer

A)  stays at A. 
B)  moves to B. 
C)  moves to C. 
D)  moves to D. 
A)  stays at A. 
B)  moves to B. 
C)  moves to C. 
D)  moves to D.

Question 8

An economic contraction caused by a shift in aggregate demand remedies itself over time as the expected price level

Accepted Answer

A)  rises,shifting aggregate demand right. 
B)  rises,shifting aggregate demand left. 
C)  falls,shifting aggregate supply right. 
D)  falls,shifting aggregate supply left. 
A)  rises,shifting aggregate demand right. 
B)  rises,shifting aggregate demand left. 
C)  falls,shifting aggregate supply right. 
D)  falls,shifting aggregate supply left.

Question 9

From 2001 to 2005 there was a dramatic rise in the price of houses.If this made people feel wealthier,then it would shift

Accepted Answer

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

Question 10

The classical dichotomy refers to the separation of

Accepted Answer

A)  variables that move with the business cycle and variables that do not. 
B)  changes in money and changes in government expenditures. 
C)  decisions made by the public and decisions made by the government. 
D)  real and nominal variables. 
A)  variables that move with the business cycle and variables that do not. 
B)  changes in money and changes in government expenditures. 
C)  decisions made by the public and decisions made by the government. 
D)  real and nominal variables.

Question 11

Which of the following did not happen during the onset of the Great Depression?

Accepted Answer

A)  The money supply fell as households took money out of bank deposits. 
B)  The Fed conducted expansionary monetary policy. 
C)  Stock prices fell about 90 percent. 
D)  Disruption of the banking system made it difficult for some firms to obtain funds for investment. 
A)  The money supply fell as households took money out of bank deposits. 
B)  The Fed conducted expansionary monetary policy. 
C)  Stock prices fell about 90 percent. 
D)  Disruption of the banking system made it difficult for some firms to obtain funds for investment.

Question 12

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)  Congress reduces purchases of new weapons systems. 
B)  The Fed buys bonds in the open market. 
C)  The price level falls. 
D)  Net exports fall. 
A)  Congress reduces purchases of new weapons systems. 
B)  The Fed buys bonds in the open market. 
C)  The price level falls. 
D)  Net exports fall.

Question 13

The Central Bank of Wiknam increases the money supply at the same time the Parliament of Wiknam passes a new investment tax credit.Which of these policies shift aggregate demand to the right?

Accepted Answer

A)  both the money supply increase and the investment tax credit 
B)  the money supply increase but not the investment tax credit 
C)  the investment tax credit but not the money supply increase 
D)  neither the investment tax credit nor the money supply increase 
A)  both the money supply increase and the investment tax credit 
B)  the money supply increase but not the investment tax credit 
C)  the investment tax credit but not the money supply increase 
D)  neither the investment tax credit nor the money supply increase

Question 14

Imagine that businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases.Their reaction would initially shift

Accepted Answer

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

Question 15

Which of the following by itself is consistent with the directions that the price level and real GDP changed at the onset of the Great Depression?

Accepted Answer

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

Question 16

Real and nominal variables are highly intertwined,and changes in the money supply change real GDP.Most economists would agree that this statement accurately describes

Accepted Answer

A)  both the short run and the long run. 
B)  the short run,but not the long run. 
C)  the long run,but not the short run. 
D)  neither the long run nor the short run. 
A)  both the short run and the long run. 
B)  the short run,but not the long run. 
C)  the long run,but not the short run. 
D)  neither the long run nor the short run.

Question 17

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 18

Figure 33-2.  
-Refer to Figure 33-2.The appearance of the long-run aggregate-supply (LRAS)curve

Accepted Answer

A)  is inconsistent with the concept of monetary neutrality. 
B)  is consistent with the idea that point A represents a long-run equilibrium but not a short-run equilibrium when the relevant short-run aggregate-supply curve is AS1. 
C)  indicates that Y1 is the natural rate of output. 
D)  All of the above are correct. 
A)  is inconsistent with the concept of monetary neutrality. 
B)  is consistent with the idea that point A represents a long-run equilibrium but not a short-run equilibrium when the relevant short-run aggregate-supply curve is AS1. 
C)  indicates that Y1 is the natural rate of output. 
D)  All of the above are correct.

Question 19

In 1936,John Maynard Keynes published a book,The General Theory,which attempted to explain

Accepted Answer

A)  stagflation. 
B)  the classical dichotomy. 
C)  short-run economic fluctuations. 
D)  how changes in the money supply had created the Great Depression. 
A)  stagflation. 
B)  the classical dichotomy. 
C)  short-run economic fluctuations. 
D)  how changes in the money supply had created the Great Depression.

Question 20

Other things the same,if workers and firms expected prices to rise by 2 percent but instead they rise by 3 percent,then

Accepted Answer

A)  employment and production rise. 
B)  employment rises and production falls. 
C)  employment falls and production rises. 
D)  employment and production fall. 
A)  employment and production rise. 
B)  employment rises and production falls. 
C)  employment falls and production rises. 
D)  employment and production fall.

Exam 33: Aggregate Demand and Aggregate Supply

Other things the same,when the price level rises,interest rates

Which of the following is correct?

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

Other things the same,an increase in the price level makes the dollars people hold worth

Figure 33-2. -Refer to Stock Market Boom 2014.What happens to the expected price level and what impact does this have on wage bargaining?

Other things the same,when the price level falls,interest rates

Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.If the economy is at A and there is a fall in aggregate demand,in the short run the economy

An economic contraction caused by a shift in aggregate demand remedies itself over time as the expected price level

From 2001 to 2005 there was a dramatic rise in the price of houses.If this made people feel wealthier,then it would shift

The classical dichotomy refers to the separation of

Which of the following did not happen during the onset of the Great Depression?

Which of the following shifts aggregate demand to the right?

The Central Bank of Wiknam increases the money supply at the same time the Parliament of Wiknam passes a new investment tax credit.Which of these policies shift aggregate demand to the right?

Imagine that businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases.Their reaction would initially shift

Which of the following by itself is consistent with the directions that the price level and real GDP changed at the onset of the Great Depression?

Real and nominal variables are highly intertwined,and changes in the money supply change real GDP.Most economists would agree that this statement accurately describes

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

Figure 33-2. -Refer to Figure 33-2.The appearance of the long-run aggregate-supply (LRAS)curve

In 1936,John Maynard Keynes published a book,The General Theory,which attempted to explain

Other things the same,if workers and firms expected prices to rise by 2 percent but instead they rise by 3 percent,then

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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