Question 1

An economic policy initiative results in the AD curve shifting to the right.As a result,

Accepted Answer

A) the price level will rise. 
B) the price level will stay constant. 
C) the price level will fall. 
D) Real GDP will rise in the short run. 
E) a and d 
A) the price level will rise. 
B) the price level will stay constant. 
C) the price level will fall. 
D) Real GDP will rise in the short run. 
E) a and d

Question 2

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

Accepted Answer

A) shortage exists and consumers will bid the price level up. 
B) surplus exists and consumers will bid the price level up. 
C) surplus exists and the price level will decline. 
D) shortage exists and the price level will decline. 
E) c and d 
A) shortage exists and consumers will bid the price level up. 
B) surplus exists and consumers will bid the price level up. 
C) surplus exists and the price level will decline. 
D) shortage exists and the price level will decline. 
E) c and d

Question 3

Exhibit 8-4  
-Refer to Exhibit 8-4.Which of the following could not have caused a shift in aggregate supply from SRAS1 to SRAS2?

Accepted Answer

A) an increase in productivity 
B) a beneficial supply shock 
C) a decrease in the price of a nonlabor input 
D) a change in the price level 
E) a decrease in wage rates 
A) an increase in productivity 
B) a beneficial supply shock 
C) a decrease in the price of a nonlabor input 
D) a change in the price level 
E) a decrease in wage rates

Question 4

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

Question 5

Assume that the economy is currently in short-run equilibrium,then the U.S.dollar appreciates in the foreign exchange market.Describe the correct sequence of events that happens as the economy adjusts to a new short-run equilibrium.

Accepted Answer

As the dollar appreciates,foreign goods

Question 6

Suppose the real exchange rate of 115 Japanese yen to the dollar changes to 105 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 7

Exhibit 8-3  
-Refer to Exhibit 8-3.Which of the following could not have caused a shift in aggregate demand from AD1 to AD2?

Accepted Answer

A) a change in the price level 
B) an increase in wealth 
C) an increase in foreign real national income 
D) a decrease in personal income taxes 
E) a decrease in business taxes 
A) a change in the price level 
B) an increase in wealth 
C) an increase in foreign real national income 
D) a decrease in personal income taxes 
E) a decrease in business taxes

Question 8

If investment changes because of a change in a factor other than 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 short-run aggregate supply (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 short-run aggregate supply (SRAS)curve to another point on the same curve. 
D) SRAS curve shifts. 
E) none of the above

Question 9

Which of the following statements is false?

Accepted Answer

A) The exchange rate is the price of one (country's)currency in terms of another (country's)currency. 
B) A currency has appreciated in value if more of a foreign currency is needed to buy it. 
C) A change in the money supply can change aggregate demand. 
D) A change in business taxes can change investment,which can change aggregate demand. 
E) none of the above 
A) The exchange rate is the price of one (country's)currency in terms of another (country's)currency. 
B) A currency has appreciated in value if more of a foreign currency is needed to buy it. 
C) A change in the money supply can change aggregate demand. 
D) A change in business taxes can change investment,which can change aggregate demand. 
E) none of the above

Question 10

Exhibit 8-3  
-Refer to Exhibit 8-3.A movement from point B to point A on AD1 would 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 11

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) a decrease in interest rates (which was not prompted by a change in the price level). 
D) an increase in interest rates (which was not prompted by a change in the price level). 
A) a decrease in the price level. 
B) an increase in the price level. 
C) a decrease in interest rates (which was not prompted by a change in the price level). 
D) an increase in interest rates (which was not prompted by a change in the price level).

Question 12

Which of the following statements represents a correct and sequentially accurate economic explanation?

Accepted Answer

A) The (U.S. )dollar appreciates,net exports rise,total expenditures on goods and services rises,AD rises,and the AD curve shifts rightward. 
B) The interest rate falls,investment rises,total expenditures on goods and services rises,AD falls,and the AD curve shifts leftward. 
C) Wealth increases,consumption rises,total expenditures on goods and services rises,AD falls,and the AD curve shifts rightward. 
D) (Business)expectations about future sales become more positive,investment rises,total expenditures on goods and services rises,AD rises,and the AD curve shifts rightward. 
E) Foreign real national income rises,net exports rise,total expenditures on goods and services falls,AD rises,and the AD curve shifts rightward. 
A) The (U.S. )dollar appreciates,net exports rise,total expenditures on goods and services rises,AD rises,and the AD curve shifts rightward. 
B) The interest rate falls,investment rises,total expenditures on goods and services rises,AD falls,and the AD curve shifts leftward. 
C) Wealth increases,consumption rises,total expenditures on goods and services rises,AD falls,and the AD curve shifts rightward. 
D) (Business)expectations about future sales become more positive,investment rises,total expenditures on goods and services rises,AD rises,and the AD curve shifts rightward. 
E) Foreign real national income rises,net exports rise,total expenditures on goods and services falls,AD rises,and the AD curve shifts rightward.

Question 13

The real balance effect describes the change in

Accepted Answer

A) checking account balances that occur when the money supply increases or decreases. 
B) the value of physical assets (e.g. ,houses)that results from a change in the price level. 
C) the output producers produce as they attempt to balance their production in response to changes in consumers' demand. 
D) the value of cash holdings that results from a change in the price level. 
E) the balance of cash holdings that results from a change in the amount of income earned. 
A) checking account balances that occur when the money supply increases or decreases. 
B) the value of physical assets (e.g. ,houses)that results from a change in the price level. 
C) the output producers produce as they attempt to balance their production in response to changes in consumers' demand. 
D) the value of cash holdings that results from a change in the price level. 
E) the balance of cash holdings that results from a change in the amount of income earned.

Question 14

An aggregate demand (AD)curve shows the

Accepted Answer

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

Question 15

A depreciation of the U.S.dollar against foreign currencies tends to __________ U.S.net exports and shift the U.S.AD curve to the __________.

Accepted Answer

A) raise;right 
B) raise;left 
C) lower;right 
D) lower;left 
A) raise;right 
B) raise;left 
C) lower;right 
D) lower;left

Question 16

A decrease in consumption caused by a factor other than a change 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 17

As the price level falls,ceteris paribus,people holding some of their wealth in monetary form become

Accepted Answer

A) less wealthy and they buy less. 
B) more wealthy and they buy more. 
C) less wealthy and they buy more. 
D) more wealthy and they buy less. 
A) less wealthy and they buy less. 
B) more wealthy and they buy more. 
C) less wealthy and they buy more. 
D) more wealthy and they buy less.

Question 18

The product of ____________________ and _________________ is equal to the total amount of spending in an economy.

Accepted Answer

A) the money supply;the price level 
B) velocity;the price level 
C) the money supply;velocity 
D) velocity;the level of output 
A) the money supply;the price level 
B) velocity;the price level 
C) the money supply;velocity 
D) velocity;the level of output

Question 19

Ceteris paribus,Real GDP and the unemployment rate are

Accepted Answer

A) directly related. 
B) inversely related. 
C) unrelated. 
D) directly related when GDP is below its natural level and inversely related when GDP is above its natural level. 
A) directly related. 
B) inversely related. 
C) unrelated. 
D) directly related when GDP is below its natural level and inversely related when GDP is above its natural level.

Question 20

Exhibit 8-4  
-Refer to Exhibit 8-4.A shift in short-run aggregate supply from SRAS1 to SRAS2 could have been the result of

Accepted Answer

A) a decrease in the price level. 
B) an increase in the price level. 
C) an adverse supply shock. 
D) a beneficial supply shock. 
A) a decrease in the price level. 
B) an increase in the price level. 
C) an adverse supply shock. 
D) a beneficial supply shock.

Exam 8: Aggregate Demand and Aggregate Supply

An economic policy initiative results in the AD curve shifting to the right.As a result,

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

Exhibit 8-4 -Refer to Exhibit 8-4.Which of the following could not have caused a shift in aggregate supply from SRAS1 to SRAS2?

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?

Assume that the economy is currently in short-run equilibrium,then the U.S.dollar appreciates in the foreign exchange market.Describe the correct sequence of events that happens as the economy adjusts to a new short-run equilibrium.

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

Exhibit 8-3 -Refer to Exhibit 8-3.Which of the following could not have caused a shift in aggregate demand from AD1 to AD2?

If investment changes because of a change in a factor other than the price level,then the

Which of the following statements is false?

Exhibit 8-3 -Refer to Exhibit 8-3.A movement from point B to point A on AD1 would have been the result of

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

Which of the following statements represents a correct and sequentially accurate economic explanation?

The real balance effect describes the change in

An aggregate demand (AD)curve shows the

A depreciation of the U.S.dollar against foreign currencies tends to __________ U.S.net exports and shift the U.S.AD curve to the __________.

A decrease in consumption caused by a factor other than a change in the price level

As the price level falls,ceteris paribus,people holding some of their wealth in monetary form become

The product of ____________________ and _________________ is equal to the total amount of spending in an economy.

Ceteris paribus,Real GDP and the unemployment rate are

Exhibit 8-4 -Refer to Exhibit 8-4.A shift in short-run aggregate supply from SRAS1 to SRAS2 could have been the result of

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

Exhibit 8-4 -Refer to Exhibit 8-4.Which of the following could not have caused a shift in aggregate supply from SRAS₁ to SRAS₂?

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

Exhibit 8-3 -Refer to Exhibit 8-3.Which of the following could not have caused a shift in aggregate demand from AD₁ to AD₂?

Exhibit 8-3 -Refer to Exhibit 8-3.A movement from point B to point A on AD₁ would have been the result of

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

A depreciation of the U.S.dollar against foreign currencies tends to U.S.net exports and shift the U.S.AD curve to the .

The product of ____ and _ is equal to the total amount of spending in an economy.

Exhibit 8-4 -Refer to Exhibit 8-4.A shift in short-run aggregate supply from SRAS₁ to SRAS₂ could have been the result of