Question 1

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 2

Other things the same,when the government spends more,the initial effect is that

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 3

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 4

The long-run effect of an increase in government spending is to raise

Accepted Answer

A)  both real output and the price level. 
B)  real output and lower the price level. 
C)  real output and leave the price level unchanged. 
D)  the price level and leave real output unchanged. 
A)  both real output and the price level. 
B)  real output and lower the price level. 
C)  real output and leave the price level unchanged. 
D)  the price level and leave real output unchanged.

Question 5

From 2006 to 2008 there was a dramatic fall in the price of houses.If this fall made people feel less wealthy,then it would have shifted

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 6

Classical economist David Hume observed that as the money supply expanded after gold discoveries it took some time for prices to rise and in the meantime the economy enjoyed higher employment and production.This is inconsistent with monetary neutrality because

Accepted Answer

A)  monetary neutrality would mean that neither prices nor production should have risen. 
B)  monetary neutrality would mean that production should have risen,but prices should not have. 
C)  monetary neutrality would mean the prices should have risen,but production should not have changed. 
D)  monetary neutrality would mean that prices and production should both have fallen. 
A)  monetary neutrality would mean that neither prices nor production should have risen. 
B)  monetary neutrality would mean that production should have risen,but prices should not have. 
C)  monetary neutrality would mean the prices should have risen,but production should not have changed. 
D)  monetary neutrality would mean that prices and production should both have fallen.

Question 7

During recessions

Accepted Answer

A)  workers are laid off. 
B)  factories are idle. 
C)  firms may find they are unable to sell all they produce. 
D)  All of the above are correct. 
A)  workers are laid off. 
B)  factories are idle. 
C)  firms may find they are unable to sell all they produce. 
D)  All of the above are correct.

Question 8

The aggregate demand and aggregate supply model helps us to understand both short-run economic fluctuations and how the economy moves from the short to the long run.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following correctly describes actions of the U.S.government during the recession of 2008-2009?

Accepted Answer

A)  It refused to provide banks funding and made no significant changes in government spending. 
B)  It refused to provide banks funding but made a large increase in government spending. 
C)  It became part owner of some banks but made no significant change in government spending 
D)  It became part owner of some banks and made a large increase in government spending. 
A)  It refused to provide banks funding and made no significant changes in government spending. 
B)  It refused to provide banks funding but made a large increase in government spending. 
C)  It became part owner of some banks but made no significant change in government spending 
D)  It became part owner of some banks and made a large increase in government spending.

Question 10

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

Accepted Answer

A) True 
 B)False

Question 11

Pessimism
Suppose the economy is in long-run equilibrium.Then because of corporate scandal,international tensions,and loss of confidence in policymakers,people become pessimistic regarding the future and retain that level of pessimism for some time.
-Refer to Pessimism.In the short run what happens to the price level and real GDP?

Accepted Answer

A)  Both the price level and real GDP rise. 
B)  Both the price level and real GDP fall. 
C)  The price level rises and real GDP falls. 
D)  The price level falls and real GDP rises. 
A)  Both the price level and real GDP rise. 
B)  Both the price level and real GDP fall. 
C)  The price level rises and real GDP falls. 
D)  The price level falls and real GDP rises.

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

Other things the same,when the government spends more,the initial effect is that

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

The long-run effect of an increase in government spending is to raise

From 2006 to 2008 there was a dramatic fall in the price of houses.If this fall made people feel less wealthy,then it would have shifted

Classical economist David Hume observed that as the money supply expanded after gold discoveries it took some time for prices to rise and in the meantime the economy enjoyed higher employment and production.This is inconsistent with monetary neutrality because

During recessions

The aggregate demand and aggregate supply model helps us to understand both short-run economic fluctuations and how the economy moves from the short to the long run.

Which of the following correctly describes actions of the U.S.government during the recession of 2008-2009?

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

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

Filters

Exam 23: Aggregate Demand and Aggregate Supply

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

Other things the same,when the government spends more,the initial effect is that

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

The long-run effect of an increase in government spending is to raise

From 2006 to 2008 there was a dramatic fall in the price of houses.If this fall made people feel less wealthy,then it would have shifted

Classical economist David Hume observed that as the money supply expanded after gold discoveries it took some time for prices to rise and in the meantime the economy enjoyed higher employment and production.This is inconsistent with monetary neutrality because

During recessions

The aggregate demand and aggregate supply model helps us to understand both short-run economic fluctuations and how the economy moves from the short to the long run.

Which of the following correctly describes actions of the U.S.government during the recession of 2008-2009?

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

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

Filters