Question 1

An increase in the price of a nonlabor input such as oil will cause

Accepted Answer

A)  a movement down the SRAS curve. 
B)  a movement up the SRAS curve. 
C)  a leftward shift in the SRAS curve. 
D)  a rightward shift in the SRAS curve. 
E)  no change regarding the SRAS curve. 
A)  a movement down the SRAS curve. 
B)  a movement up the SRAS curve. 
C)  a leftward shift in the SRAS curve. 
D)  a rightward shift in the SRAS curve. 
E)  no change regarding the SRAS curve. C

Question 2

Aggregate demand curves are

Accepted Answer

A)  downward sloping. 
B)  upward sloping. 
C)  horizontal. 
D)  vertical. 
A)  downward sloping. 
B)  upward sloping. 
C)  horizontal. 
D)  vertical. A

Question 3

The dollar appreciates against foreign currencies.This makes foreign-produced goods __________ for Americans and U.S.-produced goods __________ for foreigners.As a result,U.S.__________ fall and U.S.__________ rise.

Accepted Answer

A)  more expensive; cheaper; imports; exports 
B)  cheaper; more expensive; exports; imports 
C)  cheaper; more expensive; imports; exports 
D)  more expensive; cheaper; exports; imports 
A)  more expensive; cheaper; imports; exports 
B)  cheaper; more expensive; exports; imports 
C)  cheaper; more expensive; imports; exports 
D)  more expensive; cheaper; exports; imports B

Question 4

-Refer to Exhibit 8-1.If we assume that the unemployment rate and Real GDP are inversely related,which of the points on this graph is most likely representative of the lowest unemployment rate?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 5

In the short run,a decrease in wage rates,ceteris paribus,shifts the

Accepted Answer

A)  AD curve to the right,causing equilibrium price level to rise and equilibrium Real GDP to increase. 
B)  AD curve to the left,causing equilibrium price level to fall and equilibrium Real GDP to decrease. 
C)  SRAS curve to the right,causing equilibrium price level to fall and equilibrium Real GDP to increase. 
D)  SRAS curve to the left,causing equilibrium price level to rise and equilibrium Real GDP to decrease. 
A)  AD curve to the right,causing equilibrium price level to rise and equilibrium Real GDP to increase. 
B)  AD curve to the left,causing equilibrium price level to fall and equilibrium Real GDP to decrease. 
C)  SRAS curve to the right,causing equilibrium price level to fall and equilibrium Real GDP to increase. 
D)  SRAS curve to the left,causing equilibrium price level to rise and equilibrium Real GDP to decrease.

Question 6

Individuals' expectations of lower future prices is a

Accepted Answer

A)  rightward shifter of the AD curve. 
B)  leftward shifter of the AD curve. 
C)  reason for moving up along a given AD curve. 
D)  reason for moving down along a given AD curve. 
A)  rightward shifter of the AD curve. 
B)  leftward shifter of the AD curve. 
C)  reason for moving up along a given AD curve. 
D)  reason for moving down along a given AD curve.

Question 7

The short-run aggregate supply (SRAS)curve shows the quantity

Accepted Answer

A)  demanded of all goods and services at different price levels,ceteris paribus. 
B)  supplied of all goods and services at a particular price level,ceteris paribus. 
C)  supplied of all goods and services at different price levels,ceteris paribus. 
D)  supplied of GDP at a particular price level,ceteris paribus. 
A)  demanded of all goods and services at different price levels,ceteris paribus. 
B)  supplied of all goods and services at a particular price level,ceteris paribus. 
C)  supplied of all goods and services at different price levels,ceteris paribus. 
D)  supplied of GDP at a particular price level,ceteris paribus.

Question 8

A simultaneous rise in aggregate demand and fall in short-run aggregate supply will definitely

Accepted Answer

A)  raise the price level,but there is not enough information to know how Real GDP will change. 
B)  lower Real GDP,but there is not enough information to know how the price level will change. 
C)  raise the price level and Real GDP. 
D)  raise Real GDP,but there is not enough information to know how the price level will change. 
E)  raise the price level and lower Real GDP. 
A)  raise the price level,but there is not enough information to know how Real GDP will change. 
B)  lower Real GDP,but there is not enough information to know how the price level will change. 
C)  raise the price level and Real GDP. 
D)  raise Real GDP,but there is not enough information to know how the price level will change. 
E)  raise the price level and lower Real GDP.

