Question 1

The expenditure approach to measuring GDP involves adding up the purchases of final goods and services by market participants.

Accepted Answer

A) True 
 B)False

Question 2

Jason has been holding his retirement savings in a safe in his house.Currently the economy is experiencing a falling price level.He can conclude that:

Accepted Answer

A) the real purchasing power of his money is remaining constant. 
B) the real value of his savings is increasing as long as the price level is falling. 
C) the real value of his savings is decreasing as long as the price level is falling. 
D) none of the above are true. 
A) the real purchasing power of his money is remaining constant. 
B) the real value of his savings is increasing as long as the price level is falling. 
C) the real value of his savings is decreasing as long as the price level is falling. 
D) none of the above are true.

Question 3

Brazil has a relatively low income per capita because it has relatively few natural resources.

Accepted Answer

A) True 
 B)False

Question 4

Investment will increase if business taxes ____, real interest rates ____, or if business confidence ____.

Accepted Answer

A) increase, increases, increases 
B) decrease, decrease, decreases 
C) increase, increases, decreases 
D) decrease, decrease, increases 
A) increase, increases, increases 
B) decrease, decrease, decreases 
C) increase, increases, decreases 
D) decrease, decrease, increases

Question 5

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 6

The expenditure method dictates that GDP is equal to C + I + G + (X - M)

Accepted Answer

A) True 
 B)False

Question 7

Free trade can promote greater output because of the principle of comparative advantage.

Accepted Answer

A) True 
 B)False

Question 8

If, due to rising demand, the price of cotton rose 10 percent while the prices of other goods and services rose an average of 15 percent,

Accepted Answer

A) the relative price of cotton has risen and one would expect the output of cotton to rise as a result. 
B) the relative price of cotton has risen and one would expect the output of cotton to fall as a result. 
C) the relative price of cotton has fallen and one would expect the output of cotton to rise as a result. 
D) the relative price of cotton has fallen and one would expect the output of cotton to fall as a result. 
A) the relative price of cotton has risen and one would expect the output of cotton to rise as a result. 
B) the relative price of cotton has risen and one would expect the output of cotton to fall as a result. 
C) the relative price of cotton has fallen and one would expect the output of cotton to rise as a result. 
D) the relative price of cotton has fallen and one would expect the output of cotton to fall as a result.

Question 9

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 10

Which of the following decreases U.S.aggregate demand?

Accepted Answer

A) a lower price level, increasing citizen's real wealth 
B) a lower price level, reducing interest rates 
C) a lower price level, increasing exports and decreasing imports 
D) an increase in Americans' expected future incomes 
E) None of the above decrease U.S. aggregate demand. 
A) a lower price level, increasing citizen's real wealth 
B) a lower price level, reducing interest rates 
C) a lower price level, increasing exports and decreasing imports 
D) an increase in Americans' expected future incomes 
E) None of the above decrease U.S. aggregate demand.

Question 11

If both imports and exports rose,

Accepted Answer

A) AD would fall. 
B) AD would rise. 
C) AD would be unaffected. 
D) AD would rise if exports rose more than imports. 
E) AD would fall if exports rose more than imports. 
A) AD would fall. 
B) AD would rise. 
C) AD would be unaffected. 
D) AD would rise if exports rose more than imports. 
E) AD would fall if exports rose more than imports.

Question 12

An economic boom in China is likely to lead to a(n):

Accepted Answer

A) decrease in U.S. exports and U.S. aggregate demand. 
B) increase in U.S. exports and U.S. aggregate demand. 
C) decrease in U.S. imports and U.S. aggregate demand. 
D) increase in U.S. imports and U.S. aggregate demand. 
A) decrease in U.S. exports and U.S. aggregate demand. 
B) increase in U.S. exports and U.S. aggregate demand. 
C) decrease in U.S. imports and U.S. aggregate demand. 
D) increase in U.S. imports and U.S. aggregate demand.

Question 13

According to the "misperception effect" explanation of short-run aggregate supply, firms increase output as the price level rises because they mistake the increase in overall prices for an increase in the relative price of their own output.

