Question 1

Other things the same,as the price level falls,which of the following increases?

Accepted Answer

A) lending and investment spending 
B) lending,but not investment spending 
C) investment spending,but not lending 
D) neither investment spending nor lending 
A) lending and investment spending 
B) lending,but not investment spending 
C) investment spending,but not lending 
D) neither investment spending nor lending

Question 2

Aggregate demand shifts right 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 3

Other things the same,if the price level falls,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 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 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 4

Which of the following effects provide incentives for consumers to spend less when the price level rises?

Accepted Answer

A) the wealth effect and the interest-rate effect 
B) the wealth effect but not the interest-rate effect 
C) the interest-rate effect but not the wealth effect 
D) neither the wealth-effect nor the interest rate effect 
A) the wealth effect and the interest-rate effect 
B) the wealth effect but not the interest-rate effect 
C) the interest-rate effect but not the wealth effect 
D) neither the wealth-effect nor the interest rate effect

Question 5

Other things the same,which of the following is correct?

Accepted Answer

A) A decrease in the price level causes the dollar to appreciate.Aggregate demand shifts right. 
B) A decrease in the price level causes the dollar to depreciate.Aggregate demand shifts right. 
C) If speculators lose confidence in the American economy,the dollar appreciates.Aggregate demand shifts right. 
D) If speculators lose confidence in the American economy,the dollar depreciates.Aggregate demand shifts right. 
A) A decrease in the price level causes the dollar to appreciate.Aggregate demand shifts right. 
B) A decrease in the price level causes the dollar to depreciate.Aggregate demand shifts right. 
C) If speculators lose confidence in the American economy,the dollar appreciates.Aggregate demand shifts right. 
D) If speculators lose confidence in the American economy,the dollar depreciates.Aggregate demand shifts right.

Question 6

The aggregate-demand curve

Accepted Answer

A) has a slope that is explained in the same way as the slope of the demand curve for a particular product. 
B) is vertical in the long run. 
C) shows an inverse relation between the price level and the quantity of all goods and services demanded. 
D) All of the above are correct. 
A) has a slope that is explained in the same way as the slope of the demand curve for a particular product. 
B) is vertical in the long run. 
C) shows an inverse relation between the price level and the quantity of all goods and services demanded. 
D) All of the above are correct.

Question 7

Suppose businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases.Their reaction would initially shift

Accepted Answer

A) aggregate demand right. 
B) aggregate demand left. 
C) aggregate supply right. 
D) aggregate supply left. 
A) aggregate demand right. 
B) aggregate demand left. 
C) aggregate supply right. 
D) aggregate supply left.

Question 8

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

Accepted Answer

A) real wealth rises. 
B) the interest rate rises. 
C) the dollar appreciates. 
D) All of the above are correct. 
A) real wealth rises. 
B) the interest rate rises. 
C) the dollar appreciates. 
D) All of the above are correct.

Question 9

Other things the same,the aggregate quantity of goods demanded decreases if

Accepted Answer

A) real wealth falls. 
B) the interest rate rises. 
C) the dollar appreciates. 
D) All of the above are correct. 
A) real wealth falls. 
B) the interest rate rises. 
C) the dollar appreciates. 
D) All of the above are correct.

Question 10

If banks and speculators in the U.S.decided to exchange U.S.dollars for the foreign currencies of other countries,but foreigners do not desire to increase their holdings of U.S.dollars,then U.S.net exports would

Accepted Answer

A) rise and aggregate demand would shift left. 
B) rise and aggregate demand would shift right. 
C) fall and aggregate demand would shift left. 
D) fall and aggregate demand would shift right. 
A) rise and aggregate demand would shift left. 
B) rise and aggregate demand would shift right. 
C) fall and aggregate demand would shift left. 
D) fall and aggregate demand would shift right.

Question 11

Other things the same,if the price level falls,domestic interest rates

Accepted Answer

A) rise,so domestic residents will want to hold more foreign bonds. 
B) rise,so domestic residents will want to hold fewer foreign bonds. 
C) fall,so domestic residents will want to hold more foreign bonds. 
D) fall,so domestic residents will want to hold fewer foreign bonds. 
A) rise,so domestic residents will want to hold more foreign bonds. 
B) rise,so domestic residents will want to hold fewer foreign bonds. 
C) fall,so domestic residents will want to hold more foreign bonds. 
D) fall,so domestic residents will want to hold fewer foreign bonds.

Question 12

The initial impact of an increase in an investment tax credit is to shift

Accepted Answer

A) aggregate demand right. 
B) aggregate demand left. 
C) aggregate supply right. 
D) aggregate supply left. 
A) aggregate demand right. 
B) aggregate demand left. 
C) aggregate supply right. 
D) aggregate supply left.

