Question 1

If consumption increases,

Accepted Answer

A) the SRAS curve will shift rightward,which will push the price level up. 
B) the SRAS curve will shift leftward,which will push the price level up. 
C) the AD curve will shift leftward,which will push the price level down. 
D) the AD curve will shift rightward,which will push the price level up. 
A) the SRAS curve will shift rightward,which will push the price level up. 
B) the SRAS curve will shift leftward,which will push the price level up. 
C) the AD curve will shift leftward,which will push the price level down. 
D) the AD curve will shift rightward,which will push the price level up.

Question 2

An increase 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) a and c 
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) a and c

Question 3

Part of the story of the interest rate effect is that a lower price level causes __________ in the demand for credit,which then causes the interest rate to __________.

Accepted Answer

A) a decrease;fall 
B) a decrease;rise 
C) an increase;fall 
D) an increase;rise 
A) a decrease;fall 
B) a decrease;rise 
C) an increase;fall 
D) an increase;rise

Question 4

Which set of changes is definitely predicted to lower Real GDP in the short run?

Accepted Answer

A) Interest rates rise and wage rates fall. 
B) Interest rates rise and there is a beneficial supply shock. 
C) Interest rates rise and labor productivity increases. 
D) Interest rates rise and individuals expect lower (future)incomes. 
E) c and d 
A) Interest rates rise and wage rates fall. 
B) Interest rates rise and there is a beneficial supply shock. 
C) Interest rates rise and labor productivity increases. 
D) Interest rates rise and individuals expect lower (future)incomes. 
E) c and d

Question 5

Exhibit 8-1  
-Refer to Exhibit 8-2.Based on the given change,what word (rises or falls)should go in blank (7)and blank (8),respectively,to summarize the resulting impact on short run equilibrium?

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 6

Which of the following will not lead to a leftward shift in the SRAS curve?

Accepted Answer

A) an increase in wage rates 
B) an increase in the prices of nonlabor inputs 
C) an increase in productivity 
D) an adverse supply shock 
A) an increase in wage rates 
B) an increase in the prices of nonlabor inputs 
C) an increase in productivity 
D) an adverse supply shock

Question 7

Suppose the real exchange rate of 105 Japanese yen to the dollar changes to 115 yen to the dollar.In this situation,the dollar has _________________,making Japanese goods __________ expensive for Americans.

Accepted Answer

A) appreciated;less 
B) appreciated;more 
C) depreciated;less 
D) depreciated;more 
A) appreciated;less 
B) appreciated;more 
C) depreciated;less 
D) depreciated;more

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

The interest rate effect occurs because a change in interest rates causes a change in the price level.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) a decrease in the price level. 
B) an increase in the price level. 
C) businesses become more optimistic about future sales. 
D) businesses become more pessimistic about future sales. 
A) a decrease in the price level. 
B) an increase in the price level. 
C) businesses become more optimistic about future sales. 
D) businesses become more pessimistic about future sales.

Question 11

If labor productivity rises at the same time that there is a beneficial supply shock,what is the effect on short-run aggregate supply (SRAS)?

Accepted Answer

A) SRAS rises. 
B) SRAS falls. 
C) SRAS remains constant. 
D) SRAS may rise,fall,or remain constant. 
A) SRAS rises. 
B) SRAS falls. 
C) SRAS remains constant. 
D) SRAS may rise,fall,or remain constant.

Question 12

If velocity and the money supply are __________________,then when one component of spending rises another component of spending ________________.

Accepted Answer

A) constant;must fall 
B) constant;must rise 
C) rising;may not necessarily fall 
D) rising;must rise 
A) constant;must fall 
B) constant;must rise 
C) rising;may not necessarily fall 
D) rising;must rise

Question 13

The aggregate demand (AD)curve is the graphical representation of production in the short run.

Accepted Answer

A) True 
 B)False

Question 14

If consumption changes because of a change in the price level,then the

Accepted Answer

A) economy moves from one point on an AD curve to another point on the same curve. 
B) AD curve shifts. 
C) economy moves from one point on a SRAS curve to another point on the same curve. 
D) SRAS curve shifts. 
E) none of the above 
A) economy moves from one point on an AD curve to another point on the same curve. 
B) AD curve shifts. 
C) economy moves from one point on a SRAS curve to another point on the same curve. 
D) SRAS curve shifts. 
E) none of the above

Question 15

Suppose consumption decreases at each price level.As a result,aggregate demand __________,and the AD curve shifts __________.

Accepted Answer

A) increases;leftward 
B) decreases;leftward 
C) increases;rightward 
D) decreases;rightward 
A) increases;leftward 
B) decreases;leftward 
C) increases;rightward 
D) decreases;rightward

Question 16

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

Accepted Answer

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

Question 17

As the interest rate rises,businesses invest __________ and the AD curve shifts to the __________.

Accepted Answer

A) more;right 
B) more;left 
C) less;right 
D) less;left 
A) more;right 
B) more;left 
C) less;right 
D) less;left

Question 18

A business firm's profitability is based in part on the

Accepted Answer

A) prices of their nonlabor inputs. 
B) productivity of their workers. 
C) wage rates they must pay their workers. 
D) business taxes they must pay. 
E) all of the above 
A) prices of their nonlabor inputs. 
B) productivity of their workers. 
C) wage rates they must pay their workers. 
D) business taxes they must pay. 
E) all of the above

Question 19

List and describe the three effects that help to explain why the aggregate demand (AD)curve slopes downward.

Accepted Answer

If the AD curve slopes downward,it means

Question 20

The real balance 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

If consumption increases,

An increase in the price level

Part of the story of the interest rate effect is that a lower price level causes __________ in the demand for credit,which then causes the interest rate to __________.

Which set of changes is definitely predicted to lower Real GDP in the short run?

Exhibit 8-1 -Refer to Exhibit 8-2.Based on the given change,what word (rises or falls)should go in blank (7)and blank (8),respectively,to summarize the resulting impact on short run equilibrium?

Which of the following will not lead to a leftward shift in the SRAS curve?

Suppose the real exchange rate of 105 Japanese yen to the dollar changes to 115 yen to the dollar.In this situation,the dollar has _________________,making Japanese goods __________ expensive for Americans.

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

The interest rate effect occurs because a change in interest rates causes a change in the price level.

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

If labor productivity rises at the same time that there is a beneficial supply shock,what is the effect on short-run aggregate supply (SRAS)?

If velocity and the money supply are __________________,then when one component of spending rises another component of spending ________________.

The aggregate demand (AD)curve is the graphical representation of production in the short run.

If consumption changes because of a change in the price level,then the

Suppose consumption decreases at each price level.As a result,aggregate demand __________,and the AD curve shifts __________.

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

As the interest rate rises,businesses invest __________ and the AD curve shifts to the __________.

A business firm's profitability is based in part on the

List and describe the three effects that help to explain why the aggregate demand (AD)curve slopes downward.

The real balance 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

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Part of the story of the interest rate effect is that a lower price level causes in the demand for credit,which then causes the interest rate to .

Suppose the real exchange rate of 105 Japanese yen to the dollar changes to 115 yen to the dollar.In this situation,the dollar has _______,making Japanese goods expensive for Americans.

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

If velocity and the money supply are __,then when one component of spending rises another component of spending .

Suppose consumption decreases at each price level.As a result,aggregate demand ,and the AD curve shifts .

As the interest rate rises,businesses invest and the AD curve shifts to the .