Question 1

The explanations for the downward slope of the aggregate demand curve say that as the price level rises,consumption,investment,and net exports all fall.

Accepted Answer

A) True 
 B)False

Question 2

According to the sticky-price theory,which statement is consistent with an unexpected fall in the price level?

Accepted Answer

A)  Some firms' prices are lower than desired,which increases their sales. 
B)  Some firms' prices are lower than desired,which depresses their sales. 
C)  Some firms' prices are higher than desired,which increases their sales. 
D)  Some firms' prices are higher than desired,which depresses their sales. 
A)  Some firms' prices are lower than desired,which increases their sales. 
B)  Some firms' prices are lower than desired,which depresses their sales. 
C)  Some firms' prices are higher than desired,which increases their sales. 
D)  Some firms' prices are higher than desired,which depresses their sales.

Question 3

In which situation would the long-run aggregate-supply curve shift right?

Accepted Answer

A)  if immigration from abroad decreases 
B)  if the capital stock decreases 
C)  if the money supply increases 
D)  if technology advances 
A)  if immigration from abroad decreases 
B)  if the capital stock decreases 
C)  if the money supply increases 
D)  if technology advances

Question 4

Which of the following measures the overall price level?

Accepted Answer

A)  the price of some particular commodity or service 
B)  the rate of inflation 
C)  the consumer price index 
D)  the nominal GDP 
A)  the price of some particular commodity or service 
B)  the rate of inflation 
C)  the consumer price index 
D)  the nominal GDP

Question 5

In the aggregate demand and aggregate supply model,when does the aggregate quantity of goods demanded decrease?

Accepted Answer

A)  when real wealth increases 
B)  when the interest rate falls 
C)  when the dollar depreciates 
D)  when stock prices fall 
A)  when real wealth increases 
B)  when the interest rate falls 
C)  when the dollar depreciates 
D)  when stock prices fall

Question 6

What impact do changes in the price of oil have on producers who use oil inputs today as compared to producers who used oil inputs during the OPEC price shock in 1973?

Accepted Answer

A)  greater impact 
B)  smaller impact 
C)  no impact 
D)  similar impact 
A)  greater impact 
B)  smaller impact 
C)  no impact 
D)  similar impact

Question 7

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

Accepted Answer

A) True 
 B)False

Question 8

What would cause prices to fall and output to rise in the short run?

Accepted Answer

A)  short-run aggregate supply shifts right 
B)  short-run aggregate supply shifts left 
C)  aggregate demand shifts right 
D)  aggregate demand shifts left 
A)  short-run aggregate supply shifts right 
B)  short-run aggregate supply shifts left 
C)  aggregate demand shifts right 
D)  aggregate demand shifts left

Question 9

Which part of real GDP fluctuate most over the course of the business cycle?

Accepted Answer

A)  consumption 
B)  government expenditures 
C)  investment 
D)  net exports 
A)  consumption 
B)  government expenditures 
C)  investment 
D)  net exports

Question 10

What was one of the major reasons why the United States was slower to recover from the 2008-2009 recession than Canada?

Accepted Answer

A)  Housing price increases in Canadian were much larger than in the United States. 
B)  Housing price increases in the United States were much larger than in Canada. 
C)  The impact of the fall in house prices on Canadian household consumption was greater. 
D)  The impact of the fall in house prices on American household consumption was greater. 
A)  Housing price increases in Canadian were much larger than in the United States. 
B)  Housing price increases in the United States were much larger than in Canada. 
C)  The impact of the fall in house prices on Canadian household consumption was greater. 
D)  The impact of the fall in house prices on American household consumption was greater.

Question 11

Some economists argue that at low levels of GDP (lower than the long-run level of output),a shift to the right in the aggregate-demand curve increases output without a significant increase in the price levels (without inflation),while at higher levels of output (above the long-run level),a shift in the aggregate-demand significantly increases the price level without much effect on output.How would an aggregate-supply curve look like according to this theory?

Accepted Answer

This theory describes an AS cu

Question 12

Suppose a fall in stock prices makes people feel less wealthy.What are the effects of this decrease in wealth?

Accepted Answer

A)  decreased consumption,shown as a movement to the left along a given aggregate-demand curve 
B)  increased consumption,shown as a movement to the right along a given aggregate-demand curve 
C)  decreased consumption,which shifts the aggregate-demand curve to the left 
D)  increased in consumption,which shifts the aggregate-demand curve to the right 
A)  decreased consumption,shown as a movement to the left along a given aggregate-demand curve 
B)  increased consumption,shown as a movement to the right along a given aggregate-demand curve 
C)  decreased consumption,which shifts the aggregate-demand curve to the left 
D)  increased in consumption,which shifts the aggregate-demand curve to the right

Question 13

Which government action will shift the aggregate demand left?

Accepted Answer

A)  a decrease in taxes 
B)  a decrease in the money supply 
C)  signing a free trade agreement 
D)  repealing an import tariff 
A)  a decrease in taxes 
B)  a decrease in the money supply 
C)  signing a free trade agreement 
D)  repealing an import tariff

Question 14

What are the effects of an increase in the price level?

Accepted Answer

A)  People hold less money,so they lend less,and the interest rate rises. 
B)  People hold less money,so they lend more,and the interest rate falls. 
C)  People hold more money,so they lend more,and the interest rate falls. 
D)  People hold more money,so they lend less,and the interest rate rises. 
A)  People hold less money,so they lend less,and the interest rate rises. 
B)  People hold less money,so they lend more,and the interest rate falls. 
C)  People hold more money,so they lend more,and the interest rate falls. 
D)  People hold more money,so they lend less,and the interest rate rises.