Question 9

Individuals' expectations of higher future income is a

Accepted Answer

A)  rightward shifter of the AD curve. 
B)  leftward shifter of the AD curve. 
C)  reason for moving up along a given AD curve. 
D)  reason for moving down along a given AD curve. 
A)  rightward shifter of the AD curve. 
B)  leftward shifter of the AD curve. 
C)  reason for moving up along a given AD curve. 
D)  reason for moving down along a given AD curve.

Question 10

-Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If unusually bad weather leads to decreased production of wheat,corn,and other crops,at which point is the economy most likely to end up in the short run?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 11

Which of the following statements is false?

Accepted Answer

A)  Some prices in an economy adjust faster than other prices. 
B)  Aggregate demand curves slope downward. 
C)  Firms may not adjust their prices immediately because they may be unable to figure out whether a decline in demand is temporary or permanent. 
D)  The absolute price of a good is the dollar or money price of the good. 
E)  none of the above 
A)  Some prices in an economy adjust faster than other prices. 
B)  Aggregate demand curves slope downward. 
C)  Firms may not adjust their prices immediately because they may be unable to figure out whether a decline in demand is temporary or permanent. 
D)  The absolute price of a good is the dollar or money price of the good. 
E)  none of the above

Question 12

If aggregate quantity demanded is greater than aggregate quantity supplied at a particular price level,then

Accepted Answer

A)  consumers will bid prices upward,and a greater quantity of output will be supplied. 
B)  the shortage will likely be eliminated. 
C)  a and b 
D)  none of the above 
A)  consumers will bid prices upward,and a greater quantity of output will be supplied. 
B)  the shortage will likely be eliminated. 
C)  a and b 
D)  none of the above

Question 13

A change in labor productivity shifts the __________ curve and a change in the exchange rate shifts the __________ curve.

Accepted Answer

A)  SRAS; SRAS 
B)  AD; AD 
C)  SRAS; AD 
D)  AD; SRAS 
E)  none of the above 
A)  SRAS; SRAS 
B)  AD; AD 
C)  SRAS; AD 
D)  AD; SRAS 
E)  none of the above

Question 14

The interest rate effect,the real balance effect,and the international trade effect all begin with a change in the price level.

Accepted Answer

A) True 
 B)False

Question 15

An increase in short-run aggregate supply is

Accepted Answer

A)  the result of an increase in the price level. 
B)  represented by a movement from one point to another up along the existing SRAS curve. 
C)  represented by a rightward shift in the SRAS curve. 
D)  both a and b 
E)  both a and C 
A)  the result of an increase in the price level. 
B)  represented by a movement from one point to another up along the existing SRAS curve. 
C)  represented by a rightward shift in the SRAS curve. 
D)  both a and b 
E)  both a and C

Question 16

In the short run,an increase in investment,ceteris paribus,shifts the

Accepted Answer

A)  AD curve to the right,causing equilibrium price level to rise and equilibrium Real GDP to increase. 
B)  AD curve to the left,causing equilibrium price level to fall and equilibrium Real GDP to decrease. 
C)  SRAS curve to the right,causing equilibrium price level to fall and equilibrium Real GDP to increase. 
D)  SRAS curve to the left,causing equilibrium price level to rise and equilibrium Real GDP to decrease. 
A)  AD curve to the right,causing equilibrium price level to rise and equilibrium Real GDP to increase. 
B)  AD curve to the left,causing equilibrium price level to fall and equilibrium Real GDP to decrease. 
C)  SRAS curve to the right,causing equilibrium price level to fall and equilibrium Real GDP to increase. 
D)  SRAS curve to the left,causing equilibrium price level to rise and equilibrium Real GDP to decrease.

Question 17

-Refer to Exhibit 8-2.What word (rises or falls)should go in blank (7)and blank (8),respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

Accepted Answer

A)  rises; rises 
B)  falls; falls 
C)  rises; falls 
D)  falls; rises 
A)  rises; rises 
B)  falls; falls 
C)  rises; falls 
D)  falls; rises

Question 18

If foreign real national income rises,the U.S.____________ curve shifts _____________.When labor productivity increases the _____________ curve shifts _______________.If both of these situations occur simultaneously,the combined result would be a(n)______________ the price level and a(n)__________________ Real GDP in the United States.

