Question 1

As the price level rises,the exchange rate

Accepted Answer

A) falls,so exports rise and imports fall. 
B) falls,so exports fall and imports rise. 
C) rises,so exports rise and imports fall. 
D) rises,so exports fall and imports rise. 
A) falls,so exports rise and imports fall. 
B) falls,so exports fall and imports rise. 
C) rises,so exports rise and imports fall. 
D) rises,so exports fall and imports rise.

Question 2

If countries that imported goods and services from the United States went into recession,we would expect that U.S.net exports would

Accepted Answer

A) rise,making aggregate demand shift right. 
B) rise,making aggregate demand shift left. 
C) fall,making aggregate demand shift right. 
D) fall,making aggregate demand shift left. 
A) rise,making aggregate demand shift right. 
B) rise,making aggregate demand shift left. 
C) fall,making aggregate demand shift right. 
D) fall,making aggregate demand shift left.

Question 3

As the price level falls

Accepted Answer

A) people are more willing to lend,so interest rates rise. 
B) people are more willing to lend,so interest rates fall. 
C) people are less willing to lend,so interest rates fall. 
D) people are less willing to lend,so interest rates rise. 
A) people are more willing to lend,so interest rates rise. 
B) people are more willing to lend,so interest rates fall. 
C) people are less willing to lend,so interest rates fall. 
D) people are less willing to lend,so interest rates rise.

Question 4

Other things the same,if the price level rises,people

Accepted Answer

A) increase foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange increases. 
B) increase foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange decreases. 
C) decrease foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange increases. 
D) decrease foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange decreases. 
A) increase foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange increases. 
B) increase foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange decreases. 
C) decrease foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange increases. 
D) decrease foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange decreases.

Question 5

The aggregate-demand curve shows that a decrease in the price level

Accepted Answer

A) decreases the dollar value of goods and services demanded in the economy. 
B) decreases the real value of goods and services demanded in the economy. 
C) increases the dollar value of goods and services demanded in the economy. 
D) increases the real value of goods and services demanded in the economy. 
A) decreases the dollar value of goods and services demanded in the economy. 
B) decreases the real value of goods and services demanded in the economy. 
C) increases the dollar value of goods and services demanded in the economy. 
D) increases the real value of goods and services demanded in the economy.

Question 6

When the price level falls

Accepted Answer

A) households want to lend more,so the interest rate rises making the quantity of goods and services demanded rise. 
B) households want to lend more,so the interest rate falls,making the quantity of goods and services demanded rise. 
C) households want to lend more,so the interest rate rises,making the quantity of goods and services demanded fall. 
D) None of the above are correct. 
A) households want to lend more,so the interest rate rises making the quantity of goods and services demanded rise. 
B) households want to lend more,so the interest rate falls,making the quantity of goods and services demanded rise. 
C) households want to lend more,so the interest rate rises,making the quantity of goods and services demanded fall. 
D) None of the above are correct.

Question 7

Other things the same,as the price level falls,

Accepted Answer

A) the dollar depreciates. 
B) the interest rate rises. 
C) people feel less wealthy. 
D) All of the above are correct. 
A) the dollar depreciates. 
B) the interest rate rises. 
C) people feel less wealthy. 
D) All of the above are correct.

Question 8

The effect of an increase in the price level on the aggregate-demand curve is represented by a

Accepted Answer

A) shift to the right of the aggregate-demand curve. 
B) shift to the left of the aggregate-demand curve. 
C) movement to the left along a given aggregate-demand curve. 
D) movement to the right along a given aggregate-demand curve. 
A) shift to the right of the aggregate-demand curve. 
B) shift to the left of the aggregate-demand curve. 
C) movement to the left along a given aggregate-demand curve. 
D) movement to the right along a given aggregate-demand curve.

Question 9

As the price level rises

Accepted Answer

A) people are more willing to lend,so interest rates rise. 
B) people are more willing to lend,so interest rates fall. 
C) people are less willing to lend,so interest rates fall. 
D) people are less willing to lend,so interest rates rise. 
A) people are more willing to lend,so interest rates rise. 
B) people are more willing to lend,so interest rates fall. 
C) people are less willing to lend,so interest rates fall. 
D) people are less willing to lend,so interest rates rise.

Question 10

Other things the same,as the price level rises,exchange rates

Accepted Answer

A) and interest rates rise. 
B) and interest rates fall. 
C) fall and interest rates rise. 
D) rise and interest rates fall. 
A) and interest rates rise. 
B) and interest rates fall. 
C) fall and interest rates rise. 
D) rise and interest rates fall.

Question 11

Which of the following does not help explain the direction the quantity of aggregate goods demanded changes when the price level decreases?

Accepted Answer

A) consumer wealth rises 
B) borrowing rises 
C) each dollar is worth more domestic goods 
D) the dollar appreciates relative to other currencies 
A) consumer wealth rises 
B) borrowing rises 
C) each dollar is worth more domestic goods 
D) the dollar appreciates relative to other currencies

Question 12

Other things the same,when the government spends more,the initial effect is that

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 13

Which of the following is included in the aggregate demand for goods and services?

