Question 1

The long-run aggregate supply curve shifts right if

Accepted Answer

A) either immigration from abroad increases or technology improves. 
B) immigration from abroad increases,but not if technology improves. 
C) technology improves,but not if immigration from abroad increases. 
D) None of the above are correct. 
A) either immigration from abroad increases or technology improves. 
B) immigration from abroad increases,but not if technology improves. 
C) technology improves,but not if immigration from abroad increases. 
D) None of the above are correct.

Question 2

The misperceptions theory of the short-run aggregate supply curve says that the quantity of output supplied will increase if the price level

Accepted Answer

A) increases by less than expected so that firms believe the relative price of their output has increased. 
B) increases by less than expected so that firms believe the relative price of their output has decreased. 
C) increases by more than expected so that firms believe the relative price of their output has increased. 
D) increases by more than expected so that firms believe the relative price of their output has decreased. 
A) increases by less than expected so that firms believe the relative price of their output has increased. 
B) increases by less than expected so that firms believe the relative price of their output has decreased. 
C) increases by more than expected so that firms believe the relative price of their output has increased. 
D) increases by more than expected so that firms believe the relative price of their output has decreased.

Question 3

Since the end of World War II,the U.S.has almost always had rising prices and an upward trend in real GDP.This can be explained

Accepted Answer

A) only by technological progress. 
B) only by money supply growth. 
C) by technological progress and money supply growth. 
D) None of the above is correct. 
A) only by technological progress. 
B) only by money supply growth. 
C) by technological progress and money supply growth. 
D) None of the above is correct.

Question 4

If there are sticky wages,and the price level is greater than what was expected,then

Accepted Answer

A) the quantity of aggregate goods and services supplied falls,which is shown by a shift of the short-run aggregate supply curve to the left. 
B) the quantity of aggregate goods and services supplied falls,as shown by a movement to the left along the short-run aggregate supply curve. 
C) the quantity of aggregate goods and services supplied rises,as shown by a shift of the short-run aggregate supply curve to the right. 
D) the quantity of aggregate goods and services supplied rises,as shown by a movement to the right along the short-run aggregate supply curve. 
A) the quantity of aggregate goods and services supplied falls,which is shown by a shift of the short-run aggregate supply curve to the left. 
B) the quantity of aggregate goods and services supplied falls,as shown by a movement to the left along the short-run aggregate supply curve. 
C) the quantity of aggregate goods and services supplied rises,as shown by a shift of the short-run aggregate supply curve to the right. 
D) the quantity of aggregate goods and services supplied rises,as shown by a movement to the right along the short-run aggregate supply curve.

Question 5

The aggregate demand and aggregate supply model implies monetary neutrality

Accepted Answer

A) only in the short run. 
B) only in the long run. 
C) in both the short run and the long run. 
D) in neither the short run nor long run. 
A) only in the short run. 
B) only in the long run. 
C) in both the short run and the long run. 
D) in neither the short run nor long run.

Question 6

Since the end of World War II,the U.S.has almost always had rising prices and an upward trend in real GDP.To explain this

Accepted Answer

A) it is only necessary that long-run aggregate supply shifts right over time. 
B) it is only necessary that aggregate demand shifts right over time. 
C) both aggregate demand and long-run aggregate supply must be shifting right and aggregate demand must be shifting farther. 
D) None of the above cases would produce rising prices and growing real GDP over time. 
A) it is only necessary that long-run aggregate supply shifts right over time. 
B) it is only necessary that aggregate demand shifts right over time. 
C) both aggregate demand and long-run aggregate supply must be shifting right and aggregate demand must be shifting farther. 
D) None of the above cases would produce rising prices and growing real GDP over time.

Question 7

Which of the following is not a determinant of the long-run level of real GDP?

Accepted Answer

A) the price level. 
B) the amount of capital used by firms. 
C) available stock of human capital. 
D) available technology 
A) the price level. 
B) the amount of capital used by firms. 
C) available stock of human capital. 
D) available technology

Question 8

The effects of a higher than expected price level are shown by

Accepted Answer

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

Question 9

According to the aggregate demand and aggregate supply model,in the long run a decrease in the money supply leads to

Accepted Answer

A) decreases in both the price level and real GDP. 
B) an increase in real GDP and an increase in the price level. 
C) a decrease in the price level but does not change real GDP. 
D) an increase in the price level but does not change real GDP. 
A) decreases in both the price level and real GDP. 
B) an increase in real GDP and an increase in the price level. 
C) a decrease in the price level but does not change real GDP. 
D) an increase in the price level but does not change real GDP.

Question 10

The discovery of a large amount of previously-undiscovered oil in the U.S.would shift

Accepted Answer

A) the long-run aggregate-supply curve to the right. 
B) the long-run aggregate-supply curve to the left. 
C) the aggregate-demand curve to the left. 
D) None of the above is correct. 
A) the long-run aggregate-supply curve to the right. 
B) the long-run aggregate-supply curve to the left. 
C) the aggregate-demand curve to the left. 
D) None of the above is correct.

