Question 1

As the U.S.dollar appreciates and the Japanese yen depreciates,

Accepted Answer

A) U.S.-produced goods become more expensive for the Japanese and Japanese-produced goods become cheaper for Americans. 
B) U.S.-produced goods become cheaper for the Japanese and Japanese-produced goods become more expensive for Americans. 
C) U.S.-produced goods become cheaper for both the Japanese and Americans. 
D) Japanese-produced goods become more expensive for both the Japanese and Americans. 
E) none of the above 
A) U.S.-produced goods become more expensive for the Japanese and Japanese-produced goods become cheaper for Americans. 
B) U.S.-produced goods become cheaper for the Japanese and Japanese-produced goods become more expensive for Americans. 
C) U.S.-produced goods become cheaper for both the Japanese and Americans. 
D) Japanese-produced goods become more expensive for both the Japanese and Americans. 
E) none of the above

Question 2

In a two-country world,a decrease in foreign input prices,ceteris paribus,

Accepted Answer

A) shifts the SRAS curve leftward,causing the price level to increase. 
B) shifts the SRAS curve leftward,causing the price level to decrease. 
C) shifts the SRAS curve rightward,causing the price level to increase. 
D) shifts the SRAS curve rightward,causing the price level to decrease. 
E) does not affect the SRAS curve or the price level. 
A) shifts the SRAS curve leftward,causing the price level to increase. 
B) shifts the SRAS curve leftward,causing the price level to decrease. 
C) shifts the SRAS curve rightward,causing the price level to increase. 
D) shifts the SRAS curve rightward,causing the price level to decrease. 
E) does not affect the SRAS curve or the price level.

Question 3

As income taxes rise,disposable income __________,causing __________ the AD curve.

Accepted Answer

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

Question 4

The economy suffers an adverse supply shock.As a result,in the short run Real GDP will __________ and the price level will __________.

Accepted Answer

A) rise;rise 
B) fall;fall 
C) fall;remain constant 
D) fall;rise 
E) rise;fall 
A) rise;rise 
B) fall;fall 
C) fall;remain constant 
D) fall;rise 
E) rise;fall

Question 5

Some of the factors that can shift the short-run aggregate supply curve can also cause a shift in the long-run aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 6

The wage rate rises.As a result,in the short run Real GDP will __________ and the price level will __________.

Accepted Answer

A) rise;rise 
B) fall;fall 
C) remain constant;fall 
D) fall;rise 
E) rise;fall 
A) rise;rise 
B) fall;fall 
C) remain constant;fall 
D) fall;rise 
E) rise;fall

Question 7

Which of the following is not a factor that can shift the short-run aggregate supply curve?

Accepted Answer

A) changes in the wage rate 
B) changes in the price of non-labor inputs such as oil 
C) changes in labor productivity 
D) a severe drought which extensively damages grain crops 
E) none of the above 
A) changes in the wage rate 
B) changes in the price of non-labor inputs such as oil 
C) changes in labor productivity 
D) a severe drought which extensively damages grain crops 
E) none of the above

Question 8

The short-run aggregate supply curve slopes upward as a result of the real balance effect,the interest rate effect,and the international trade effect.

Accepted Answer

A) True 
 B)False

Question 9

The purchases made by the foreign sector are called __________;the purchases made by the household sector are called __________;the purchases made by the government sector are called __________;and the purchases made by the business sector are called investment.

Accepted Answer

A) net exports;consumption;net interest 
B) net exports;domestic spending;government purchases 
C) net exports;consumption;government purchases 
D) exports;domestic spending;government product 
E) imports;consumption;government expenditures 
A) net exports;consumption;net interest 
B) net exports;domestic spending;government purchases 
C) net exports;consumption;government purchases 
D) exports;domestic spending;government product 
E) imports;consumption;government expenditures

Question 10

The AD curve shows that,as the price level falls the quantity of

Accepted Answer

A) GDP demanded increases. 
B) GDP demand decreases. 
C) Real GDP demanded increases. 
D) Real GDP demanded decreases. 
E) none of the above 
A) GDP demanded increases. 
B) GDP demand decreases. 
C) Real GDP demanded increases. 
D) Real GDP demanded decreases. 
E) none of the above

Question 11

Which of the following statements is false?

Accepted Answer

A) An increase in wage rates causes producers to move up along the SRAS curve. 
B) An increase in the price level causes producers to move up along the SRAS curve. 
C) The short-run aggregate supply (SRAS)curve is upward sloping. 
D) The long-run aggregate supply (LRAS)curve is vertical. 
A) An increase in wage rates causes producers to move up along the SRAS curve. 
B) An increase in the price level causes producers to move up along the SRAS curve. 
C) The short-run aggregate supply (SRAS)curve is upward sloping. 
D) The long-run aggregate supply (LRAS)curve is vertical.

Question 12

Can a change in the price level change aggregate demand?