Accepted Answer

A)  AD; leftward; SRAS; rightward; decrease in; indeterminant impact on 
B)  AD; rightward; SRAS; leftward; increase in; indeterminant impact on 
C)  SRAS; leftward; SRAS rightward; indeterminant impact on; indeterminat impact on 
D)  AD; rightward; SRAS; rightward; indeterminant impact on; increase in 
A)  AD; leftward; SRAS; rightward; decrease in; indeterminant impact on 
B)  AD; rightward; SRAS; leftward; increase in; indeterminant impact on 
C)  SRAS; leftward; SRAS rightward; indeterminant impact on; indeterminat impact on 
D)  AD; rightward; SRAS; rightward; indeterminant impact on; increase in

Question 19

Which of the following is consistent with the sticky-wage explanation of the upward-sloping SRAS curve?

Accepted Answer

A)  The price level rises,the real wage falls,and the quantity demanded of labor declines. 
B)  The price level falls,the real wage rises,and the quantity demanded of labor falls. 
C)  The price level rises,the real wage rises,and the quantity demanded of labor falls. 
D)  The nominal wage rises,the real wage rises,and the quantity demanded and supplied of labor rise. 
E)  a and b 
A)  The price level rises,the real wage falls,and the quantity demanded of labor declines. 
B)  The price level falls,the real wage rises,and the quantity demanded of labor falls. 
C)  The price level rises,the real wage rises,and the quantity demanded of labor falls. 
D)  The nominal wage rises,the real wage rises,and the quantity demanded and supplied of labor rise. 
E)  a and b

Question 20

Starting from short-run equilibrium,the following occurs: the money supply increases and labor productivity increases.What is the effect on the price level and Real GDP in the short run?

Accepted Answer

A)  Real GDP falls and the price level necessarily rises. 
B)  Real GDP rises and the price level necessarily rises. 
C)  Real GDP rises and the effect on the price level cannot be determined. 
D)  Real GDP falls and the effect on the price level cannot be determined. 
E)  none of the above 
A)  Real GDP falls and the price level necessarily rises. 
B)  Real GDP rises and the price level necessarily rises. 
C)  Real GDP rises and the effect on the price level cannot be determined. 
D)  Real GDP falls and the effect on the price level cannot be determined. 
E)  none of the above

Exam 8: Production and Costs

An increase in the price of a nonlabor input such as oil will cause

Aggregate demand curves are

The dollar appreciates against foreign currencies.This makes foreign-produced goods __________ for Americans and U.S.-produced goods __________ for foreigners.As a result,U.S.__________ fall and U.S.__________ rise.

-Refer to Exhibit 8-1.If we assume that the unemployment rate and Real GDP are inversely related,which of the points on this graph is most likely representative of the lowest unemployment rate?

In the short run,a decrease in wage rates,ceteris paribus,shifts the

Individuals' expectations of lower future prices is a

The short-run aggregate supply (SRAS)curve shows the quantity

A simultaneous rise in aggregate demand and fall in short-run aggregate supply will definitely

Individuals' expectations of higher future income is a

-Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If unusually bad weather leads to decreased production of wheat,corn,and other crops,at which point is the economy most likely to end up in the short run?

Which of the following statements is false?

If aggregate quantity demanded is greater than aggregate quantity supplied at a particular price level,then

A change in labor productivity shifts the __________ curve and a change in the exchange rate shifts the __________ curve.

The interest rate effect,the real balance effect,and the international trade effect all begin with a change in the price level.

An increase in short-run aggregate supply is

In the short run,an increase in investment,ceteris paribus,shifts the

-Refer to Exhibit 8-2.What word (rises or falls)should go in blank (7)and blank (8),respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

Which of the following is consistent with the sticky-wage explanation of the upward-sloping SRAS curve?

Starting from short-run equilibrium,the following occurs: the money supply increases and labor productivity increases.What is the effect on the price level and Real GDP in the short run?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Perfect Competition

Monopoly

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,union,and Labor

The Distribution of Income and Poverty

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

Filters

The dollar appreciates against foreign currencies.This makes foreign-produced goods for Americans and U.S.-produced goods for foreigners.As a result,U.S. fall and U.S. rise.

A change in labor productivity shifts the curve and a change in the exchange rate shifts the curve.