Question 1

A decrease in U.S.interest rates leads to

Accepted Answer

A)  a depreciation of the dollar that leads to greater net exports. 
B)  a depreciation of the dollar that leads to smaller net exports. 
C)  an appreciation of the dollar that leads to greater net exports. 
D)  an appreciation of the dollar that leads to smaller net exports. 
A)  a depreciation of the dollar that leads to greater net exports. 
B)  a depreciation of the dollar that leads to smaller net exports. 
C)  an appreciation of the dollar that leads to greater net exports. 
D)  an appreciation of the dollar that leads to smaller net exports.

Question 2

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 3

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 4

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 5

Suppose a shift in aggregate demand creates an economic contraction.If policymakers can respond with sufficient speed and precision,they can offset the initial shift by shifting

Accepted Answer

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

Question 6

Most macroeconomic variables that measure some type of income,spending,or production fluctuate closely together.

Accepted Answer

A) True 
 B)False

Question 7

Make a list of things that would shift the aggregate demand curve to the right.

Accepted Answer

Examples (and variations on examples)in

Question 8

In 2001,the United States was in recession.Which of the following things would you not expect to have happened?

Accepted Answer

A)  increased layoffs and firings 
B)  a higher rate of bankruptcy 
C)  increased claims for unemployment insurance 
D)  increased investment spending 
A)  increased layoffs and firings 
B)  a higher rate of bankruptcy 
C)  increased claims for unemployment insurance 
D)  increased investment spending

Question 9

Other things the same,which of the following is correct?

Accepted Answer

A)  A decrease in the price level causes the dollar to appreciate.Aggregate demand shifts right. 
B)  A decrease in the price level causes the dollar to depreciate.Aggregate demand shifts right. 
C)  If speculators lose confidence in the American economy,the dollar appreciates.Aggregate demand shifts right. 
D)  If speculators lose confidence in the American economy,the dollar depreciates.Aggregate demand shifts right. 
A)  A decrease in the price level causes the dollar to appreciate.Aggregate demand shifts right. 
B)  A decrease in the price level causes the dollar to depreciate.Aggregate demand shifts right. 
C)  If speculators lose confidence in the American economy,the dollar appreciates.Aggregate demand shifts right. 
D)  If speculators lose confidence in the American economy,the dollar depreciates.Aggregate demand shifts right.

Question 10

Assuming that a is positive,theories of short-run aggregate supply are expressed mathematically as

Accepted Answer

A)  quantity of output supplied = natural rate of output + a(actual price level - expected price level). 
B)  quantity of output supplied = natural rate of output + a(expected price level - actual price level). 
C)  quantity of output supplied = a(actual price level -expected price level)- natural rate of output. 
D)  quantity of output supplied = a(expected price level - actual price level)- natural rate of output. 
A)  quantity of output supplied = natural rate of output + a(actual price level - expected price level). 
B)  quantity of output supplied = natural rate of output + a(expected price level - actual price level). 
C)  quantity of output supplied = a(actual price level -expected price level)- natural rate of output. 
D)  quantity of output supplied = a(expected price level - actual price level)- natural rate of output.

Question 11

Of the following theories,which is consistent with a vertical long-run aggregate supply curve?

Accepted Answer

A)  the sticky-wage theory 
B)  misperceptions theory 
C)  both the sticky-wage and misperceptions theories. 
D)  neither the sticky-wage nor the misperceptions theory. 
A)  the sticky-wage theory 
B)  misperceptions theory 
C)  both the sticky-wage and misperceptions theories. 
D)  neither the sticky-wage nor the misperceptions theory.

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

Increased uncertainty and pessimism about the future of the economy lead firms to desire less investment spending which shifts the aggregate-demand curve to the left.

Accepted Answer

A) True 
 B)False

Question 14

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

Accepted Answer

A) True 
 B)False

Question 15

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 16

According to classical macroeconomic theory,changes in the money supply affect

Accepted Answer

A)  variables measured in terms of money and variables measured in terms of quantities or relative prices 
B)  variables measured in terms of money but not variables measured in terms of quantities or relative prices 
C)  variables measured in terms of quantities or relative prices,but not variables measured in terms of money 
D)  neither variables measured in terms of money nor variables measured in terms of quantities or relative prices 
A)  variables measured in terms of money and variables measured in terms of quantities or relative prices 
B)  variables measured in terms of money but not variables measured in terms of quantities or relative prices 
C)  variables measured in terms of quantities or relative prices,but not variables measured in terms of money 
D)  neither variables measured in terms of money nor variables measured in terms of quantities or relative prices

Question 17

The long-run aggregate supply curve shows that by itself a permanent change in aggregate demand would lead to a long-run change

Accepted Answer

A)  in the price level and output. 
B)  in the price level,but not output. 
C)  in output,but not the price level. 
D)  in neither the price level nor output. 
A)  in the price level and output. 
B)  in the price level,but not output. 
C)  in output,but not the price level. 
D)  in neither the price level nor output.

Question 18

Most economists believe that classical theory describes the world in the short run but not in the long run.

Accepted Answer

A) True 
 B)False

Question 19

The quantity of money has no real impact on things people really care about like whether or not they have a job.Most economists would agree that this statement is appropriate concerning

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 20

During the last half of 1980,the U.S.unemployment rate was about 7.5 percent.Historical experience suggests that this is

Accepted Answer

A)  above the natural rate,so real GDP growth was likely low. 
B)  above the natural rate,so real GDP growth was likely high. 
C)  below the natural rate,so real GDP growth was likely low. 
D)  below the natural rate,so real GDP growth was likely high. 
A)  above the natural rate,so real GDP growth was likely low. 
B)  above the natural rate,so real GDP growth was likely high. 
C)  below the natural rate,so real GDP growth was likely low. 
D)  below the natural rate,so real GDP growth was likely high.

Exam 23: Aggregate Demand and Aggregate Supply

A decrease in U.S.interest rates leads to

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

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?

The saying "Money is a veil." means that

Suppose a shift in aggregate demand creates an economic contraction.If policymakers can respond with sufficient speed and precision,they can offset the initial shift by shifting

Most macroeconomic variables that measure some type of income,spending,or production fluctuate closely together.

Make a list of things that would shift the aggregate demand curve to the right.

In 2001,the United States was in recession.Which of the following things would you not expect to have happened?

Other things the same,which of the following is correct?

Assuming that a is positive,theories of short-run aggregate supply are expressed mathematically as

Of the following theories,which is consistent with a vertical long-run aggregate supply curve?

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

Increased uncertainty and pessimism about the future of the economy lead firms to desire less investment spending which shifts the aggregate-demand curve to the left.

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

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

According to classical macroeconomic theory,changes in the money supply affect

The long-run aggregate supply curve shows that by itself a permanent change in aggregate demand would lead to a long-run change

Most economists believe that classical theory describes the world in the short run but not in the long run.

The quantity of money has no real impact on things people really care about like whether or not they have a job.Most economists would agree that this statement is appropriate concerning

During the last half of 1980,the U.S.unemployment rate was about 7.5 percent.Historical experience suggests that this is

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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