Question 1

Which of the following would shift the aggregate demand curve to the left?

Accepted Answer

A)  an increase in the money supply 
B)  a cut in federal income taxes 
C)  an expected decrease in future income 
D)  an increase in the price level 
A)  an increase in the money supply 
B)  a cut in federal income taxes 
C)  an expected decrease in future income 
D)  an increase in the price level

Question 2

The aggregate demand curve illustrates the relationship between

Accepted Answer

A)  the aggregate demand for goods and services, and the real interest rate. 
B)  the aggregate demand for goods and services, and the level of current output. 
C)  the level of current output and the real interest rate. 
D)  the aggregate demand for goods and services, and the price level. 
A)  the aggregate demand for goods and services, and the real interest rate. 
B)  the aggregate demand for goods and services, and the level of current output. 
C)  the level of current output and the real interest rate. 
D)  the aggregate demand for goods and services, and the price level.

Question 3

A monopolistically competitive market differs from a perfectly competitive market in that a monopolistically competitive market has

Accepted Answer

A)  more sellers. 
B)  products that are identical. 
C)  less sticky prices. 
D)  firms that are price setters. 
A)  more sellers. 
B)  products that are identical. 
C)  less sticky prices. 
D)  firms that are price setters.

Question 4

Which of the following will NOT shift the short-run aggregate supply function?

Accepted Answer

A)  changes in labor costs 
B)  changes in the costs of nonlabor inputs 
C)  changes in the price level 
D)  changes in the expected price level 
A)  changes in labor costs 
B)  changes in the costs of nonlabor inputs 
C)  changes in the price level 
D)  changes in the expected price level

Question 5

Which of the following would NOT shift the aggregate demand curve to the left?

Accepted Answer

A)  an increase in money demand 
B)  a cut in federal government spending 
C)  a reduction in federal income taxes 
D)  a decrease in consumption spending 
A)  an increase in money demand 
B)  a cut in federal government spending 
C)  a reduction in federal income taxes 
D)  a decrease in consumption spending

Question 6

According to the new classical approach to the aggregate supply curve,the aggregate supply curve slopes upward because

Accepted Answer

A)  increases in the price level result in lower real balances. 
B)  higher current output results in higher desired investment. 
C)  higher prices result in higher levels of spending as consumers attempt to stay ahead of inflation. 
D)  businesses have difficulty in distinguishing relative price increases from general price increases. 
A)  increases in the price level result in lower real balances. 
B)  higher current output results in higher desired investment. 
C)  higher prices result in higher levels of spending as consumers attempt to stay ahead of inflation. 
D)  businesses have difficulty in distinguishing relative price increases from general price increases.

Question 7

According to AD-AS model,the primary long-run effect of increases in the money supply is

Accepted Answer

A)  higher price level. 
B)  higher GDP. 
C)  lower price level. 
D)  lower GDP. 
A)  higher price level. 
B)  higher GDP. 
C)  lower price level. 
D)  lower GDP.

Question 8

Which of the following is the correct expression for short-run aggregate supply in the new classical view?

Accepted Answer

A)  YP = Y + a(P - Pe) 
B)  Y = YP + a(P - Pe) 
C)  YP = Y + a(P + Pe) 
D)  Y = YP + a(P + Pe) 
A)  YP = Y + a(P - Pe) 
B)  Y = YP + a(P - Pe) 
C)  YP = Y + a(P + Pe) 
D)  Y = YP + a(P + Pe)

Question 9

Which of the following is NOT included in aggregate demand?

Accepted Answer

A)  Demand for goods and services for consumption 
B)  Investment in business plant and equipment 
C)  Net exports 
D)  Investment in Treasury bonds 
A)  Demand for goods and services for consumption 
B)  Investment in business plant and equipment 
C)  Net exports 
D)  Investment in Treasury bonds

Question 10

Most economists believe that the short-run aggregate supply curve

Accepted Answer

A)  slopes down. 
B)  slopes up. 
C)  is a vertical line. 
D)  is a horizontal line. 
A)  slopes down. 
B)  slopes up. 
C)  is a vertical line. 
D)  is a horizontal line.

Question 11

A decrease in the price level will lead to

Accepted Answer

A)  a decrease in the real interest rate and an increase in net exports. 
B)  an increase in the real interest rate and an increase in net exports. 
C)  a decrease in the real interest rate and a decrease in net exports. 
D)  an increase in the real interest rate and a decrease in net exports. 
A)  a decrease in the real interest rate and an increase in net exports. 
B)  an increase in the real interest rate and an increase in net exports. 
C)  a decrease in the real interest rate and a decrease in net exports. 
D)  an increase in the real interest rate and a decrease in net exports.

Question 12

Which of the following best describes a price setter?

Accepted Answer

A)  firms in perfect competition 
B)  pricing of products that are not standardized 
C)  firms setting prices equal to the market price 
D)  firms setting price equal to the aggregate price level 
A)  firms in perfect competition 
B)  pricing of products that are not standardized 
C)  firms setting prices equal to the market price 
D)  firms setting price equal to the aggregate price level

Question 13

Monetary neutrality refers to the fact that changes in the money supply

Accepted Answer

A)  affect output more in the long run than in the short run. 
B)  have no effect on output in the long run. 
C)  affect only output in the long run. 
D)  have a greater effect on prices in the short run than in the long run. 
A)  affect output more in the long run than in the short run. 
B)  have no effect on output in the long run. 
C)  affect only output in the long run. 
D)  have a greater effect on prices in the short run than in the long run.

Question 14

The new classical explanation of aggregate supply in the short run builds on research by

Accepted Answer

A)  Irving Fisher. 
B)  John Maynard Keynes. 
C)  Robert Lucas. 
D)  Robert Solow. 
A)  Irving Fisher. 
B)  John Maynard Keynes. 
C)  Robert Lucas. 
D)  Robert Solow.

Question 15

In the new Keynesian view a monopolistically competitive firm may fail to increase the price of its product as demand increases because

Accepted Answer

A)  if it does so it will lose all of its customers. 
B)  the cost to it of changing prices may exceed the benefit of doing so. 
C)  prices of monopolistically competitive firms are regulated by the federal government and may only be changed with permission. 
D)  for a monopolistically competitive firm, price is below marginal cost. 
A)  if it does so it will lose all of its customers. 
B)  the cost to it of changing prices may exceed the benefit of doing so. 
C)  prices of monopolistically competitive firms are regulated by the federal government and may only be changed with permission. 
D)  for a monopolistically competitive firm, price is below marginal cost.

Question 16

The new classical explanation of aggregate supply is also known as

Accepted Answer

A)  Monetarism. 
B)  Keynesianism. 
C)  the misperception theory. 
D)  the adaptive expectations theory. 
A)  Monetarism. 
B)  Keynesianism. 
C)  the misperception theory. 
D)  the adaptive expectations theory.

Question 17

If the expected price level increases at the same time that the federal government cuts taxes,in the short run

Accepted Answer

A)  aggregate output and the price level will both increase. 
B)  aggregate output will increase, but the price level will fall. 
C)  aggregate output and the price level will both fall. 
D)  the price level will increase, but aggregate output may either increase or decrease. 
A)  aggregate output and the price level will both increase. 
B)  aggregate output will increase, but the price level will fall. 
C)  aggregate output and the price level will both fall. 
D)  the price level will increase, but aggregate output may either increase or decrease.

Question 18

Which of the following best describes a price taker?

Accepted Answer

A)  a firm taking the market price as given 
B)  price strategies found in monopolistically competitive markets 
C)  prices being set by long-term contracts 
D)  firms taking the aggregate price level as given 
A)  a firm taking the market price as given 
B)  price strategies found in monopolistically competitive markets 
C)  prices being set by long-term contracts 
D)  firms taking the aggregate price level as given

Question 19

How does an increase in the price level lead to a higher interest rate?

Accepted Answer

An increase in the price level reduces t

Question 20

Most economists believe that the aggregate supply curve is

Accepted Answer

A)  upward-sloping in the short run, but vertical in the long run. 
B)  upward-sloping in the long run, but vertical in the short run. 
C)  upward-sloping in both the short run and in the long run. 
D)  vertical in both the short run and in the long run. 
A)  upward-sloping in the short run, but vertical in the long run. 
B)  upward-sloping in the long run, but vertical in the short run. 
C)  upward-sloping in both the short run and in the long run. 
D)  vertical in both the short run and in the long run.

Which of the following would shift the aggregate demand curve to the left?

The aggregate demand curve illustrates the relationship between

A monopolistically competitive market differs from a perfectly competitive market in that a monopolistically competitive market has

Which of the following will NOT shift the short-run aggregate supply function?

Which of the following would NOT shift the aggregate demand curve to the left?

According to the new classical approach to the aggregate supply curve,the aggregate supply curve slopes upward because

According to AD-AS model,the primary long-run effect of increases in the money supply is

Which of the following is the correct expression for short-run aggregate supply in the new classical view?

Which of the following is NOT included in aggregate demand?

Most economists believe that the short-run aggregate supply curve

A decrease in the price level will lead to

Which of the following best describes a price setter?

Monetary neutrality refers to the fact that changes in the money supply

The new classical explanation of aggregate supply in the short run builds on research by

In the new Keynesian view a monopolistically competitive firm may fail to increase the price of its product as demand increases because

The new classical explanation of aggregate supply is also known as

If the expected price level increases at the same time that the federal government cuts taxes,in the short run

Which of the following best describes a price taker?

How does an increase in the price level lead to a higher interest rate?

Most economists believe that the aggregate supply curve is

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Investment Banks, mutual Funds, hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory Ii: the Is-Mp Model

Filters

Exam 17: Monetary Theory I: the Aggregate Demand and Aggregate Supply Model

Which of the following would shift the aggregate demand curve to the left?

The aggregate demand curve illustrates the relationship between

A monopolistically competitive market differs from a perfectly competitive market in that a monopolistically competitive market has

Which of the following will NOT shift the short-run aggregate supply function?

Which of the following would NOT shift the aggregate demand curve to the left?

According to the new classical approach to the aggregate supply curve,the aggregate supply curve slopes upward because

According to AD-AS model,the primary long-run effect of increases in the money supply is

Which of the following is the correct expression for short-run aggregate supply in the new classical view?

Which of the following is NOT included in aggregate demand?

Most economists believe that the short-run aggregate supply curve

A decrease in the price level will lead to

Which of the following best describes a price setter?

Monetary neutrality refers to the fact that changes in the money supply

The new classical explanation of aggregate supply in the short run builds on research by

In the new Keynesian view a monopolistically competitive firm may fail to increase the price of its product as demand increases because

The new classical explanation of aggregate supply is also known as

If the expected price level increases at the same time that the federal government cuts taxes,in the short run

Which of the following best describes a price taker?

How does an increase in the price level lead to a higher interest rate?

Most economists believe that the aggregate supply curve is

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Investment Banks, mutual Funds, hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory Ii: the Is-Mp Model

Filters