Question 15

Technological progress shifts the long-run aggregate-supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 16

How are the effects of an increase in the price level that is greater than expected shown in the aggregate demand and aggregate supply model?

Accepted Answer

A)  by shifting the short-run aggregate-supply curve right 
B)  by shifting the short-run aggregate-supply curve left 
C)  by moving to the right along a given aggregate-supply curve 
D)  by moving to the left along a given aggregate-supply curve 
A)  by shifting the short-run aggregate-supply curve right 
B)  by shifting the short-run aggregate-supply curve left 
C)  by moving to the right along a given aggregate-supply curve 
D)  by moving to the left along a given aggregate-supply curve

Question 17

Which of the following shifts the short-run aggregate supply to the right?

Accepted Answer

A)  an increase in the minimum wage 
B)  an increase in immigration from abroad 
C)  an increase in the price of oil 
D)  an increase in the actual price level 
A)  an increase in the minimum wage 
B)  an increase in immigration from abroad 
C)  an increase in the price of oil 
D)  an increase in the actual price level

Question 18

What was one of the major reasons why the United States was slower to recover from the 2008-2009 recession than Canada?

Accepted Answer

A)  Housing price declines in Canadian were much larger than in the United States. 
B)  Housing price declines in the United States were much larger than in Canada. 
C)  The impact of the rise in house prices on Canadian household consumption was greater. 
D)  The impact of the rise in house prices on American household consumption was greater. 
A)  Housing price declines in Canadian were much larger than in the United States. 
B)  Housing price declines in the United States were much larger than in Canada. 
C)  The impact of the rise in house prices on Canadian household consumption was greater. 
D)  The impact of the rise in house prices on American household consumption was greater.

Question 19

What are the recessions of the 1970s often most attributed to?

Accepted Answer

A)  OPEC increasing oil production 
B)  an increase in oil prices 
C)  declines in the price of stock 
D)  decreases in the money supply 
A)  OPEC increasing oil production 
B)  an increase in oil prices 
C)  declines in the price of stock 
D)  decreases in the money supply

Question 20

Figure 14-1    
-Refer to the Figure 14-1.How would an increase in the money supply move the economy in the long run?

Accepted Answer

A)  from C to A 
B)  from C to B 
C)  from C to A to C again 
D)  from C to D 
A)  from C to A 
B)  from C to B 
C)  from C to A to C again 
D)  from C to D

The explanations for the downward slope of the aggregate demand curve say that as the price level rises,consumption,investment,and net exports all fall.

According to the sticky-price theory,which statement is consistent with an unexpected fall in the price level?

In which situation would the long-run aggregate-supply curve shift right?

Which of the following measures the overall price level?

In the aggregate demand and aggregate supply model,when does the aggregate quantity of goods demanded decrease?

What impact do changes in the price of oil have on producers who use oil inputs today as compared to producers who used oil inputs during the OPEC price shock in 1973?

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

What would cause prices to fall and output to rise in the short run?

Which part of real GDP fluctuate most over the course of the business cycle?

What was one of the major reasons why the United States was slower to recover from the 2008-2009 recession than Canada?

Suppose a fall in stock prices makes people feel less wealthy.What are the effects of this decrease in wealth?

Which government action will shift the aggregate demand left?

What are the effects of an increase in the price level?

Technological progress shifts the long-run aggregate-supply curve to the right.

How are the effects of an increase in the price level that is greater than expected shown in the aggregate demand and aggregate supply model?

Which of the following shifts the short-run aggregate supply to the right?

What was one of the major reasons why the United States was slower to recover from the 2008-2009 recession than Canada?

What are the recessions of the 1970s often most attributed to?

Figure 14-1 -Refer to the Figure 14-1.How would an increase in the money supply move the economy in the long run?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 14: Aggregate Demand and Aggregate Supply

The explanations for the downward slope of the aggregate demand curve say that as the price level rises,consumption,investment,and net exports all fall.

According to the sticky-price theory,which statement is consistent with an unexpected fall in the price level?

In which situation would the long-run aggregate-supply curve shift right?

Which of the following measures the overall price level?

In the aggregate demand and aggregate supply model,when does the aggregate quantity of goods demanded decrease?

What impact do changes in the price of oil have on producers who use oil inputs today as compared to producers who used oil inputs during the OPEC price shock in 1973?

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

What would cause prices to fall and output to rise in the short run?

Which part of real GDP fluctuate most over the course of the business cycle?

What was one of the major reasons why the United States was slower to recover from the 2008-2009 recession than Canada?

Suppose a fall in stock prices makes people feel less wealthy.What are the effects of this decrease in wealth?

Which government action will shift the aggregate demand left?

What are the effects of an increase in the price level?

Technological progress shifts the long-run aggregate-supply curve to the right.

How are the effects of an increase in the price level that is greater than expected shown in the aggregate demand and aggregate supply model?

Which of the following shifts the short-run aggregate supply to the right?

What was one of the major reasons why the United States was slower to recover from the 2008-2009 recession than Canada?

What are the recessions of the 1970s often most attributed to?

Figure 14-1 -Refer to the Figure 14-1.How would an increase in the money supply move the economy in the long run?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters