Question 1

A short-run aggregate supply curve shows the

Accepted Answer

A) amount of a particular good producers are willing and able to buy at a particular price,ceteris paribus. 
B) real output (Real GDP)producers are willing and able to sell at different price levels,ceteris paribus. 
C) real output (Real GDP)people are willing and able to buy and to sell at different price levels,ceteris paribus. 
D) real output (Real GDP)people are willing and able to buy at different price levels,ceteris paribus. 
A) amount of a particular good producers are willing and able to buy at a particular price,ceteris paribus. 
B) real output (Real GDP)producers are willing and able to sell at different price levels,ceteris paribus. 
C) real output (Real GDP)people are willing and able to buy and to sell at different price levels,ceteris paribus. 
D) real output (Real GDP)people are willing and able to buy at different price levels,ceteris paribus. B

Question 2

Which of the following statements is false?

Accepted Answer

A) Purchasing power and the price level are inversely related. 
B) The real balance effect refers to the change in the purchasing power of dollar-denominated assets as a result of a change in the price level. 
C) The aggregate demand curve slopes downward because of the real balance,interest rate,and international trade effects. 
D) A change in the quantity demanded of Real GDP is directly brought about by a change in interest rates. 
A) Purchasing power and the price level are inversely related. 
B) The real balance effect refers to the change in the purchasing power of dollar-denominated assets as a result of a change in the price level. 
C) The aggregate demand curve slopes downward because of the real balance,interest rate,and international trade effects. 
D) A change in the quantity demanded of Real GDP is directly brought about by a change in interest rates. D

Question 3

Which of the following best describes how the real balance effect works?

Accepted Answer

A) The price level falls,purchasing power rises,a person's monetary wealth rises,and the person buys fewer goods and services. 
B) The price level rises,purchasing power rises,a person's monetary wealth decreases,and the person buys more goods and services. 
C) The price level rises,purchasing power falls,a person's monetary wealth falls,and the person buys fewer goods and services. 
D) The price level falls,purchasing power rises,a person's monetary wealth falls,and the person buys fewer goods and services. 
E) none of the above 
A) The price level falls,purchasing power rises,a person's monetary wealth rises,and the person buys fewer goods and services. 
B) The price level rises,purchasing power rises,a person's monetary wealth decreases,and the person buys more goods and services. 
C) The price level rises,purchasing power falls,a person's monetary wealth falls,and the person buys fewer goods and services. 
D) The price level falls,purchasing power rises,a person's monetary wealth falls,and the person buys fewer goods and services. 
E) none of the above C

Question 4

A rise in foreign real national income tends to raise U.S.__________,shifting the U.S.AD curve to the __________.

Accepted Answer

A) exports;left 
B) exports;right 
C) imports;left 
D) imports;right 
A) exports;left 
B) exports;right 
C) imports;left 
D) imports;right

Question 5

If foreign input prices increase and the United States is a purchaser of those inputs,then the U.S.

Accepted Answer

A) AD curve will shift leftward and U.S.prices will fall. 
B) AD curve will shift rightward and U.S.prices will rise. 
C) SRAS curve will shift leftward and U.S.prices will rise. 
D) SRAS curve will shift rightward and U.S.prices will fall 
A) AD curve will shift leftward and U.S.prices will fall. 
B) AD curve will shift rightward and U.S.prices will rise. 
C) SRAS curve will shift leftward and U.S.prices will rise. 
D) SRAS curve will shift rightward and U.S.prices will fall

Question 6

A decrease in the price level

Accepted Answer

A) shifts the AD curve to the right. 
B) shifts the AD curve to the left. 
C) causes an upward movement along the existing AD curve. 
D) causes a downward movement along the existing AD curve. 
E) none of the above 
A) shifts the AD curve to the right. 
B) shifts the AD curve to the left. 
C) causes an upward movement along the existing AD curve. 
D) causes a downward movement along the existing AD curve. 
E) none of the above

Question 7

Assume that the economy is currently in short-run equilibrium,then personal income taxes decline.Describe the correct sequence of events that happen as the economy adjusts to a new short-run equilibrium (be sure to state what the impact would be on the price level and Real GDP).

Accepted Answer

As personal income taxes decline,househo

Question 8

Suppose that C = $700,I = $200,G = $200,NX = $100,and that the money supply is equal to $400.Based upon these assumptions,velocity is equal to ________________.If consumption and velocity both rise beyond their initial levels,then it follows that another component of spending ___________ necessarily fall.

Accepted Answer

A) 3;must 
B) 3;does not 
C) 4;must 
D) 4;does not 
A) 3;must 
B) 3;does not 
C) 4;must 
D) 4;does not

Question 9

Foreign real national income rises.This raises U.S.___________ which ________ aggregate demand (AD).The AD curve shifts ___________ as a result.

Accepted Answer

A) net exports;raises;rightward 
B) imports;raises;rightward 
C) prices;reduces;leftward 
D) investment;reduces;leftward 
E) none of the above 
A) net exports;raises;rightward 
B) imports;raises;rightward 
C) prices;reduces;leftward 
D) investment;reduces;leftward 
E) none of the above

Question 10

One of the reasons why the AD curve slopes downward is that as the

Accepted Answer

A) price level rises,purchasing power rises. 
B) price level falls,purchasing power rises. 
C) nation's income level rises,purchasing power rises. 
D) nation's income level rises,purchasing power falls. 
E) This is a trick question,because the AD curve is upward sloping. 
A) price level rises,purchasing power rises. 
B) price level falls,purchasing power rises. 
C) nation's income level rises,purchasing power rises. 
D) nation's income level rises,purchasing power falls. 
E) This is a trick question,because the AD curve is upward sloping.

