Question 1

We could explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time.

Accepted Answer

A) True 
 B)False

Question 2

Below are pairs of GDP growth rates and unemployment rates.Economists would be shocked to see most of these pairs in the U.S.Which pair of GDP growth rates and unemployment rates is realistic?

Accepted Answer

A)  6 percent,0 percent 
B)  3 percent,10 percent 
C)  -1 percent,6 percent 
D)  -3 percent,2 percent 
A)  6 percent,0 percent 
B)  3 percent,10 percent 
C)  -1 percent,6 percent 
D)  -3 percent,2 percent

Question 3

Which of the following is correct?

Accepted Answer

A)  The short-run,but not the long-run,aggregate supply curve is consistent with the idea that nominal variables do not affect real variables. 
B)  The long-run,but not the short-run,aggregate supply curve is consistent with the idea that nominal variables do not affect real variables. 
C)  The long-run and short-run supply curves are both consistent with the idea that nominal variables affect real variables. 
D)  Neither the long-run nor the short-run aggregate supply curve is consistent with the idea that nominal variables affect real variables. 
A)  The short-run,but not the long-run,aggregate supply curve is consistent with the idea that nominal variables do not affect real variables. 
B)  The long-run,but not the short-run,aggregate supply curve is consistent with the idea that nominal variables do not affect real variables. 
C)  The long-run and short-run supply curves are both consistent with the idea that nominal variables affect real variables. 
D)  Neither the long-run nor the short-run aggregate supply curve is consistent with the idea that nominal variables affect real variables.

Question 4

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

Accepted Answer

A)  back to A in the long run. 
B)  to B in the long run. 
C)  to C in the long run. 
D)  to D in the long run. 
A)  back to A in the long run. 
B)  to B in the long run. 
C)  to C in the long run. 
D)  to D in the long run.

Question 5

Which of the following is correct concerning recessions?

Accepted Answer

A)  They come at fairly regular and predictable intervals. 
B)  They are associated with comparatively large declines in investment spending. 
C)  They are any period when real GDP growth is less than average. 
D)  They tend to be associated with falling unemployment rates. 
A)  They come at fairly regular and predictable intervals. 
B)  They are associated with comparatively large declines in investment spending. 
C)  They are any period when real GDP growth is less than average. 
D)  They tend to be associated with falling unemployment rates.

Question 6

Which of the following is correct?

Accepted Answer

A)  Economic fluctuations are easily predicted by competent economists. 
B)  Recessions have never occurred very close together. 
C)  Other measures of spending,income,and production do not fluctuate closely with real GDP. 
D)  None of the above is correct. 
A)  Economic fluctuations are easily predicted by competent economists. 
B)  Recessions have never occurred very close together. 
C)  Other measures of spending,income,and production do not fluctuate closely with real GDP. 
D)  None of the above is correct.

Question 7

Other things the same,an increase in the amount of capital firms wish to purchase 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 8

Consider the exhibit below for the following questions.
Figure 33-1  
-Refer to Figure 33-1.If the economy starts at A and moves to D in the short run,the economy

Accepted Answer

A)  moves to A in the long run. 
B)  moves to B in the long run. 
C)  moves to C in the long run. 
D)  stays at D in the long run. 
A)  moves to A in the long run. 
B)  moves to B in the long run. 
C)  moves to C in the long run. 
D)  stays at D in the long run.

Question 9

Other things the same,a decrease in the price level makes consumers feel

Accepted Answer

A)  less wealthy,so the quantity of goods and services demanded falls. 
B)  less wealthy,so the quantity of goods and services demanded rises. 
C)  more wealthy,so the quantity of goods and services demanded rises. 
D)  more wealthy,so the quantity of goods and services demanded falls. 
A)  less wealthy,so the quantity of goods and services demanded falls. 
B)  less wealthy,so the quantity of goods and services demanded rises. 
C)  more wealthy,so the quantity of goods and services demanded rises. 
D)  more wealthy,so the quantity of goods and services demanded falls.

Question 10

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.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.

Question 11

Other things the same,an increase in the price level causes the interest rate to

Accepted Answer

A)  increase,the dollar to depreciate,and net exports to increase. 
B)  increase,the dollar to appreciate,and net exports to decrease. 
C)  decrease,the dollar to depreciate,and net exports to increase. 
D)  decrease,the dollar to appreciate,and net exports to decrease. 
A)  increase,the dollar to depreciate,and net exports to increase. 
B)  increase,the dollar to appreciate,and net exports to decrease. 
C)  decrease,the dollar to depreciate,and net exports to increase. 
D)  decrease,the dollar to appreciate,and net exports to decrease.

Question 12

If there are floods or droughts or a 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)  None of the above is correct. 
A)  aggregate supply shifts right. 
B)  output falls in the short run. 
C)  prices fall in the short run. 
D)  None of the above is correct.

Question 13

The saying "Money is a veil." means that

Accepted Answer

A)  while nominal variables are the first thing we may observe about an economy,what's important are the real variables and the forces that determine them. 
B)  money is the principal medium of exchange in most economies. 
C)  the primary determinant of short-run economic fluctuations is not real variables,but rather changes in the money supply. 
D)  in the long run money is of no importance to the determination of either real or nominal variables. 
A)  while nominal variables are the first thing we may observe about an economy,what's important are the real variables and the forces that determine them. 
B)  money is the principal medium of exchange in most economies. 
C)  the primary determinant of short-run economic fluctuations is not real variables,but rather changes in the money supply. 
D)  in the long run money is of no importance to the determination of either real or nominal variables.

Question 14

Classical economist David Hume observed that as the money supply expanded after gold discoveries

Accepted Answer

A)  prices and output both increased immediately. 
B)  prices increased immediately while output remained unchanged. 
C)  it took time for prices to rise;in the meantime output was lower. 
D)  it took time for prices to rise;in the meantime output was higher. 
A)  prices and output both increased immediately. 
B)  prices increased immediately while output remained unchanged. 
C)  it took time for prices to rise;in the meantime output was lower. 
D)  it took time for prices to rise;in the meantime output was higher.

Question 15

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 raise the cost of electricity production.In the short run

Accepted Answer

A)  the price level will rise and real GDP will fall. 
B)  the price level will fall and real GDP twill rise. 
C)  the price level and real GDP will both stay the same. 
D)  All of the above are possible. 
A)  the price level will rise and real GDP will fall. 
B)  the price level will fall and real GDP twill rise. 
C)  the price level and real GDP will both stay the same. 
D)  All of the above are possible.

Question 16

Which of the following would cause stagflation?

Accepted Answer

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

Question 17

Other things the same,if the price level falls,domestic interest rates

Accepted Answer

A)  rise,so domestic residents will want to hold more foreign bonds. 
B)  rise,so domestic residents will want to hold fewer foreign bonds. 
C)  fall,so domestic residents will want to hold more foreign bonds. 
D)  fall,so domestic residents will want to hold fewer foreign bonds. 
A)  rise,so domestic residents will want to hold more foreign bonds. 
B)  rise,so domestic residents will want to hold fewer foreign bonds. 
C)  fall,so domestic residents will want to hold more foreign bonds. 
D)  fall,so domestic residents will want to hold fewer foreign bonds.

Question 18

Increased optimism about the future leads to rising prices and falling unemployment in the short run.

Accepted Answer

A) True 
 B)False

Question 19

Imagine the U.S.economy is in long-run equilibrium.Then suppose the value of the U.S.dollar increases.At the same time,people in the U.S.revise their expectations so that the expected price level falls.We would expect that 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.

Question 20

We depart from the assumptions of classical economics when we focus on the relationship between

Accepted Answer

A)  the quantity of output and the price level. 
B)  the quantity of output and the unemployment rate. 
C)  the price level and the inflation rate. 
D)  inflation and the nominal interest rate. 
A)  the quantity of output and the price level. 
B)  the quantity of output and the unemployment rate. 
C)  the price level and the inflation rate. 
D)  inflation and the nominal interest rate.

Exam 33: Aggregate Demand and Aggregate Supply

We could explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time.

Below are pairs of GDP growth rates and unemployment rates.Economists would be shocked to see most of these pairs in the U.S.Which pair of GDP growth rates and unemployment rates is realistic?

Which of the following is correct?

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

Which of the following is correct concerning recessions?

Which of the following is correct?

Other things the same,an increase in the amount of capital firms wish to purchase would initially shift

Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.If the economy starts at A and moves to D in the short run,the economy

Other things the same,a decrease in the price level makes consumers feel

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.In the short-run

Other things the same,an increase in the price level causes the interest rate to

If there are floods or droughts or a decrease in the availability of raw materials

The saying "Money is a veil." means that

Classical economist David Hume observed that as the money supply expanded after gold discoveries

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 raise the cost of electricity production.In the short run

Which of the following would cause stagflation?

Other things the same,if the price level falls,domestic interest rates

Increased optimism about the future leads to rising prices and falling unemployment in the short run.

Imagine the U.S.economy is in long-run equilibrium.Then suppose the value of the U.S.dollar increases.At the same time,people in the U.S.revise their expectations so that the expected price level falls.We would expect that in the short-run

We depart from the assumptions of classical economics when we focus on the relationship between

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

Filters