Accepted Answer

A) Yes,as the price level rises,aggregate demand falls. 
B) Yes,but only under the condition that the real balance effect is operational. 
C) No,only a change in a factor other than the price level can change aggregate demand. 
D) No,a change in the price level can only change aggregate supply. 
E) none of the above 
A) Yes,as the price level rises,aggregate demand falls. 
B) Yes,but only under the condition that the real balance effect is operational. 
C) No,only a change in a factor other than the price level can change aggregate demand. 
D) No,a change in the price level can only change aggregate supply. 
E) none of the above

Question 13

Suppose the real exchange rate of 10 Mexican pesos to the dollar changes to 9 pesos to the dollar.In this situation,the dollar has ________________,making Mexican 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 14

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

Accepted Answer

A) If government purchases rise,total expenditures on goods and services rises,and the AD curve shifts leftward. 
B) If government purchases rise,total expenditures on goods and services rises,and the AD curve shifts rightward. 
C) If consumption rises,total expenditures on goods and services rises,and the AD curve shifts rightward. 
D) If consumption rises,total expenditures on goods and services rises,and the quantity demanded of Real GDP rises. 
E) b and c 
A) If government purchases rise,total expenditures on goods and services rises,and the AD curve shifts leftward. 
B) If government purchases rise,total expenditures on goods and services rises,and the AD curve shifts rightward. 
C) If consumption rises,total expenditures on goods and services rises,and the AD curve shifts rightward. 
D) If consumption rises,total expenditures on goods and services rises,and the quantity demanded of Real GDP rises. 
E) b and c

Question 15

The real balance effect helps to explain "a change in

Accepted Answer

A) aggregate demand." 
B) the quantity demanded of Real GDP." 
C) aggregate supply." 
D) the quantity supplied of Real GDP." 
A) aggregate demand." 
B) the quantity demanded of Real GDP." 
C) aggregate supply." 
D) the quantity supplied of Real GDP."

Question 16

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 up along the 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 up along the SRAS curve. 
C) represented by a rightward shift in the SRAS curve. 
D) both a and b 
E) both a and C

Question 17

Exhibit 8-1  
-Refer to Exhibit 8-2.Based on the given change,what word (rises or falls)should go in blank (9)and blank (10),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 18

Personal income taxes rise.This lowers __________,which lowers __________ and the __________ curve shifts __________.

Accepted Answer

A) net exports;aggregate demand (A
D) ;AD;leftward 
B) consumption;short-run aggregate supply (SRAS);SRAS;rightward 
C) government revenue;net exports;AD;rightward 
D) consumption;aggregate demand (A
D) ;AD;leftward 
E) none of the above 
A) net exports;aggregate demand (A
D) ;AD;leftward 
B) consumption;short-run aggregate supply (SRAS);SRAS;rightward 
C) government revenue;net exports;AD;rightward 
D) consumption;aggregate demand (A
D) ;AD;leftward 
E) none of the above

Question 19

If businesses are optimistic about future sales,the short-run aggregate supply curve will shift leftward.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) Wage rates rise,SRAS rises,and the SRAS curve shifts to the left. 
B) The prices of nonlabor inputs rise,SRAS decreases,and the SRAS curve shifts to the right. 
C) Labor productivity rises,SRAS increases,and the SRAS curve shifts to the right. 
D) An adverse supply shock hits,SRAS decreases,and the SRAS curve shifts to the right. 
E) a and c 
A) Wage rates rise,SRAS rises,and the SRAS curve shifts to the left. 
B) The prices of nonlabor inputs rise,SRAS decreases,and the SRAS curve shifts to the right. 
C) Labor productivity rises,SRAS increases,and the SRAS curve shifts to the right. 
D) An adverse supply shock hits,SRAS decreases,and the SRAS curve shifts to the right. 
E) a and c

Exam 8: Aggregate Demand and Aggregate Supply

As the U.S.dollar appreciates and the Japanese yen depreciates,

In a two-country world,a decrease in foreign input prices,ceteris paribus,

As income taxes rise,disposable income __________,causing __________ the AD curve.

The economy suffers an adverse supply shock.As a result,in the short run Real GDP will __________ and the price level will __________.

Some of the factors that can shift the short-run aggregate supply curve can also cause a shift in the long-run aggregate supply curve.

The wage rate rises.As a result,in the short run Real GDP will __________ and the price level will __________.

Which of the following is not a factor that can shift the short-run aggregate supply curve?

The short-run aggregate supply curve slopes upward as a result of the real balance effect,the interest rate effect,and the international trade effect.

The purchases made by the foreign sector are called __________;the purchases made by the household sector are called __________;the purchases made by the government sector are called __________;and the purchases made by the business sector are called investment.

The AD curve shows that,as the price level falls the quantity of

Which of the following statements is false?

Can a change in the price level change aggregate demand?

Suppose the real exchange rate of 10 Mexican pesos to the dollar changes to 9 pesos to the dollar.In this situation,the dollar has ________________,making Mexican goods __________ expensive for Americans.

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

The real balance effect helps to explain "a change in

An increase in short-run aggregate supply is

Exhibit 8-1 -Refer to Exhibit 8-2.Based on the given change,what word (rises or falls)should go in blank (9)and blank (10),respectively,to summarize the resulting impact on short run equilibrium?

Personal income taxes rise.This lowers __________,which lowers __________ and the __________ curve shifts __________.

If businesses are optimistic about future sales,the short-run aggregate supply curve will shift leftward.

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

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

As income taxes rise,disposable income ,causing the AD curve.

The economy suffers an adverse supply shock.As a result,in the short run Real GDP will and the price level will .

The wage rate rises.As a result,in the short run Real GDP will and the price level will .

The purchases made by the foreign sector are called ;the purchases made by the household sector are called ;the purchases made by the government sector are called __;and the purchases made by the business sector are called investment.

Suppose the real exchange rate of 10 Mexican pesos to the dollar changes to 9 pesos to the dollar.In this situation,the dollar has ______,making Mexican goods expensive for Americans.

Personal income taxes rise.This lowers ,which lowers and the curve shifts .