Question 1

Which of the following would be true if the exports of a country fell more than its imports?

Accepted Answer

A) The country's budget deficit would decrease. 
B) The country's aggregate supply would increase. 
C) The country's aggregate demand would decrease. 
D) The country's aggregate demand would increase. 
E) The country's aggregate demand would remain unaffected. 
A) The country's budget deficit would decrease. 
B) The country's aggregate supply would increase. 
C) The country's aggregate demand would decrease. 
D) The country's aggregate demand would increase. 
E) The country's aggregate demand would remain unaffected.

Question 2

If there was no real wealth or interest rate effect, the aggregate demand curve would be upward sloping.

Accepted Answer

A) True 
 B)False

Question 3

Higher interest rates will tend to reduce aggregate demand, other things being equal.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following would shift both the short-run aggregate supply curve and the long-run aggregate supply curve leftward?

Accepted Answer

A) Decreases in the prices of the factors of production that reflect permanent changes in their supplies 
B) Increases in the prices of the factors of production that do not reflect permanent changes in their supplies 
C) Decreases in the prices of the factors of production that do not reflect permanent changes in their supplies 
D) Increases in the prices of the factors of production that reflect permanent changes in their supplies 
E) Decreases in the aggregate price level 
A) Decreases in the prices of the factors of production that reflect permanent changes in their supplies 
B) Increases in the prices of the factors of production that do not reflect permanent changes in their supplies 
C) Decreases in the prices of the factors of production that do not reflect permanent changes in their supplies 
D) Increases in the prices of the factors of production that reflect permanent changes in their supplies 
E) Decreases in the aggregate price level

Question 5

The interest rate effect helps explain why a lower price level will reduce the quantity of real goods and services demanded as an economy moves down along its aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 6

In an open economy, as the price level decreases, a(n) _____ demand for domestic goods relative to foreign goods results in a(n) _____ in the quantity of real GDP demanded.

Accepted Answer

A) increase in the; decrease 
B) increase in the; increase 
C) decrease in the; decrease 
D) decrease in the; increase 
E) constant; decrease 
A) increase in the; decrease 
B) increase in the; increase 
C) decrease in the; decrease 
D) decrease in the; increase 
E) constant; decrease

Question 7

If an individual is living in a period of continued high inflation on a fixed income, then:

Accepted Answer

A) the cost of the goods and services he or she buys decreases and his or her real income increases. 
B) the cost of the goods and services he or she buys increases and his or her real income increases. 
C) the cost of the goods and services he or she buys increases, but his or her real income remains the same. 
D) the cost of the goods and services he or she buys increases and his or her real income decreases. 
E) the cost of the goods and services he or she buys decreases and his or her real income remains the same. 
A) the cost of the goods and services he or she buys decreases and his or her real income increases. 
B) the cost of the goods and services he or she buys increases and his or her real income increases. 
C) the cost of the goods and services he or she buys increases, but his or her real income remains the same. 
D) the cost of the goods and services he or she buys increases and his or her real income decreases. 
E) the cost of the goods and services he or she buys decreases and his or her real income remains the same.

Question 8

At a given price level, anything that changes the amount of total purchases in the economy will cause the aggregate demand curve to shift.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following will increase aggregate demand in an economy?

Accepted Answer

A) A recession forecasted by a group of economists 
B) A decrease in the minimum taxable income by the government 
C) An increase in consumer debt 
D) A decrease in the import quota on a popular consumer good 
E) An increase in the population in the economy 
A) A recession forecasted by a group of economists 
B) A decrease in the minimum taxable income by the government 
C) An increase in consumer debt 
D) A decrease in the import quota on a popular consumer good 
E) An increase in the population in the economy

Question 10

What happens to aggregate demand if the demand for consumption goods decreases? What happens if the demand for investment goods increases?

Accepted Answer

Answers will vary. If the demand for con

Question 11

Which of the following statements is true?

Accepted Answer

A) Any permanent change in the quantity of any factor of production available can cause a movement along the short-run aggregate supply curve. 
B) Any permanent change in the quantity of any factor of production available can cause a movement along the long-run aggregate supply curve. 
C) Increases in costly government regulations can cause a leftward shift of both the short-run and long-run aggregate supply curves. 
D) Decreases in costly government regulations can shift the short-run aggregate supply curve upward because they increase productivity. 
E) Nonlabor input prices do not affect the long-run aggregate supply curve. 
A) Any permanent change in the quantity of any factor of production available can cause a movement along the short-run aggregate supply curve. 
B) Any permanent change in the quantity of any factor of production available can cause a movement along the long-run aggregate supply curve. 
C) Increases in costly government regulations can cause a leftward shift of both the short-run and long-run aggregate supply curves. 
D) Decreases in costly government regulations can shift the short-run aggregate supply curve upward because they increase productivity. 
E) Nonlabor input prices do not affect the long-run aggregate supply curve.

Question 12

The short-run aggregate supply curve:

Accepted Answer

A) represents a fixed volume of output. 
B) reflects how much real GDP suppliers are willing and able to produce at different price levels. 
C) shifts only when the long-run aggregate supply shifts. 
D) is not affected at all by the price level. 
E) reflects the amount of real GDP supplied when all input prices are variable. 
A) represents a fixed volume of output. 
B) reflects how much real GDP suppliers are willing and able to produce at different price levels. 
C) shifts only when the long-run aggregate supply shifts. 
D) is not affected at all by the price level. 
E) reflects the amount of real GDP supplied when all input prices are variable.

Question 13

Increases in government regulations can make the production of goods and services more costly for producers, and the increase in production costs results in a leftward shift of both the short-run and the long-run aggregate supply curves.

Accepted Answer

A) True 
 B)False

Question 14

If the stock market of a country continues a steady climb upwards, consumer confidence increases, leading to:

Accepted Answer

A) increased consumption and lower aggregate demand. 
B) decreased consumption and higher aggregate demand. 
C) increased consumption and higher aggregate demand. 
D) decreased investment and higher price level. 
E) increased rates of interest and lower wage rates. 
A) increased consumption and lower aggregate demand. 
B) decreased consumption and higher aggregate demand. 
C) increased consumption and higher aggregate demand. 
D) decreased investment and higher price level. 
E) increased rates of interest and lower wage rates.

Question 15

The short-run aggregate supply curve:

Accepted Answer

A) has the same slope as the long-run aggregate supply curve. 
B) shifts only when the long-run aggregate supply curve shifts in the same direction. 
C) normally slopes upward to the right because the costs of labor and other inputs are relatively fixed in the short run. 
D) normally has a slope of zero, meaning the curve is horizontal. 
E) is normally perpendicular to the horizontal axis. 
A) has the same slope as the long-run aggregate supply curve. 
B) shifts only when the long-run aggregate supply curve shifts in the same direction. 
C) normally slopes upward to the right because the costs of labor and other inputs are relatively fixed in the short run. 
D) normally has a slope of zero, meaning the curve is horizontal. 
E) is normally perpendicular to the horizontal axis.

Question 16

The aggregate supply curves show how much a nation's consumers are willing and able to consume at each price level.

Accepted Answer

A) True 
 B)False

Question 17

Figure 13-3 shows the short-run macroeconomic equilibrium of an economy at Point A. In the figure, Point A suggests that:Figure 13-3

Accepted Answer

A) the economy is operating with an inflationary gap. 
B) the economy is operating with a recessionary gap. 
C) the economy is operating at long-run equilibrium. 
D) tax rates are falling in the economy. 
E) the government should increase its spending in the economy. 
A) the economy is operating with an inflationary gap. 
B) the economy is operating with a recessionary gap. 
C) the economy is operating at long-run equilibrium. 
D) tax rates are falling in the economy. 
E) the government should increase its spending in the economy.

Question 18

As the price level in an economy decreases, other things being equal, the:

Accepted Answer

A) aggregate supply in the economy increases. 
B) quantity of real gross domestic product demanded increases. 
C) quantity of real gross domestic product demanded decreases. 
D) economy's real gross domestic product supplied increases. 
E) purchasing power of its currency decreases. 
A) aggregate supply in the economy increases. 
B) quantity of real gross domestic product demanded increases. 
C) quantity of real gross domestic product demanded decreases. 
D) economy's real gross domestic product supplied increases. 
E) purchasing power of its currency decreases.

Question 19

Figure 13-5 shows the short-run macroeconomic equilibrium of an economy at Point A. In the figure, Point A suggests that:Figure 13-5

Accepted Answer

A) the real value of currency in the economy is lower than its nominal value. 
B) the economy is operating with a recessionary gap. 
C) the economy is operating at long-run equilibrium. 
D) the government should increase the level of taxes in the economy. 
E) the government should decrease its budget. 
A) the real value of currency in the economy is lower than its nominal value. 
B) the economy is operating with a recessionary gap. 
C) the economy is operating at long-run equilibrium. 
D) the government should increase the level of taxes in the economy. 
E) the government should decrease its budget.