Question 11

If the price level rises above what was expected and nominal wages are fixed,then

Accepted Answer

A) production becomes less profitable so firms will hire fewer workers. 
B) production becomes less profitable so firms will hire more workers. 
C) production becomes more profitable so firms will hire fewer workers. 
D) production becomes more profitable so firms will hire more workers. 
A) production becomes less profitable so firms will hire fewer workers. 
B) production becomes less profitable so firms will hire more workers. 
C) production becomes more profitable so firms will hire fewer workers. 
D) production becomes more profitable so firms will hire more workers.

Question 12

The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,

Accepted Answer

A) relative to prices wages are higher and employment rise. 
B) relative to prices wages are higher and employment falls. 
C) relative to prices wages are lower and employment rises. 
D) relative to prices wages are lower and employment falls. 
A) relative to prices wages are higher and employment rise. 
B) relative to prices wages are higher and employment falls. 
C) relative to prices wages are lower and employment rises. 
D) relative to prices wages are lower and employment falls.

Question 13

Over the last fifty years both real GDP and prices have trended upward in most countries.Continuing real GDP growth and inflation can be explained by

Accepted Answer

A) continuing technological progress alone. 
B) continuing increases in the money supply alone. 
C) continued technological progress and continuing increases in the money supply. 
D) None of the above can explain continuing real GDP growth and inflation. 
A) continuing technological progress alone. 
B) continuing increases in the money supply alone. 
C) continued technological progress and continuing increases in the money supply. 
D) None of the above can explain continuing real GDP growth and inflation.

Question 14

Menu costs help explain

Accepted Answer

A) sticky-price theory. 
B) misperceptions theory. 
C) sticky-wage theory. 
D) All of the above are correct. 
A) sticky-price theory. 
B) misperceptions theory. 
C) sticky-wage theory. 
D) All of the above are correct.

Question 15

Which of the following would shift long-run aggregate supply to the right?

Accepted Answer

A) increased immigration from abroad 
B) a decrease in the price of an imported natural resource 
C) opening the economy to international trade 
D) All of the above are correct. 
A) increased immigration from abroad 
B) a decrease in the price of an imported natural resource 
C) opening the economy to international trade 
D) All of the above are correct.

Question 16

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

Accepted Answer

A) a decrease in the actual price level 
B) an increase in the actual price level 
C) a decrease in the expected price level 
D) an increase in the expected price level 
A) a decrease in the actual price level 
B) an increase in the actual price level 
C) a decrease in the expected price level 
D) an increase in the expected price level

Question 17

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

Accepted Answer

A) an increase in the price level 
B) an increase in the minimum wage 
C) a decrease in the price of oil 
D) more people migrate abroad than immigrate from abroad 
A) an increase in the price level 
B) an increase in the minimum wage 
C) a decrease in the price of oil 
D) more people migrate abroad than immigrate from abroad

Question 18

The long-run aggregate supply curve shifts right if

Accepted Answer

A) immigration from abroad increases. 
B) the capital stock increases. 
C) technology advances. 
D) All of the above are correct. 
A) immigration from abroad increases. 
B) the capital stock increases. 
C) technology advances. 
D) All of the above are correct.

Question 19

The mathematical equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level),expresses

Accepted Answer

A) how the long run equilibrium adjusts to changes in money supply. 
B) how output deviates in the short run from its long run natural rate. 
C) how the short run aggregate supply curve shifts. 
D) how adverse shifts in aggregate supply can cause stagflation. 
A) how the long run equilibrium adjusts to changes in money supply. 
B) how output deviates in the short run from its long run natural rate. 
C) how the short run aggregate supply curve shifts. 
D) how adverse shifts in aggregate supply can cause stagflation.

Question 20

People had been expecting the price level to be 140 but it turns out to be 138.Johnson Family Restaurants increases the number of workers it employs.What could explain this?

Accepted Answer

A) both sticky price theory and sticky wage theory 
B) sticky price theory but not sticky wage theory 
C) sticky wage theory but not sticky price theory 
D) neither sticky wage theory nor sticky price theory 
A) both sticky price theory and sticky wage theory 
B) sticky price theory but not sticky wage theory 
C) sticky wage theory but not sticky price theory 
D) neither sticky wage theory nor sticky price theory

Exam 20: Aggregate Demand and Aggregate Supply: The Aggregate-Supply Curve

The long-run aggregate supply curve shifts right if

The misperceptions theory of the short-run aggregate supply curve says that the quantity of output supplied will increase if the price level

Since the end of World War II,the U.S.has almost always had rising prices and an upward trend in real GDP.This can be explained

If there are sticky wages,and the price level is greater than what was expected,then

The aggregate demand and aggregate supply model implies monetary neutrality

Since the end of World War II,the U.S.has almost always had rising prices and an upward trend in real GDP.To explain this

Which of the following is not a determinant of the long-run level of real GDP?

The effects of a higher than expected price level are shown by

According to the aggregate demand and aggregate supply model,in the long run a decrease in the money supply leads to

The discovery of a large amount of previously-undiscovered oil in the U.S.would shift

If the price level rises above what was expected and nominal wages are fixed,then

The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,

Over the last fifty years both real GDP and prices have trended upward in most countries.Continuing real GDP growth and inflation can be explained by

Menu costs help explain

Which of the following would shift long-run aggregate supply to the right?

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

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

The long-run aggregate supply curve shifts right if

The mathematical equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level),expresses

People had been expecting the price level to be 140 but it turns out to be 138.Johnson Family Restaurants increases the number of workers it employs.What could explain this?

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion