Question 1

During World War II,output increased by a larger percentage than government expenditures.

Accepted Answer

A) True 
 B)False

Question 2

Scenario 14-1
The economy is in long-run equilibrium.Suddenly,due to improved international relations,a boom experienced by a major trading partner,and the increased confidence of policymakers,citizens become more optimistic about the future and stay this way for a long time.
-Refer to the Scenario 14-1.In the short run,which statement describes the changes that take place in the economy?

Accepted Answer

A)  Both the price level and real GDP rise. 
B)  Both the price level and real GDP fall. 
C)  The price level rises and real GDP falls. 
D)  The price level falls and real GDP rises. 
A)  Both the price level and real GDP rise. 
B)  Both the price level and real GDP fall. 
C)  The price level rises and real GDP falls. 
D)  The price level falls and real GDP rises.

Question 3

Suppose there was an economic contraction caused by a shift in aggregate supply.Further,suppose the central bank changes the money supply to offset the effects of that contraction.How would the effects of the change in money supply be reflected in the aggregate demand and aggregate supply model?

Accepted Answer

A)  aggregate supply would shift to the right. 
B)  Aggregate supply would shift to the left. 
C)  Aggregate demand would shift to the right. 
D)  Aggregate demand would shift to the left. 
A)  aggregate supply would shift to the right. 
B)  Aggregate supply would shift to the left. 
C)  Aggregate demand would shift to the right. 
D)  Aggregate demand would shift to the left.

Question 4

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

Accepted Answer

A)  an increase in the money supply 
B)  an increase in the minimum wage 
C)  a decrease in the price of oil 
D)  a decrease in immigration from abroad 
A)  an increase in the money supply 
B)  an increase in the minimum wage 
C)  a decrease in the price of oil 
D)  a decrease in immigration from abroad

Question 5

Below are pairs of GDP growth rates and unemployment rates.Economists would be shocked to see most of these pairs.Which pair of GDP growth rates and unemployment rates is most realistic?

Accepted Answer

A)  -3 percent,2 percent 
B)  -1 percent,20 percent 
C)  1 percent,7 percent 
D)  6 percent,0 percent 
A)  -3 percent,2 percent 
B)  -1 percent,20 percent 
C)  1 percent,7 percent 
D)  6 percent,0 percent

Question 6

A decrease in the money supply causes the interest rate to rise so that investment rises.

Accepted Answer

A) True 
 B)False

Question 7

How does an economic contraction that is caused by a shift in aggregate demand remedy itself over time?

Accepted Answer

A)  The expected price level rises,shifting aggregate demand right. 
B)  The expected price level rises,shifting aggregate demand left. 
C)  The expected price level falls,shifting aggregate supply right. 
D)  The expected price level falls,shifting aggregate supply left. 
A)  The expected price level rises,shifting aggregate demand right. 
B)  The expected price level rises,shifting aggregate demand left. 
C)  The expected price level falls,shifting aggregate supply right. 
D)  The expected price level falls,shifting aggregate supply left.

Question 8

Which of the following best defines business cycles?

Accepted Answer

A)  long-term trends in economic activity 
B)  regular,predictable fluctuations in GDP 
C)  the rise and fall of multinational companies 
D)  fluctuations in the economy 
A)  long-term trends in economic activity 
B)  regular,predictable fluctuations in GDP 
C)  the rise and fall of multinational companies 
D)  fluctuations in the economy

Question 9

We could explain continued increases in both output and the price level by supposing that only long-run aggregate supply shifted right over time.

Accepted Answer

A) True 
 B)False

Question 10

Most economists believe that classical theory explains the world in the short run,but not the long run.

Accepted Answer

A) True 
 B)False

Question 11

Which statement best characterizes the long-run aggregate-supply curve?

Accepted Answer

A)  It is horizontal. 
B)  It shows a positive relationship between price level and output. 
C)  It demonstrates the importance of money in the economy. 
D)  It shows that money does not influence real GDP in the long run. 
A)  It is horizontal. 
B)  It shows a positive relationship between price level and output. 
C)  It demonstrates the importance of money in the economy. 
D)  It shows that money does not influence real GDP in the long run.

Question 12

Consider the short-run aggregate-supply curve in the following graph.     
a.Calculate approximately the elasticities of the curve at two price levels,P = 20 and P = 100.(Hint: The price elasticity formula is EP = percentage change in Y / percentage change in P.)
​
b.Explain the meaning of the elasticity in the context of the AS curve.
​
c.Compare the two elasticities found in (a)and discuss the results.

Accepted Answer

a.An easier way of calculating the elast

Question 13

Which of the following would shift the AS curve to the right?

Accepted Answer

A)  certain sources of oil become profitable to develop 
B)  lower costs for those firms that use oil as an input 
C)  lower costs to consumer to heat their homes 
D)  Increased investment in developing the oil sands and offshore oil 
A)  certain sources of oil become profitable to develop 
B)  lower costs for those firms that use oil as an input 
C)  lower costs to consumer to heat their homes 
D)  Increased investment in developing the oil sands and offshore oil

Question 14

Which expenditure item is responsible for the decrease in real GDP during a recession?

Accepted Answer

A)  mostly investment spending 
B)  mostly consumption spending 
C)  mostly government spending 
D)  mostly exports 
A)  mostly investment spending 
B)  mostly consumption spending 
C)  mostly government spending 
D)  mostly exports

Question 15

Suppose the economy is in long-run equilibrium.In a short span of time,there is a large influx of skilled immigrants,a major new discovery of oil,and a major new technological advance in electricity production.In the short run,what would we expect to happen?