Question 20

Which of the following would shift the short-run aggregate supply curve of an industry rightward but not change its short-run aggregate supply curve?

Accepted Answer

A) An increase in money supply 
B) A positive supply shock 
C) A decrease in the price level 
D) An increase in the price level 
E) An increase in the interest rate 
A) An increase in money supply 
B) A positive supply shock 
C) A decrease in the price level 
D) An increase in the price level 
E) An increase in the interest rate

Which of the following would be true if the exports of a country fell more than its imports?

If there was no real wealth or interest rate effect, the aggregate demand curve would be upward sloping.

Higher interest rates will tend to reduce aggregate demand, other things being equal.

Which of the following would shift both the short-run aggregate supply curve and the long-run aggregate supply curve leftward?

The interest rate effect helps explain why a lower price level will reduce the quantity of real goods and services demanded as an economy moves down along its aggregate demand curve.

In an open economy, as the price level decreases, a(n) _ demand for domestic goods relative to foreign goods results in a(n) _ in the quantity of real GDP demanded.

If an individual is living in a period of continued high inflation on a fixed income, then:

At a given price level, anything that changes the amount of total purchases in the economy will cause the aggregate demand curve to shift.

Which of the following will increase aggregate demand in an economy?

What happens to aggregate demand if the demand for consumption goods decreases? What happens if the demand for investment goods increases?

Which of the following statements is true?

The short-run aggregate supply curve:

Increases in government regulations can make the production of goods and services more costly for producers, and the increase in production costs results in a leftward shift of both the short-run and the long-run aggregate supply curves.

If the stock market of a country continues a steady climb upwards, consumer confidence increases, leading to:

The short-run aggregate supply curve:

The aggregate supply curves show how much a nation's consumers are willing and able to consume at each price level.

Figure 13-3 shows the short-run macroeconomic equilibrium of an economy at Point A. In the figure, Point A suggests that:Figure 13-3

As the price level in an economy decreases, other things being equal, the:

Figure 13-5 shows the short-run macroeconomic equilibrium of an economy at Point A. In the figure, Point A suggests that:Figure 13-5

Which of the following would shift the short-run aggregate supply curve of an industry rightward but not change its short-run aggregate supply curve?

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Perfectly Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Fiscal Policy

Monetary Institutions

The Federal Reserve and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

Exam 13: Aggregate Demand and Aggregate Supply

Which of the following would be true if the exports of a country fell more than its imports?

If there was no real wealth or interest rate effect, the aggregate demand curve would be upward sloping.

Higher interest rates will tend to reduce aggregate demand, other things being equal.

Which of the following would shift both the short-run aggregate supply curve and the long-run aggregate supply curve leftward?

The interest rate effect helps explain why a lower price level will reduce the quantity of real goods and services demanded as an economy moves down along its aggregate demand curve.

In an open economy, as the price level decreases, a(n) _____ demand for domestic goods relative to foreign goods results in a(n) _____ in the quantity of real GDP demanded.

If an individual is living in a period of continued high inflation on a fixed income, then:

At a given price level, anything that changes the amount of total purchases in the economy will cause the aggregate demand curve to shift.

Which of the following will increase aggregate demand in an economy?

What happens to aggregate demand if the demand for consumption goods decreases? What happens if the demand for investment goods increases?

Which of the following statements is true?

The short-run aggregate supply curve:

Increases in government regulations can make the production of goods and services more costly for producers, and the increase in production costs results in a leftward shift of both the short-run and the long-run aggregate supply curves.

If the stock market of a country continues a steady climb upwards, consumer confidence increases, leading to:

The short-run aggregate supply curve:

The aggregate supply curves show how much a nation's consumers are willing and able to consume at each price level.

Figure 13-3 shows the short-run macroeconomic equilibrium of an economy at Point A. In the figure, Point A suggests that:Figure 13-3

As the price level in an economy decreases, other things being equal, the:

Figure 13-5 shows the short-run macroeconomic equilibrium of an economy at Point A. In the figure, Point A suggests that:Figure 13-5

Which of the following would shift the short-run aggregate supply curve of an industry rightward but not change its short-run aggregate supply curve?

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Perfectly Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Fiscal Policy

Monetary Institutions

The Federal Reserve and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

In an open economy, as the price level decreases, a(n) _ demand for domestic goods relative to foreign goods results in a(n) _ in the quantity of real GDP demanded.