Question 1

When the dollar appreciates,U.S.

Accepted Answer

A) exports decrease,while imports increase. 
B) exports and imports decrease. 
C) exports and imports increase. 
D) exports increase,while imports decrease. 
A) exports decrease,while imports increase. 
B) exports and imports decrease. 
C) exports and imports increase. 
D) exports increase,while imports decrease.

Question 2

Other things the same,the aggregate quantity of goods demanded in the U.S.increases if

Accepted Answer

A) real wealth falls. 
B) the interest rate rises. 
C) the dollar depreciates. 
D) None of the above is correct. 
A) real wealth falls. 
B) the interest rate rises. 
C) the dollar depreciates. 
D) None of the above is correct.

Question 3

When the money supply decreases

Accepted Answer

A) interest rates fall and so aggregate demand shifts right. 
B) interest rates fall and so aggregate demand shifts left. 
C) interest rates rise and so aggregate demand shifts right. 
D) interest rates rise and so aggregate demand shifts left. 
A) interest rates fall and so aggregate demand shifts right. 
B) interest rates fall and so aggregate demand shifts left. 
C) interest rates rise and so aggregate demand shifts right. 
D) interest rates rise and so aggregate demand shifts left.

Question 4

As the price level rises

Accepted Answer

A) people will want to hold more money,so the interest rate rises. 
B) people will want to hold more money,so the interest rate falls. 
C) people will want to hold less money,so the interest rate falls. 
D) people will want to hold less money,so the interest rate rises. 
A) people will want to hold more money,so the interest rate rises. 
B) people will want to hold more money,so the interest rate falls. 
C) people will want to hold less money,so the interest rate falls. 
D) people will want to hold less money,so the interest rate rises.

Question 5

When the Fed buys bonds

Accepted Answer

A) the supply of money increases and so aggregate demand shifts right. 
B) the supply of money decreases and so aggregate demand shifts left. 
C) the supply of money decreases and so aggregate demand shifts right. 
D) the supply of money increases and so aggregate demand shifts left. 
A) the supply of money increases and so aggregate demand shifts right. 
B) the supply of money decreases and so aggregate demand shifts left. 
C) the supply of money decreases and so aggregate demand shifts right. 
D) the supply of money increases and so aggregate demand shifts left.

Question 6

In the context of the aggregate-demand curve,the interest-rate effect refers to the idea that,when the price level increases,

Accepted Answer

A) the real value of money decreases;in turn,the real value of the dollar increases in foreign exchange markets,which decreases net exports. 
B) the real value of money decreases;in turn,interest rates increase,which decreases net exports. 
C) households increase their holdings of money;in turn,interest rates decrease,which reduces spending on investment goods. 
D) households increase their holdings of money;in turn,interest rates increase,which reduces spending on investment goods. 
A) the real value of money decreases;in turn,the real value of the dollar increases in foreign exchange markets,which decreases net exports. 
B) the real value of money decreases;in turn,interest rates increase,which decreases net exports. 
C) households increase their holdings of money;in turn,interest rates decrease,which reduces spending on investment goods. 
D) households increase their holdings of money;in turn,interest rates increase,which reduces spending on investment goods.

Question 7

Other things the same,a decrease in the price level motivates people to hold

Accepted Answer

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

Question 8

Which of the following both shift aggregate demand right?

Accepted Answer

A) net exports rise for some reason other than a price change and government purchases rise. 
B) net exports rise for some reason other than a price change and taxes increase. 
C) net exports fall for some reason other than a price change and government purchases fall. 
D) net exports fall for some reason other than a price change and taxes fall. 
A) net exports rise for some reason other than a price change and government purchases rise. 
B) net exports rise for some reason other than a price change and taxes increase. 
C) net exports fall for some reason other than a price change and government purchases fall. 
D) net exports fall for some reason other than a price change and taxes fall.

Question 9

If the dollar depreciates because of speculation or government policy,U.S.

Accepted Answer

A) aggregate demand shifts left.U.S.aggregate demand also shifts left if other countries experience an increase in real GDP. 
B) aggregate demand shifts left.U.S.aggregate demand shifts right if other countries experience an increase in real GDP. 
C) aggregate demand shifts right.U.S.aggregate demand also shifts right if other countries experience a decrease in real GDP. 
D) aggregate demand shifts right.U.S.aggregate demand shifts left if other countries experience a decrease in real GDP. 
A) aggregate demand shifts left.U.S.aggregate demand also shifts left if other countries experience an increase in real GDP. 
B) aggregate demand shifts left.U.S.aggregate demand shifts right if other countries experience an increase in real GDP. 
C) aggregate demand shifts right.U.S.aggregate demand also shifts right if other countries experience a decrease in real GDP. 
D) aggregate demand shifts right.U.S.aggregate demand shifts left if other countries experience a decrease in real GDP.

Question 10

If the dollar appreciates,perhaps because of speculation or government policy,then U.S.net exports

Accepted Answer

A) increase which shifts aggregate demand right. 
B) increase which shifts aggregate demand left. 
C) decrease which shifts aggregate demand right. 
D) decrease which shifts aggregate demand left. 
A) increase which shifts aggregate demand right. 
B) increase which shifts aggregate demand left. 
C) decrease which shifts aggregate demand right. 
D) decrease which shifts aggregate demand left.