Accepted Answer

A)  The price level will rise,and real GDP will fall. 
B)  The price level will fall,and real GDP will rise. 
C)  The price level and real GDP will both stay the same. 
D)  The price level and real GDP will both fall. 
A)  The price level will rise,and real GDP will fall. 
B)  The price level will fall,and real GDP will rise. 
C)  The price level and real GDP will both stay the same. 
D)  The price level and real GDP will both fall.

Question 16

Explain how an increase in the price level changes interest rates.How does this change in interest rates lead to changes in investment and net exports?

Accepted Answer

When the price level increases,the purch

Question 17

Which of the following adjusts to bring aggregate supply and demand into balance?

Accepted Answer

A)  the price level 
B)  the real rate of interest 
C)  the money supply 
D)  immigration 
A)  the price level 
B)  the real rate of interest 
C)  the money supply 
D)  immigration

Question 18

What did The General Theory,a 1936 book by John Maynard Keynes,attempt to explain?

Accepted Answer

A)  stagflation 
B)  the long-run effects of government policies 
C)  short-run economic fluctuations 
D)  how changes in the money supply had created the Great Depression 
A)  stagflation 
B)  the long-run effects of government policies 
C)  short-run economic fluctuations 
D)  how changes in the money supply had created the Great Depression

Question 19

When the government spends more,what is the initial effect?

Accepted Answer

A)  Aggregate demand shifts right. 
B)  Aggregate demand shifts left. 
C)  Aggregate supply shifts right. 
D)  Aggregate supply shifts left. 
A)  Aggregate demand shifts right. 
B)  Aggregate demand shifts left. 
C)  Aggregate supply shifts right. 
D)  Aggregate supply shifts left.

Question 20

What happens to prices and output when the long-run aggregate-supply curve shifts right?

Accepted Answer

A)  Prices and output both increase. 
B)  Prices and output both decrease. 
C)  Prices increase and output decreases. 
D)  Prices decrease and output increases. 
A)  Prices and output both increase. 
B)  Prices and output both decrease. 
C)  Prices increase and output decreases. 
D)  Prices decrease and output increases.

During World War II,output increased by a larger percentage than government expenditures.

Suppose there was an economic contraction caused by a shift in aggregate supply.Further,suppose the central bank changes the money supply to offset the effects of that contraction.How would the effects of the change in money supply be reflected in the aggregate demand and aggregate supply model?

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

Below are pairs of GDP growth rates and unemployment rates.Economists would be shocked to see most of these pairs.Which pair of GDP growth rates and unemployment rates is most realistic?

A decrease in the money supply causes the interest rate to rise so that investment rises.

How does an economic contraction that is caused by a shift in aggregate demand remedy itself over time?

Which of the following best defines business cycles?

We could explain continued increases in both output and the price level by supposing that only long-run aggregate supply shifted right over time.

Most economists believe that classical theory explains the world in the short run,but not the long run.

Which statement best characterizes the long-run aggregate-supply curve?

Which of the following would shift the AS curve to the right?

Which expenditure item is responsible for the decrease in real GDP during a recession?

Suppose the economy is in long-run equilibrium.In a short span of time,there is a large influx of skilled immigrants,a major new discovery of oil,and a major new technological advance in electricity production.In the short run,what would we expect to happen?

Explain how an increase in the price level changes interest rates.How does this change in interest rates lead to changes in investment and net exports?

Which of the following adjusts to bring aggregate supply and demand into balance?

What did The General Theory,a 1936 book by John Maynard Keynes,attempt to explain?

When the government spends more,what is the initial effect?

What happens to prices and output when the long-run aggregate-supply curve shifts right?

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

During World War II,output increased by a larger percentage than government expenditures.

Suppose there was an economic contraction caused by a shift in aggregate supply.Further,suppose the central bank changes the money supply to offset the effects of that contraction.How would the effects of the change in money supply be reflected in the aggregate demand and aggregate supply model?

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

Below are pairs of GDP growth rates and unemployment rates.Economists would be shocked to see most of these pairs.Which pair of GDP growth rates and unemployment rates is most realistic?

A decrease in the money supply causes the interest rate to rise so that investment rises.

How does an economic contraction that is caused by a shift in aggregate demand remedy itself over time?

Which of the following best defines business cycles?

We could explain continued increases in both output and the price level by supposing that only long-run aggregate supply shifted right over time.

Most economists believe that classical theory explains the world in the short run,but not the long run.

Which statement best characterizes the long-run aggregate-supply curve?

Which of the following would shift the AS curve to the right?

Which expenditure item is responsible for the decrease in real GDP during a recession?

Suppose the economy is in long-run equilibrium.In a short span of time,there is a large influx of skilled immigrants,a major new discovery of oil,and a major new technological advance in electricity production.In the short run,what would we expect to happen?

Explain how an increase in the price level changes interest rates.How does this change in interest rates lead to changes in investment and net exports?

Which of the following adjusts to bring aggregate supply and demand into balance?

What did The General Theory,a 1936 book by John Maynard Keynes,attempt to explain?

When the government spends more,what is the initial effect?

What happens to prices and output when the long-run aggregate-supply curve shifts right?

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