Question 11

A fall in the price level changes the purchasing power of money.This is relevant to the __________ effect.

Accepted Answer

A) international trade 
B) real balance 
C) aggregate demand 
D) interest rate 
E) aggregate supply 
A) international trade 
B) real balance 
C) aggregate demand 
D) interest rate 
E) aggregate supply

Question 12

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 13

If wages are "sticky",a decline in the price level will

Accepted Answer

A) raise the real wage and lower the quantity demanded of labor. 
B) lower the real wage and lower the quantity supplied of labor. 
C) raise the real wage and lower the quantity supplied of labor. 
D) a and b 
E) none of the above 
A) raise the real wage and lower the quantity demanded of labor. 
B) lower the real wage and lower the quantity supplied of labor. 
C) raise the real wage and lower the quantity supplied of labor. 
D) a and b 
E) none of the above

Question 14

Suppose a drop in prices in the stock market makes people feel less financially secure.This would cause __________ the economy's AD curve.

Accepted Answer

A) movement down along 
B) movement up along 
C) a rightward shift of 
D) a leftward shift of 
A) movement down along 
B) movement up along 
C) a rightward shift of 
D) a leftward shift of

Question 15

Short-run equilibrium exists

Accepted Answer

A) where the AD curve intersects the short-run aggregate supply (SRAS)curve. 
B) where the AD curve intersects the long-run aggregate supply (LRAS)curve. 
C) on the AD curve only. 
D) on the SRAS curve only. 
A) where the AD curve intersects the short-run aggregate supply (SRAS)curve. 
B) where the AD curve intersects the long-run aggregate supply (LRAS)curve. 
C) on the AD curve only. 
D) on the SRAS curve only.

Question 16

Exhibit 8-3  
-Refer to Exhibit 8-3.A shift in aggregate demand from AD1 to AD2 could have been the result of

Accepted Answer

A) a decrease in the price level. 
B) an increase in the price level. 
C) an increase in foreign real national income. 
D) a decrease in foreign real national income. 
A) a decrease in the price level. 
B) an increase in the price level. 
C) an increase in foreign real national income. 
D) a decrease in foreign real national income.

Question 17

The short-run aggregate supply curve shows the various amounts of real output that producers are willing to

Accepted Answer

A) sell at different profit levels. 
B) sell at different price levels. 
C) buy at different income levels. 
D) buy at different price levels. 
A) sell at different profit levels. 
B) sell at different price levels. 
C) buy at different income levels. 
D) buy at different price levels.

Question 18

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 19

__________ identifies the level of Real GDP the economy produces when all economywide adjustments have taken place and there are no misperceptions on the part of workers.

Accepted Answer

A) Short-run equilibrium 
B) Disequilibrium 
C) Long-run equilibrium 
D) Equilibrium 
E) none of the above 
A) Short-run equilibrium 
B) Disequilibrium 
C) Long-run equilibrium 
D) Equilibrium 
E) none of the above

Question 20

The interest rate effect is one of the

Accepted Answer

A) reasons why an AD curve is downward-sloping. 
B) shifters of an AD curve. 
C) reasons why a short-run aggregate supply curve can be derived. 
D) shifters of a short-run aggregate supply curve. 
A) reasons why an AD curve is downward-sloping. 
B) shifters of an AD curve. 
C) reasons why a short-run aggregate supply curve can be derived. 
D) shifters of a short-run aggregate supply curve.

Exam 8: Aggregate Demand and Aggregate Supply

A short-run aggregate supply curve shows the

Which of the following statements is false?

Which of the following best describes how the real balance effect works?

A rise in foreign real national income tends to raise U.S.__________,shifting the U.S.AD curve to the __________.

If foreign input prices increase and the United States is a purchaser of those inputs,then the U.S.

A decrease in the price level

Assume that the economy is currently in short-run equilibrium,then personal income taxes decline.Describe the correct sequence of events that happen as the economy adjusts to a new short-run equilibrium (be sure to state what the impact would be on the price level and Real GDP).

Foreign real national income rises.This raises U.S.___________ which ________ aggregate demand (AD).The AD curve shifts ___________ as a result.

One of the reasons why the AD curve slopes downward is that as the

A fall in the price level changes the purchasing power of money.This is relevant to the __________ effect.

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

If wages are "sticky",a decline in the price level will

Suppose a drop in prices in the stock market makes people feel less financially secure.This would cause __________ the economy's AD curve.

Short-run equilibrium exists

Exhibit 8-3 -Refer to Exhibit 8-3.A shift in aggregate demand from AD1 to AD2 could have been the result of

The short-run aggregate supply curve shows the various amounts of real output that producers are willing to

Individuals' expectations of lower future prices is a

__________ identifies the level of Real GDP the economy produces when all economywide adjustments have taken place and there are no misperceptions on the part of workers.

The interest rate effect is one of the

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, controlled, and Relative

Supply,demand,and Price: Applications

Macroeconomic Measurements, part I: Prices and Unemployment

Macroeconomic Measurements, part II: GDP and Real GDP

Classical Macroeconomics and the Self-Regulating Economy

Keynesian Macroeconomics and Economic Instability: a Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money,banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, technology, ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

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

Globalization and International Impacts on the Economy

The Economic Case for and Against Government: Five Topics Considered

Stocks, bonds, futures, and Options

Filters

A rise in foreign real national income tends to raise U.S.,shifting the U.S.AD curve to the .

Foreign real national income rises.This raises U.S._ which aggregate demand (AD).The AD curve shifts _ as a result.

Exhibit 8-3 -Refer to Exhibit 8-3.A shift in aggregate demand from AD₁ to AD₂ could have been the result of