Question 1

There has been a decrease in investment.As a result,real GDP will ________ in the short run,and ________ in the long run.

Accepted Answer

A) increase; increase further 
B) increase; decrease to its initial value 
C) decrease; decrease further 
D) decrease; increase to its initial level 
A) increase; increase further 
B) increase; decrease to its initial value 
C) decrease; decrease further 
D) decrease; increase to its initial level

Question 2

An increase in the price level results in a(n)________ in the quantity of real GDP demanded because ________.

Accepted Answer

A) decrease; a higher price level reduces consumption,investment,and net exports. 
B) increase; a higher price level reduces consumption,investment,and net exports. 
C) decrease; a higher price level increases consumption,investment,and net exports. 
D) increase; a higher price level increases consumption,investment,and net exports. 
A) decrease; a higher price level reduces consumption,investment,and net exports. 
B) increase; a higher price level reduces consumption,investment,and net exports. 
C) decrease; a higher price level increases consumption,investment,and net exports. 
D) increase; a higher price level increases consumption,investment,and net exports.

Question 3

Figure 13-1  
-Refer to Figure 13-1.Ceteris paribus,a decrease in the growth rate of domestic GDP relative to the growth rate of foreign GDP would result in U.S.exports increasing faster than U.S.imports.This would be represented by a movement from

Accepted Answer

A) AD1 to AD2. 
B) AD2 to AD1. 
C) point A to point B. 
D) point B to point A. 
A) AD1 to AD2. 
B) AD2 to AD1. 
C) point A to point B. 
D) point B to point A.

Question 4

Figure 13-1  
-Refer to Figure 13-1.Ceteris paribus,a decrease in interest rates would be represented by a movement from

Accepted Answer

A) AD1 to AD2. 
B) AD2 to AD1. 
C) point A to point B. 
D) point B to point A. 
A) AD1 to AD2. 
B) AD2 to AD1. 
C) point A to point B. 
D) point B to point A.

Question 5

The proponents of ________ and ________ think that the Federal Reserve should adopt a constant monetary growth rule.

Accepted Answer

A) new Keynesianism; the new classical model 
B) the real business cycle model; Marxism 
C) rational expectations; monetarism 
D) the monetarist model; the Keynesian model 
A) new Keynesianism; the new classical model 
B) the real business cycle model; Marxism 
C) rational expectations; monetarism 
D) the monetarist model; the Keynesian model

Question 6

The new Keynesians emphasize the importance of

Accepted Answer

A) rational expectations. 
B) the monetary growth rule. 
C) real causes of the business cycle. 
D) sticky wages and prices. 
A) rational expectations. 
B) the monetary growth rule. 
C) real causes of the business cycle. 
D) sticky wages and prices.

Question 7

According to the real business cycle model,________ in aggregate demand ________ GDP.

Accepted Answer

A) increases; decrease 
B) increases; increase 
C) increases; do not affect 
D) decreases; increase 
A) increases; decrease 
B) increases; increase 
C) increases; do not affect 
D) decreases; increase

Question 8

On the long-run aggregate supply curve

Accepted Answer

A) a decrease in the price level decreases the level of potential GDP. 
B) a decrease in the price level increases the aggregate quantity of GDP supplied. 
C) a decrease in the price level decreases the aggregate quantity of GDP supplied. 
D) a decrease in the price level has no effect on the aggregate quantity of GDP supplied. 
A) a decrease in the price level decreases the level of potential GDP. 
B) a decrease in the price level increases the aggregate quantity of GDP supplied. 
C) a decrease in the price level decreases the aggregate quantity of GDP supplied. 
D) a decrease in the price level has no effect on the aggregate quantity of GDP supplied.

Question 9

Suppose the U.S.GDP growth rate is slower relative to other countries' GDP growth rates.This will

Accepted Answer

A) move the economy up along a stationary aggregate demand curve. 
B) move the economy down along a stationary aggregate demand curve. 
C) shift the aggregate demand curve to the left. 
D) shift the aggregate demand curve to the right. 
A) move the economy up along a stationary aggregate demand curve. 
B) move the economy down along a stationary aggregate demand curve. 
C) shift the aggregate demand curve to the left. 
D) shift the aggregate demand curve to the right.

Question 10

German luxury car exports were hurt in 2009 as a result of the recession.How did this decrease in exports affect Germany's aggregate demand curve?

Accepted Answer

A) The aggregate demand curve shifted to the right. 
B) The aggregate demand curve did not shift,but there was a movement up the aggregate demand curve. 
C) The aggregate demand curve did not shift,but there was a movement down the aggregate demand curve. 
D) The aggregate demand shifted to the left. 
A) The aggregate demand curve shifted to the right. 
B) The aggregate demand curve did not shift,but there was a movement up the aggregate demand curve. 
C) The aggregate demand curve did not shift,but there was a movement down the aggregate demand curve. 
D) The aggregate demand shifted to the left.

Question 11

When the economy enters into a recession,your employer is ________ to reduce your wages because ________.

Accepted Answer

A) unlikely; output and input prices generally fall during recession 
B) unlikely; lower wages reduce productivity and morale 
C) likely; output prices always fall during recession 
D) likely; aggregate demand is vertical in the long run 
A) unlikely; output and input prices generally fall during recession 
B) unlikely; lower wages reduce productivity and morale 
C) likely; output prices always fall during recession 
D) likely; aggregate demand is vertical in the long run

Question 12

Suppose the economy is in long-run equilibrium and there is an increase in investment.As a result,real GDP will ________ in the short run,and ________ in the long run.

Accepted Answer

A) increase; increase further 
B) increase; decrease to its initial value 
C) decrease; decrease further 
D) decrease; increase to its initial level 
A) increase; increase further 
B) increase; decrease to its initial value 
C) decrease; decrease further 
D) decrease; increase to its initial level

Question 13

Explain how the aggregate demand and aggregate supply model can be made more dynamic.

Accepted Answer

We can make the aggregate demand and agg

Question 14

Just before and during the recession of 2007-2009,net exports in the United States

Accepted Answer

A) fell and remained negative. 
B) fell,but remained positive. 
C) rose and became positive. 
D) rose,but remained negative. 
A) fell and remained negative. 
B) fell,but remained positive. 
C) rose and became positive. 
D) rose,but remained negative.

Question 15

For the recession of 2007-2009,it took ________ for real GDP to return to its cyclical peak.

Accepted Answer

A) about 18 months 
B) about 2 year 
C) about 3.5 years 
D) almost 5 years 
A) about 18 months 
B) about 2 year 
C) about 3.5 years 
D) almost 5 years

Question 16

How do lower taxes affect aggregate demand?

Accepted Answer

A) They increase disposable income,consumption,and aggregate demand. 
B) They reduce disposable income,consumption,and aggregate demand. 
C) they increase corporate investment and aggregate demand. 
D) They increase aggregate supply and thus increase aggregate demand as well. 
A) They increase disposable income,consumption,and aggregate demand. 
B) They reduce disposable income,consumption,and aggregate demand. 
C) they increase corporate investment and aggregate demand. 
D) They increase aggregate supply and thus increase aggregate demand as well.

Question 17

When the price level in the United States rises relative to the price level of other countries,________ will rise,________ will fall,and ________ will fall.

Accepted Answer

A) imports; exports; net exports 
B) exports; imports; net exports 
C) net exports; exports; imports 
D) net exports; imports; exports 
A) imports; exports; net exports 
B) exports; imports; net exports 
C) net exports; exports; imports 
D) net exports; imports; exports

Question 18

Last week,six Swedish kronor could purchase one U.S.dollar.This week,it takes eight Swedish kronor to purchase one U.S.dollar.This change in the value of the dollar will ________ exports from the United States to Sweden and ________ U.S.aggregate demand.

Accepted Answer

A) increase; increase 
B) decrease; decrease 
C) increase; decrease 
D) decrease; increase 
A) increase; increase 
B) decrease; decrease 
C) increase; decrease 
D) decrease; increase

Question 19

Studies have shown that

Accepted Answer

A) firms often cut nominal wages during recessions and allow inflation to gradually increase real wages. 
B) firms are reluctant to cut nominal wages during recessions but instead increase workers' nominal wages and allow inflation to gradually increase real wages. 
C) firms are reluctant to cut nominal wages during recessions but instead freeze workers' nominal wages and allow inflation to gradually reduce real wages. 
D) firms often freeze workers' nominal wages during a recession and keep the wages frozen well after the recession has ended. 
A) firms often cut nominal wages during recessions and allow inflation to gradually increase real wages. 
B) firms are reluctant to cut nominal wages during recessions but instead increase workers' nominal wages and allow inflation to gradually increase real wages. 
C) firms are reluctant to cut nominal wages during recessions but instead freeze workers' nominal wages and allow inflation to gradually reduce real wages. 
D) firms often freeze workers' nominal wages during a recession and keep the wages frozen well after the recession has ended.

Question 20

The automatic mechanism ________ the price level in the case of ________ and ________ the price level in the case of ________.

Accepted Answer

A) raises; recession; lowers; expansion 
B) lowers; expansion; lowers; recession 
C) raises; expansion; raises; recession 
D) lowers; recession; raises; expansion 
A) raises; recession; lowers; expansion 
B) lowers; expansion; lowers; recession 
C) raises; expansion; raises; recession 
D) lowers; recession; raises; expansion

There has been a decrease in investment.As a result,real GDP will in the short run,and in the long run.

An increase in the price level results in a(n) in the quantity of real GDP demanded because .

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,a decrease in the growth rate of domestic GDP relative to the growth rate of foreign GDP would result in U.S.exports increasing faster than U.S.imports.This would be represented by a movement from

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,a decrease in interest rates would be represented by a movement from

The proponents of and think that the Federal Reserve should adopt a constant monetary growth rule.

The new Keynesians emphasize the importance of

According to the real business cycle model, in aggregate demand GDP.

On the long-run aggregate supply curve

Suppose the U.S.GDP growth rate is slower relative to other countries' GDP growth rates.This will

German luxury car exports were hurt in 2009 as a result of the recession.How did this decrease in exports affect Germany's aggregate demand curve?

When the economy enters into a recession,your employer is to reduce your wages because .

Suppose the economy is in long-run equilibrium and there is an increase in investment.As a result,real GDP will in the short run,and in the long run.

Explain how the aggregate demand and aggregate supply model can be made more dynamic.

Just before and during the recession of 2007-2009,net exports in the United States

For the recession of 2007-2009,it took ________ for real GDP to return to its cyclical peak.

How do lower taxes affect aggregate demand?

When the price level in the United States rises relative to the price level of other countries, will rise, will fall,and will fall.

Last week,six Swedish kronor could purchase one U.S.dollar.This week,it takes eight Swedish kronor to purchase one U.S.dollar.This change in the value of the dollar will exports from the United States to Sweden and U.S.aggregate demand.

Studies have shown that

The automatic mechanism the price level in the case of and the price level in the case of .

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 13: Aggregate Demand and Aggregate Supply Analysis

There has been a decrease in investment.As a result,real GDP will ________ in the short run,and ________ in the long run.

An increase in the price level results in a(n)________ in the quantity of real GDP demanded because ________.

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,a decrease in the growth rate of domestic GDP relative to the growth rate of foreign GDP would result in U.S.exports increasing faster than U.S.imports.This would be represented by a movement from

Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,a decrease in interest rates would be represented by a movement from

The proponents of ________ and ________ think that the Federal Reserve should adopt a constant monetary growth rule.

The new Keynesians emphasize the importance of

According to the real business cycle model,________ in aggregate demand ________ GDP.

On the long-run aggregate supply curve

Suppose the U.S.GDP growth rate is slower relative to other countries' GDP growth rates.This will

German luxury car exports were hurt in 2009 as a result of the recession.How did this decrease in exports affect Germany's aggregate demand curve?

When the economy enters into a recession,your employer is ________ to reduce your wages because ________.

Suppose the economy is in long-run equilibrium and there is an increase in investment.As a result,real GDP will ________ in the short run,and ________ in the long run.

Explain how the aggregate demand and aggregate supply model can be made more dynamic.

Just before and during the recession of 2007-2009,net exports in the United States

For the recession of 2007-2009,it took ________ for real GDP to return to its cyclical peak.

How do lower taxes affect aggregate demand?

When the price level in the United States rises relative to the price level of other countries,________ will rise,________ will fall,and ________ will fall.

Last week,six Swedish kronor could purchase one U.S.dollar.This week,it takes eight Swedish kronor to purchase one U.S.dollar.This change in the value of the dollar will ________ exports from the United States to Sweden and ________ U.S.aggregate demand.

Studies have shown that

The automatic mechanism ________ the price level in the case of ________ and ________ the price level in the case of ________.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

There has been a decrease in investment.As a result,real GDP will in the short run,and in the long run.

An increase in the price level results in a(n) in the quantity of real GDP demanded because .

The proponents of and think that the Federal Reserve should adopt a constant monetary growth rule.

According to the real business cycle model, in aggregate demand GDP.

When the economy enters into a recession,your employer is to reduce your wages because .

Suppose the economy is in long-run equilibrium and there is an increase in investment.As a result,real GDP will in the short run,and in the long run.

When the price level in the United States rises relative to the price level of other countries, will rise, will fall,and will fall.

Last week,six Swedish kronor could purchase one U.S.dollar.This week,it takes eight Swedish kronor to purchase one U.S.dollar.This change in the value of the dollar will exports from the United States to Sweden and U.S.aggregate demand.

The automatic mechanism the price level in the case of and the price level in the case of .