Question 13

Which of the following shifts aggregate demand to the right?

Accepted Answer

A) the Federal Reserve buys bonds. 
B) a decrease in net exports due to something other than a change in domestic prices. 
C) an increase in household saving. 
D) All of the above are correct. 
A) the Federal Reserve buys bonds. 
B) a decrease in net exports due to something other than a change in domestic prices. 
C) an increase in household saving. 
D) All of the above are correct.

Question 14

Suppose a fall in stock prices makes people feel poorer.The decrease in wealth would induce people to

Accepted Answer

A) decrease consumption,shown as a movement to the left along a given aggregate-demand curve. 
B) increase consumption,shown as a movement to the right along a given aggregate-demand curve. 
C) decrease consumption,shown by shifting the aggregate-demand curve to the left. 
D) increase consumption,shown by shifting the aggregate-demand curve to the right. 
A) decrease consumption,shown as a movement to the left along a given aggregate-demand curve. 
B) increase consumption,shown as a movement to the right along a given aggregate-demand curve. 
C) decrease consumption,shown by shifting the aggregate-demand curve to the left. 
D) increase consumption,shown by shifting the aggregate-demand curve to the right.

Question 15

Other things the same,as the price level falls,a country's exchange rate

Accepted Answer

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

Question 16

An increase in the money supply

Accepted Answer

A) and an investment tax credit both cause aggregate demand to shift right. 
B) and an investment tax credit both cause aggregate demand to shift left. 
C) causes aggregate demand to shift right,while an investment tax credit causes aggregate demand to shift left. 
D) causes aggregate demand to shift left,while an investment tax credit causes aggregate demand to shift right. 
A) and an investment tax credit both cause aggregate demand to shift right. 
B) and an investment tax credit both cause aggregate demand to shift left. 
C) causes aggregate demand to shift right,while an investment tax credit causes aggregate demand to shift left. 
D) causes aggregate demand to shift left,while an investment tax credit causes aggregate demand to shift right.

Question 17

As the price level rises,the interest rate

Accepted Answer

A) falls,so the supply of dollars in the market for foreign currency exchange shifts left. 
B) falls,so the supply of dollars in the market for foreign currency exchange shifts right. 
C) rises,so the supply of dollars in the market for foreign currency exchange shifts left. 
D) rises,so the supply of dollars in the market for foreign currency exchange shifts right. 
A) falls,so the supply of dollars in the market for foreign currency exchange shifts left. 
B) falls,so the supply of dollars in the market for foreign currency exchange shifts right. 
C) rises,so the supply of dollars in the market for foreign currency exchange shifts left. 
D) rises,so the supply of dollars in the market for foreign currency exchange shifts right.

Question 18

Which of the following shifts aggregate demand to the right?

Accepted Answer

A) both an investment tax credit and a decrease in income tax rates 
B) an investment tax credit but not a decrease in income tax rates 
C) a decrease in income tax rates but not an investment tax credit 
D) neither an investment tax credit nor a decrease in income tax rates 
A) both an investment tax credit and a decrease in income tax rates 
B) an investment tax credit but not a decrease in income tax rates 
C) a decrease in income tax rates but not an investment tax credit 
D) neither an investment tax credit nor a decrease in income tax rates

Question 19

As the price level rises,

Accepted Answer

A) the exchange rate falls,so net exports fall. 
B) the exchange rate falls,so net exports rise. 
C) the exchange rate rises,so net exports fall. 
D) the exchange rate rises,so net exports rise. 
A) the exchange rate falls,so net exports fall. 
B) the exchange rate falls,so net exports rise. 
C) the exchange rate rises,so net exports fall. 
D) the exchange rate rises,so net exports rise.

Question 20

Other things the same,when the price level falls,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.

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

Other things the same,as the price level falls,which of the following increases?

Aggregate demand shifts right if

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

Which of the following effects provide incentives for consumers to spend less when the price level rises?

Other things the same,which of the following is correct?

The aggregate-demand curve

Suppose businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases.Their reaction would initially shift

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

Other things the same,the aggregate quantity of goods demanded decreases if

If banks and speculators in the U.S.decided to exchange U.S.dollars for the foreign currencies of other countries,but foreigners do not desire to increase their holdings of U.S.dollars,then U.S.net exports would

Other things the same,if the price level falls,domestic interest rates

The initial impact of an increase in an investment tax credit is to shift

Which of the following shifts aggregate demand to the right?

Suppose a fall in stock prices makes people feel poorer.The decrease in wealth would induce people to

Other things the same,as the price level falls,a country's exchange rate

An increase in the money supply

As the price level rises,the interest rate

Which of the following shifts aggregate demand to the right?

As the price level rises,

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

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