Question 1

When wage rates rise the short-run aggregate supply curve shifts to the right.

Accepted Answer

A) True 
 B)False

Question 2

There is a rise in labor productivity in the economy.As a result,in the short run Real GDP __________ and the price level __________.

Accepted Answer

A) rises;falls 
B) falls;rises 
C) falls;falls 
D) rises;rises 
E) remains constant;remains constant 
A) rises;falls 
B) falls;rises 
C) falls;falls 
D) rises;rises 
E) remains constant;remains constant

Question 3

Suppose that a worker has the option of being paid in euros or dollars.It would be to the workers advantage if his employer pays him in ____________ rather than ______________ if the worker believes that the value of the dollar is about to ____________ relative to the value of the euro.

Accepted Answer

A) euros;dollars;fall 
B) dollars;euros;rise 
C) euros;dollars;rise 
D) dollars;euros;fall 
E) ​a and b 
A) euros;dollars;fall 
B) dollars;euros;rise 
C) euros;dollars;rise 
D) dollars;euros;fall 
E) ​a and b

Question 4

Starting from short-run equilibrium,the following occurs: personal income taxes rise and foreign real national income rises.What is the effect on the price level and Real GDP in the short run?

Accepted Answer

A) The price level rises and Real GDP falls. 
B) The price level falls and Real GDP falls. 
C) The price level rises and Real GDP rises. 
D) The price level falls and Real GDP rises. 
E) There is not enough information to answer this question. 
A) The price level rises and Real GDP falls. 
B) The price level falls and Real GDP falls. 
C) The price level rises and Real GDP rises. 
D) The price level falls and Real GDP rises. 
E) There is not enough information to answer this question.

Question 5

Exhibit 8-1  
-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If businesses become more optimistic about future sales,at which point is the economy most likely to end up in the short run?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 6

Which of the following statements is false?

Accepted Answer

A) Aggregate demand is a specific dollar amount,such as $400 billion. 
B) At a given price level,anything that changes total expenditures changes aggregate demand. 
C) Total expenditures rises if consumption rises,ceteris paribus. 
D) Total expenditures rises if investment spending rises,ceteris paribus. 
A) Aggregate demand is a specific dollar amount,such as $400 billion. 
B) At a given price level,anything that changes total expenditures changes aggregate demand. 
C) Total expenditures rises if consumption rises,ceteris paribus. 
D) Total expenditures rises if investment spending rises,ceteris paribus.

Question 7

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

Accepted Answer

A) If consumption falls,total expenditures on goods and services rises,and the AD curve shifts leftward. 
B) If investment increases,total expenditures on goods and services falls,and the AD curve shifts leftward. 
C) If net exports rise,total expenditures on goods and services rises,and the AD curve shifts rightward. 
D) If consumption falls,total expenditures on goods and services falls,and the AD curve shifts leftward. 
E) c and d 
A) If consumption falls,total expenditures on goods and services rises,and the AD curve shifts leftward. 
B) If investment increases,total expenditures on goods and services falls,and the AD curve shifts leftward. 
C) If net exports rise,total expenditures on goods and services rises,and the AD curve shifts rightward. 
D) If consumption falls,total expenditures on goods and services falls,and the AD curve shifts leftward. 
E) c and d

Question 8

If total expenditures fall at a given price level,then the

Accepted Answer

A) quantity demanded of Real GDP rises. 
B) quantity demanded of Real GDP falls. 
C) AD curves shifts to the right. 
D) AD curve shifts to the left. 
E) none of the above 
A) quantity demanded of Real GDP rises. 
B) quantity demanded of Real GDP falls. 
C) AD curves shifts to the right. 
D) AD curve shifts to the left. 
E) none of the above

Question 9

In the short run,an increase in investment,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 10

Unusually good weather that improves crop production and a major oil discovery are both examples of a beneficial supply shock.

Accepted Answer

A) True 
 B)False

Question 11

Business optimism about future sales tends to __________ investment expenditures,shifting the AD curve to the __________.

Accepted Answer

A) increase;left 
B) increase;right 
C) decrease;left 
D) decrease;right 
A) increase;left 
B) increase;right 
C) decrease;left 
D) decrease;right

Question 12

Individuals' expectations of higher future income 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 13

An increase in the price of nonlabor inputs

Accepted Answer

A) shifts the AD curve leftward. 
B) shifts the SRAS curve leftward. 
C) is the same thing as a beneficial supply shock. 
D) shifts the AD curve rightward. 
E) shifts the SRAS curve rightward. 
A) shifts the AD curve leftward. 
B) shifts the SRAS curve leftward. 
C) is the same thing as a beneficial supply shock. 
D) shifts the AD curve rightward. 
E) shifts the SRAS curve rightward.

Question 14

Suppose the following: (1)the wage rate falls, (2)business taxes decline, (3)any change in SRAS is greater than any change in AD.Based on this information,in the short run Real GDP will __________ and the price level will __________.

Accepted Answer

A) rise;rise 
B) fall;rise 
C) fall;fall 
D) rise;fall 
E) none of the above 
A) rise;rise 
B) fall;rise 
C) fall;fall 
D) rise;fall 
E) none of the above

Question 15

Exhibit 8-1  
-Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A If unusually bad weather leads to decreased production of wheat,corn,and other crops,at which point is the economy most likely to end up in the short run?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 16

If velocity is rising,an increase in one spending component can occur without requiring other spending components to decline.

Accepted Answer

A) True 
 B)False

Question 17

As interest rates drop,households tend to borrow more and businesses tend to borrow less.

Accepted Answer

A) True 
 B)False

Question 18

The dollar appreciates against foreign currencies.This makes foreign-produced goods __________ for Americans and U.S.-produced goods __________ for foreigners.As a result,U.S.__________ fall and U.S.__________ rise.

Accepted Answer

A) more expensive;cheaper;imports;exports 
B) cheaper;more expensive;exports;imports 
C) cheaper;more expensive;imports;exports 
D) more expensive;cheaper;exports;imports 
A) more expensive;cheaper;imports;exports 
B) cheaper;more expensive;exports;imports 
C) cheaper;more expensive;imports;exports 
D) more expensive;cheaper;exports;imports

Question 19

The level of Real GDP and the price level always have a direct relationship.

Accepted Answer

A) True 
 B)False

Question 20

Suppose Americans buy inputs from foreigners.When the price of foreign inputs falls,the U.S.SRAS curve __________,which tends to __________the U.S.price level.

Accepted Answer

A) shifts rightward;reduce 
B) shifts leftward;increase 
C) shifts leftward;reduce 
D) remains constant;increase 
A) shifts rightward;reduce 
B) shifts leftward;increase 
C) shifts leftward;reduce 
D) remains constant;increase

Exam 8: Aggregate Demand and Aggregate Supply

When wage rates rise the short-run aggregate supply curve shifts to the right.

There is a rise in labor productivity in the economy.As a result,in the short run Real GDP __________ and the price level __________.

Suppose that a worker has the option of being paid in euros or dollars.It would be to the workers advantage if his employer pays him in ____________ rather than ______________ if the worker believes that the value of the dollar is about to ____________ relative to the value of the euro.

Starting from short-run equilibrium,the following occurs: personal income taxes rise and foreign real national income rises.What is the effect on the price level and Real GDP in the short run?

Exhibit 8-1 -Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If businesses become more optimistic about future sales,at which point is the economy most likely to end up in the short run?

Which of the following statements is false?

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

If total expenditures fall at a given price level,then the

In the short run,an increase in investment,ceteris paribus,shifts the

Unusually good weather that improves crop production and a major oil discovery are both examples of a beneficial supply shock.

Business optimism about future sales tends to __________ investment expenditures,shifting the AD curve to the __________.

Individuals' expectations of higher future income is a

An increase in the price of nonlabor inputs

Suppose the following: (1)the wage rate falls, (2)business taxes decline, (3)any change in SRAS is greater than any change in AD.Based on this information,in the short run Real GDP will __________ and the price level will __________.

Exhibit 8-1 -Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A If unusually bad weather leads to decreased production of wheat,corn,and other crops,at which point is the economy most likely to end up in the short run?

If velocity is rising,an increase in one spending component can occur without requiring other spending components to decline.

As interest rates drop,households tend to borrow more and businesses tend to borrow less.

The dollar appreciates against foreign currencies.This makes foreign-produced goods __________ for Americans and U.S.-produced goods __________ for foreigners.As a result,U.S.__________ fall and U.S.__________ rise.

The level of Real GDP and the price level always have a direct relationship.

Suppose Americans buy inputs from foreigners.When the price of foreign inputs falls,the U.S.SRAS curve __________,which tends to __________the U.S.price level.

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

There is a rise in labor productivity in the economy.As a result,in the short run Real GDP and the price level .

Suppose that a worker has the option of being paid in euros or dollars.It would be to the workers advantage if his employer pays him in rather than if the worker believes that the value of the dollar is about to __ relative to the value of the euro.

Business optimism about future sales tends to investment expenditures,shifting the AD curve to the .

Suppose the following: (1)the wage rate falls, (2)business taxes decline, (3)any change in SRAS is greater than any change in AD.Based on this information,in the short run Real GDP will and the price level will .

The dollar appreciates against foreign currencies.This makes foreign-produced goods for Americans and U.S.-produced goods for foreigners.As a result,U.S. fall and U.S. rise.

Suppose Americans buy inputs from foreigners.When the price of foreign inputs falls,the U.S.SRAS curve ,which tends to the U.S.price level.