Question 11

When taxes increase,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 12

Other things the same,when the price level rises,interest rates

Accepted Answer

A) rise,so firms increase investment. 
B) rise,so firms decrease investment. 
C) fall,so firms increase investment. 
D) fall,so firms decrease investment. 
A) rise,so firms increase investment. 
B) rise,so firms decrease investment. 
C) fall,so firms increase investment. 
D) fall,so firms decrease investment.

Question 13

When the dollar depreciates,each dollar buys

Accepted Answer

A) more foreign currency,and so buys more foreign goods. 
B) more foreign currency,and so buys fewer foreign goods. 
C) less foreign currency,and so buys more foreign goods. 
D) less foreign currency,and so buys fewer foreign goods. 
A) more foreign currency,and so buys more foreign goods. 
B) more foreign currency,and so buys fewer foreign goods. 
C) less foreign currency,and so buys more foreign goods. 
D) less foreign currency,and so buys fewer foreign goods.

Question 14

Which of the following will both make people buy more?

Accepted Answer

A) wealth and interest rates rise. 
B) wealth rises and interest rates fall. 
C) wealth falls and interest rates rise. 
D) wealth falls and interest rates fall. 
A) wealth and interest rates rise. 
B) wealth rises and interest rates fall. 
C) wealth falls and interest rates rise. 
D) wealth falls and interest rates fall.

Question 15

Other things the same,as the price level falls,the real value of a dollar

Accepted Answer

A) rises,and interest rates rise. 
B) rises,and interest rates fall. 
C) falls,and interest rates rise. 
D) falls,and interest rates fall. 
A) rises,and interest rates rise. 
B) rises,and interest rates fall. 
C) falls,and interest rates rise. 
D) falls,and interest rates fall.

Question 16

Aggregate demand shifts left if

Accepted Answer

A) government purchases increase and shifts left if stock prices rise. 
B) government purchases increase and shifts left if stock prices fall. 
C) government purchases decrease and shifts left if stock prices rise. 
D) government purchases decrease and shifts left is stock prices fall. 
A) government purchases increase and shifts left if stock prices rise. 
B) government purchases increase and shifts left if stock prices fall. 
C) government purchases decrease and shifts left if stock prices rise. 
D) government purchases decrease and shifts left is stock prices fall.

Question 17

Other things the same,when the price level rises,interest rates

Accepted Answer

A) rise,which means consumers will want to spend more on homebuilding. 
B) rise,which means consumers will want to spend less on homebuilding. 
C) fall,which means consumers will want to spend more on homebuilding. 
D) fall,which means consumers will want to spend less on homebuilding. 
A) rise,which means consumers will want to spend more on homebuilding. 
B) rise,which means consumers will want to spend less on homebuilding. 
C) fall,which means consumers will want to spend more on homebuilding. 
D) fall,which means consumers will want to spend less on homebuilding.

Question 18

The aggregate quantity of goods and services demanded changes as the price level rises because

Accepted Answer

A) real wealth falls,interest rates rise,and the dollar appreciates. 
B) real wealth falls,interest rates rise,and the dollar depreciates. 
C) real wealth rises,interest rates fall,and the dollar appreciates. 
D) real wealth rises,interest rates fall,and the dollar depreciates. 
A) real wealth falls,interest rates rise,and the dollar appreciates. 
B) real wealth falls,interest rates rise,and the dollar depreciates. 
C) real wealth rises,interest rates fall,and the dollar appreciates. 
D) real wealth rises,interest rates fall,and the dollar depreciates.

Question 19

At the end of World War II many European countries were rebuilding and so were eager to buy capital goods and had rising incomes.We would expect that the rebuilding increased aggregate demand in

Accepted Answer

A) both the United States and Europe. 
B) the United States but not Europe. 
C) Europe,but not the United States. 
D) neither the United States,nor Europe. 
A) both the United States and Europe. 
B) the United States but not Europe. 
C) Europe,but not the United States. 
D) neither the United States,nor Europe.

Question 20

When the money supply increases

Accepted Answer

A) interest rates fall and so aggregate demand shifts right. 
B) interest rates fall and so aggregate demand shifts left. 
C) interest rates rise and so aggregate demand shifts right. 
D) interest rates rise and so aggregate demand shifts left. 
A) interest rates fall and so aggregate demand shifts right. 
B) interest rates fall and so aggregate demand shifts left. 
C) interest rates rise and so aggregate demand shifts right. 
D) interest rates rise and so aggregate demand shifts left.

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

When the dollar appreciates,U.S.

Other things the same,the aggregate quantity of goods demanded in the U.S.increases if

When the money supply decreases

As the price level rises

When the Fed buys bonds

In the context of the aggregate-demand curve,the interest-rate effect refers to the idea that,when the price level increases,

Other things the same,a decrease in the price level motivates people to hold

Which of the following both shift aggregate demand right?

If the dollar depreciates because of speculation or government policy,U.S.

If the dollar appreciates,perhaps because of speculation or government policy,then U.S.net exports

When taxes increase,consumption

Other things the same,when the price level rises,interest rates

When the dollar depreciates,each dollar buys

Which of the following will both make people buy more?

Other things the same,as the price level falls,the real value of a dollar

Aggregate demand shifts left if

Other things the same,when the price level rises,interest rates

The aggregate quantity of goods and services demanded changes as the price level rises because

At the end of World War II many European countries were rebuilding and so were eager to buy capital goods and had rising incomes.We would expect that the rebuilding increased aggregate demand in

When the money supply increases

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