Accepted Answer

A) True 
 B)False

Question 14

If there is currently an expansionary gap, an increase in aggregate demand will make the expansionary gap smaller, but a decrease in aggregate demand will make the expansionary gap larger.

Accepted Answer

A) True 
 B)False

Question 15

The real wealth effect is one reason for the negative slope of the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 16

If there were no real wealth or interest rate effect, the aggregate demand curve would still be downward sloping.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following will decrease aggregate demand?

Accepted Answer

A) exports rising faster than imports 
B) exports falling faster than imports. 
C) exports rising the same amount as imports 
D) exports rising and imports falling 
A) exports rising faster than imports 
B) exports falling faster than imports. 
C) exports rising the same amount as imports 
D) exports rising and imports falling

Question 18

How do pollution and crime affect GDP?

Accepted Answer

Pollution and crime are entire

Question 19

The real wealth and the real interest rate effects are both causes of the downward slope of the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 20

A change that shifted the long-run aggregate supply curve to the right would also shift the short-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

The expenditure approach to measuring GDP involves adding up the purchases of final goods and services by market participants.

Jason has been holding his retirement savings in a safe in his house.Currently the economy is experiencing a falling price level.He can conclude that:

Brazil has a relatively low income per capita because it has relatively few natural resources.

Investment will increase if business taxes , real interest rates , or if business confidence .

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

The expenditure method dictates that GDP is equal to C + I + G + (X - M)

Free trade can promote greater output because of the principle of comparative advantage.

If, due to rising demand, the price of cotton rose 10 percent while the prices of other goods and services rose an average of 15 percent,

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.

Which of the following decreases U.S.aggregate demand?

If both imports and exports rose,

An economic boom in China is likely to lead to a(n):

According to the "misperception effect" explanation of short-run aggregate supply, firms increase output as the price level rises because they mistake the increase in overall prices for an increase in the relative price of their own output.

If there is currently an expansionary gap, an increase in aggregate demand will make the expansionary gap smaller, but a decrease in aggregate demand will make the expansionary gap larger.

The real wealth effect is one reason for the negative slope of the aggregate demand curve.

If there were no real wealth or interest rate effect, the aggregate demand curve would still be downward sloping.

Which of the following will decrease aggregate demand?

How do pollution and crime affect GDP?

The real wealth and the real interest rate effects are both causes of the downward slope of the aggregate demand curve.

A change that shifted the long-run aggregate supply curve to the right would also shift the short-run aggregate supply curve to the right.

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 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 System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

Exam 13: Aggregate Demand and Aggregate Supply

The expenditure approach to measuring GDP involves adding up the purchases of final goods and services by market participants.

Jason has been holding his retirement savings in a safe in his house.Currently the economy is experiencing a falling price level.He can conclude that:

Brazil has a relatively low income per capita because it has relatively few natural resources.

Investment will increase if business taxes ____, real interest rates ____, or if business confidence ____.

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

The expenditure method dictates that GDP is equal to C + I + G + (X - M)

Free trade can promote greater output because of the principle of comparative advantage.

If, due to rising demand, the price of cotton rose 10 percent while the prices of other goods and services rose an average of 15 percent,

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.

Which of the following decreases U.S.aggregate demand?

If both imports and exports rose,

An economic boom in China is likely to lead to a(n):

According to the "misperception effect" explanation of short-run aggregate supply, firms increase output as the price level rises because they mistake the increase in overall prices for an increase in the relative price of their own output.

If there is currently an expansionary gap, an increase in aggregate demand will make the expansionary gap smaller, but a decrease in aggregate demand will make the expansionary gap larger.

The real wealth effect is one reason for the negative slope of the aggregate demand curve.

If there were no real wealth or interest rate effect, the aggregate demand curve would still be downward sloping.

Which of the following will decrease aggregate demand?

How do pollution and crime affect GDP?

The real wealth and the real interest rate effects are both causes of the downward slope of the aggregate demand curve.

A change that shifted the long-run aggregate supply curve to the right would also shift the short-run aggregate supply curve to the right.

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 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 System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

Investment will increase if business taxes , real interest rates , or if business confidence .