Accepted Answer

A) consumption demand 
B) investment demand 
C) net exports 
D) All of the above are correct. 
A) consumption demand 
B) investment demand 
C) net exports 
D) All of the above are correct.

Question 14

Which of the following effects helps to explain the slope of the aggregate-demand curve?

Accepted Answer

A) the exchange-rate effect 
B) the wealth effect 
C) the interest-rate effect 
D) All of the above are correct. 
A) the exchange-rate effect 
B) the wealth effect 
C) the interest-rate effect 
D) All of the above are correct.

Question 15

Other things the same,a decrease in the price level causes the interest rate to

Accepted Answer

A) increase,the dollar to appreciate,and net exports to increase. 
B) increase,the dollar to depreciate,and net exports to decrease. 
C) decrease,the dollar to depreciate,and net exports to increase. 
D) decrease,the dollar to appreciate,and net exports to decrease. 
A) increase,the dollar to appreciate,and net exports to increase. 
B) increase,the dollar to depreciate,and net exports to decrease. 
C) decrease,the dollar to depreciate,and net exports to increase. 
D) decrease,the dollar to appreciate,and net exports to decrease.

Question 16

Tax cuts shift aggregate demand

Accepted Answer

A) right as do increases in government spending. 
B) right while increases in government spending shift aggregate demand left. 
C) left as do increases in government spending. 
D) left while increases in government spending shift aggregate demand right. 
A) right as do increases in government spending. 
B) right while increases in government spending shift aggregate demand left. 
C) left as do increases in government spending. 
D) left while increases in government spending shift aggregate demand right.

Question 17

In which case can we be sure aggregate demand shifts left overall?

Accepted Answer

A) people want to save more for retirement and the Fed increases the money supply. 
B) people want to save more for retirement and the Fed decreases the money supply. 
C) people want to save less for retirement and the Fed increases the money supply. 
D) people want to save less for retirement and the Fed decreases the money supply. 
A) people want to save more for retirement and the Fed increases the money supply. 
B) people want to save more for retirement and the Fed decreases the money supply. 
C) people want to save less for retirement and the Fed increases the money supply. 
D) people want to save less for retirement and the Fed decreases the money supply.

Question 18

When taxes decrease,consumption

Accepted Answer

A) decreases as shown by a movement to the left along a given aggregate-demand curve. 
B) decreases as shown by a shift of the aggregate demand curve to the left. 
C) increases as shown by a movement to the right along a given aggregate-demand curve. 
D) increases as shown by a shift of the aggregate demand curve to the right. 
A) decreases as shown by a movement to the left along a given aggregate-demand curve. 
B) decreases as shown by a shift of the aggregate demand curve to the left. 
C) increases as shown by a movement to the right along a given aggregate-demand curve. 
D) increases as shown by a shift of the aggregate demand curve to the right.

Question 19

If speculators bid up the value of the U.S.dollar in the market for foreign exchange,then

Accepted Answer

A) U.S.goods become more expensive relative to foreign goods so aggregate demand shifts right. 
B) U.S.goods become less expensive relative to foreign goods so aggregate demand shifts right. 
C) U.S.goods become more expensive relative to foreign goods so aggregate demand shifts left. 
D) U.S.goods become less expensive relative to foreign goods so aggregate demand shifts left. 
A) U.S.goods become more expensive relative to foreign goods so aggregate demand shifts right. 
B) U.S.goods become less expensive relative to foreign goods so aggregate demand shifts right. 
C) U.S.goods become more expensive relative to foreign goods so aggregate demand shifts left. 
D) U.S.goods become less expensive relative to foreign goods so aggregate demand shifts left.

Question 20

When the price level falls

Accepted Answer

A) The interest rate falls because people will want to hold more money and so sell bonds. 
B) Firms will want to spend more on new business buildings and business equipment and households will want to spend more building new homes. 
C) Both A and B are correct. 
D) None of the above are correct. 
A) The interest rate falls because people will want to hold more money and so sell bonds. 
B) Firms will want to spend more on new business buildings and business equipment and households will want to spend more building new homes. 
C) Both A and B are correct. 
D) None of the above are correct.

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

As the price level rises,the exchange rate

If countries that imported goods and services from the United States went into recession,we would expect that U.S.net exports would

As the price level falls

Other things the same,if the price level rises,people

The aggregate-demand curve shows that a decrease in the price level

When the price level falls

Other things the same,as the price level falls,

The effect of an increase in the price level on the aggregate-demand curve is represented by a

As the price level rises

Other things the same,as the price level rises,exchange rates

Which of the following does not help explain the direction the quantity of aggregate goods demanded changes when the price level decreases?

Other things the same,when the government spends more,the initial effect is that

Which of the following is included in the aggregate demand for goods and services?

Which of the following effects helps to explain the slope of the aggregate-demand curve?

Other things the same,a decrease in the price level causes the interest rate to

Tax cuts shift aggregate demand

In which case can we be sure aggregate demand shifts left overall?

When taxes decrease,consumption

If speculators bid up the value of the U.S.dollar in the market for foreign exchange,then

When the price level falls

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