Question 1

In the long run,technological progress

Accepted Answer

A)  and increases in the money supply both make the price level rise. 
B)  and increases in the money supply both make the price level fall. 
C)  makes the price level rise,while increases in the money supply make prices fall. 
D)  makes the price level fall,while increases in the money supply make prices rise. 
A)  and increases in the money supply both make the price level rise. 
B)  and increases in the money supply both make the price level fall. 
C)  makes the price level rise,while increases in the money supply make prices fall. 
D)  makes the price level fall,while increases in the money supply make prices rise.

Question 2

Political Instability Abroad
Suppose that political instability in other countries makes people fear for the value of their assets in these countries so that they desire to purchase more U.S assets.
-Refer to Political Instability Abroad.What would happen to the dollar?

Accepted Answer

A)  It would appreciate in foreign exchange markets making U.S goods more expensive compared to foreign goods. 
B)  It would appreciate in foreign exchange markets making U.S.goods less expensive compared to foreign goods. 
C)  It would depreciate in foreign exchange markets making U.S.goods more expensive compared to foreign goods. 
D)  It would depreciate in foreign exchange markets making U.S.goods less expensive compared to foreign goods. 
A)  It would appreciate in foreign exchange markets making U.S goods more expensive compared to foreign goods. 
B)  It would appreciate in foreign exchange markets making U.S.goods less expensive compared to foreign goods. 
C)  It would depreciate in foreign exchange markets making U.S.goods more expensive compared to foreign goods. 
D)  It would depreciate in foreign exchange markets making U.S.goods less expensive compared to foreign goods.

Question 3

Which of the following affected aggregate demand during the recession of 2008-2009?

Accepted Answer

A)  a decline in residential construction and a decrease in lending 
B)  a decline in residential construction but not a decrease in lending 
C)  a decrease in lending but not a decline in residential construction 
D)  neither a decrease in residential construction nor a decrease in lending 
A)  a decline in residential construction and a decrease in lending 
B)  a decline in residential construction but not a decrease in lending 
C)  a decrease in lending but not a decline in residential construction 
D)  neither a decrease in residential construction nor a decrease in lending

Question 4

The wealth effect,interest-rate effect,and exchange-rate effect are all explanations for

Accepted Answer

A)  the slope of short-run aggregate supply. 
B)  the slope of long-run aggregate supply. 
C)  the slope of the aggregate-demand curve. 
D)  everything that makes the aggregate-demand curve shift. 
A)  the slope of short-run aggregate supply. 
B)  the slope of long-run aggregate supply. 
C)  the slope of the aggregate-demand curve. 
D)  everything that makes the aggregate-demand curve shift.

Question 5

Suppose the economy is in long-run equilibrium.Senator A succeeds in getting taxes raised.At the same time,Senator B succeeds in getting major new restrictions on logging enacted.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 6

When production costs rise,

Accepted Answer

A)  the short-run aggregate supply curve shifts to the right. 
B)  the short-run aggregate supply curve shifts to the left. 
C)  the aggregate demand curve shifts to the right. 
D)  the aggregate demand curve shifts to the left. 
A)  the short-run aggregate supply curve shifts to the right. 
B)  the short-run aggregate supply curve shifts to the left. 
C)  the aggregate demand curve shifts to the right. 
D)  the aggregate demand curve shifts to the left.

Question 7

Consider the exhibit below for the following questions.
Figure 23-1  
-Refer to Figure 23-1.The economy would be moving to long-run equilibrium if it started at

Accepted Answer

A)  A and moved to B. 
B)  C and moved to B. 
C)  D and moved to C. 
D)  None of the above is correct. 
A)  A and moved to B. 
B)  C and moved to B. 
C)  D and moved to C. 
D)  None of the above is correct.

Question 8

Which of the following is most commonly used to monitor short-run changes in economic activity?

Accepted Answer

A)  the inflation rate 
B)  real GDP 
C)  aggregate demand 
D)  aggregate supply 
A)  the inflation rate 
B)  real GDP 
C)  aggregate demand 
D)  aggregate supply

Question 9

Most economists believe that money neutrality holds

Accepted Answer

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

Question 10

When the price level falls the quantity of

Accepted Answer

A)  consumption goods demanded rises,while the quantity of net exports demanded falls. 
B)  consumption goods demanded and the quantity of net exports demanded both rise. 
C)  consumption goods demanded and the quantity of net exports demanded both fall. 
D)  consumption goods demanded falls,while the quantity of net exports demand rises. 
A)  consumption goods demanded rises,while the quantity of net exports demanded falls. 
B)  consumption goods demanded and the quantity of net exports demanded both rise. 
C)  consumption goods demanded and the quantity of net exports demanded both fall. 
D)  consumption goods demanded falls,while the quantity of net exports demand rises.

Question 11

The discovery of a large amount of previously-undiscovered oil in the U.S.would shift

Accepted Answer

A)  the long-run aggregate-supply curve to the right. 
B)  the long-run aggregate-supply curve to the left. 
C)  the aggregate-demand curve to the left. 
D)  None of the above is correct. 
A)  the long-run aggregate-supply curve to the right. 
B)  the long-run aggregate-supply curve to the left. 
C)  the aggregate-demand curve to the left. 
D)  None of the above is correct.

Question 12

When interest rates fall

Accepted Answer

A)  firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. 
B)  firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding. 
C)  firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding. 
D)  firms want to borrow less for new plants and equipment and households want to borrow less for homebuilding. 
A)  firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. 
B)  firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding. 
C)  firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding. 
D)  firms want to borrow less for new plants and equipment and households want to borrow less for homebuilding.

Question 13

People had been expecting the price level to be 170 but it turns out to be 165.Diamond Power Tools increases the number of workers it employs.What could explain this?

Accepted Answer

A)  both sticky price theory and sticky wage theory 
B)  sticky price theory but not sticky wage theory 
C)  sticky wage theory but not sticky price theory 
D)  neither sticky wage theory nor sticky price theory 
A)  both sticky price theory and sticky wage theory 
B)  sticky price theory but not sticky wage theory 
C)  sticky wage theory but not sticky price theory 
D)  neither sticky wage theory nor sticky price theory

Question 14

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 15

Other things the same,as the price level decreases it induces greater spending on

Accepted Answer

A)  both net exports and investment. 
B)  net exports but not investment. 
C)  investment but not net exports. 
D)  neither net exports nor investment. 
A)  both net exports and investment. 
B)  net exports but not investment. 
C)  investment but not net exports. 
D)  neither net exports nor investment.

Question 16

Recessions in China and India would cause

Accepted Answer

A)  the U.S.price level and real GDP to rise. 
B)  the U.S.price level and real GDP to fall. 
C)  the U.S.price level to rise and real GDP to fall. 
D)  the U.S.price level to fall and real GDP to rise. 
A)  the U.S.price level and real GDP to rise. 
B)  the U.S.price level and real GDP to fall. 
C)  the U.S.price level to rise and real GDP to fall. 
D)  the U.S.price level to fall and real GDP to rise.

Question 17

When taxes decrease,consumption

Accepted Answer

A)  increases,so aggregate demand shifts right. 
B)  increases,so aggregate supply shifts right. 
C)  decreases,so aggregate demand shifts left. 
D)  decreases,so aggregate supply shifts left. 
A)  increases,so aggregate demand shifts right. 
B)  increases,so aggregate supply shifts right. 
C)  decreases,so aggregate demand shifts left. 
D)  decreases,so aggregate supply shifts left.

Question 18

Other things the same,if prices fell when firms and workers were expecting them to rise,then

Accepted Answer

A)  employment and production would rise. 
B)  employment would rise and production would fall. 
C)  employment would fall and production would rise. 
D)  employment and production would fall. 
A)  employment and production would rise. 
B)  employment would rise and production would fall. 
C)  employment would fall and production would rise. 
D)  employment and production would fall.

Question 19

When taxes decrease,consumption

Accepted Answer

A)  decreases as shown by a movement to the left along a given aggregate-demand curve. 
B)  decreases as shown by a shift of the aggregate demand curve to the left. 
C)  increases as shown by a movement to the right along a given aggregate-demand curve. 
D)  increases as shown by a shift of the aggregate demand curve to the right. 
A)  decreases as shown by a movement to the left along a given aggregate-demand curve. 
B)  decreases as shown by a shift of the aggregate demand curve to the left. 
C)  increases as shown by a movement to the right along a given aggregate-demand curve. 
D)  increases as shown by a shift of the aggregate demand curve to the right.

Question 20

The only way to rationalize an upward slope for the short-run aggregate-supply curve is to argue that wages are sticky in the short run.

Accepted Answer

A) True 
 B)False

Exam 23: Aggregate Demand and Aggregate Supply

In the long run,technological progress

Political Instability Abroad Suppose that political instability in other countries makes people fear for the value of their assets in these countries so that they desire to purchase more U.S assets. -Refer to Political Instability Abroad.What would happen to the dollar?

Which of the following affected aggregate demand during the recession of 2008-2009?

The wealth effect,interest-rate effect,and exchange-rate effect are all explanations for

Suppose the economy is in long-run equilibrium.Senator A succeeds in getting taxes raised.At the same time,Senator B succeeds in getting major new restrictions on logging enacted.In the short run

When production costs rise,

Consider the exhibit below for the following questions. Figure 23-1 -Refer to Figure 23-1.The economy would be moving to long-run equilibrium if it started at

Which of the following is most commonly used to monitor short-run changes in economic activity?

Most economists believe that money neutrality holds

When the price level falls the quantity of

The discovery of a large amount of previously-undiscovered oil in the U.S.would shift

When interest rates fall

People had been expecting the price level to be 170 but it turns out to be 165.Diamond Power Tools increases the number of workers it employs.What could explain this?

During recessions

Other things the same,as the price level decreases it induces greater spending on

Recessions in China and India would cause

When taxes decrease,consumption

Other things the same,if prices fell when firms and workers were expecting them to rise,then

When taxes decrease,consumption

The only way to rationalize an upward slope for the short-run aggregate-supply curve is to argue that wages are sticky in the short run.

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 Costs of Production

Firms in Competitive Markets

Monopoly

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

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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