Question 1

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 2

What variables besides real GDP tend to decline during recessions? Given the definition of real GDP, argue that declines in these variables are to be expected.

Accepted Answer

Variables that fall along with real GDP

Question 3

The long-run aggregate supply curve shifts left if

Accepted Answer

A)  the capital stock increases. 
B)  there is a natural disaster. 
C)  the government removes some environmental regulations that limit production methods. 
D)  None of the above is correct. 
A)  the capital stock increases. 
B)  there is a natural disaster. 
C)  the government removes some environmental regulations that limit production methods. 
D)  None of the above is correct.

Question 4

Suppose a shift in aggregate demand creates an economic contraction. If policymakers can respond with sufficient speed and precision, they can offset the initial shift by shifting

Accepted Answer

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

Question 5

If the price level is higher than expected, firms might raise their production in the short run if

Accepted Answer

A)  the nominal wage they pay their employees was set based on the expected price level. 
B)  prices are costly to adjust and they have set their price at some time in the past but are not ready to change it. 
C)  they believe that the price of their product has risen relative to the price of other products, when in fact the rise in the price of their product reflects an increase in the general price level. 
D)  All of the above are correct. 
A)  the nominal wage they pay their employees was set based on the expected price level. 
B)  prices are costly to adjust and they have set their price at some time in the past but are not ready to change it. 
C)  they believe that the price of their product has risen relative to the price of other products, when in fact the rise in the price of their product reflects an increase in the general price level. 
D)  All of the above are correct.

Question 6

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 7

When the price level falls

Accepted Answer

A)  people want to hold less money. 
B)  the interest rate falls. 
C)  investment spending rises. 
D)  All of the above are correct. 
A)  people want to hold less money. 
B)  the interest rate falls. 
C)  investment spending rises. 
D)  All of the above are correct.

Question 8

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 9

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 10

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

Accepted Answer

A)  an increase in the actual price level 
B)  an increase in the expected price level 
C)  an increase in the capital stock 
D)  None of the above is correct. 
A)  an increase in the actual price level 
B)  an increase in the expected price level 
C)  an increase in the capital stock 
D)  None of the above is correct.

Question 11

In the mid-1970s the price of oil rose dramatically. This

Accepted Answer

A)  shifted aggregate supply left. 
B)  caused U.S. prices to fall. 
C)  was the consequence of OPEC increasing oil production. 
D)  All of the above are correct. 
A)  shifted aggregate supply left. 
B)  caused U.S. prices to fall. 
C)  was the consequence of OPEC increasing oil production. 
D)  All of the above are correct.

Question 12

The quantity of money has no real impact on things people really care about like whether or not they have a job. Most economists would agree that this statement is appropriate concerning

Accepted Answer

A)  both the short run and the long run. 
B)  the short run, but not the long run. 
C)  the long run, but not the short run. 
D)  neither the long run nor the short run. 
A)  both the short run and the long run. 
B)  the short run, but not the long run. 
C)  the long run, but not the short run. 
D)  neither the long run nor the short run.

Question 13

According to the classical model, which of the following would double if the quantity of money doubled?

Accepted Answer

A)  prices but not nominal income 
B)  nominal income but not prices 
C)  both prices and nominal income 
D)  neither prices nor nominal income 
A)  prices but not nominal income 
B)  nominal income but not prices 
C)  both prices and nominal income 
D)  neither prices nor nominal income

Question 14

In 2009 Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right?

Accepted Answer

A)  only the increased funding for states 
B)  only the tax cuts 
C)  both the increased funding for states and the tax cuts 
D)  neither the increased funding for states nor the tax cuts 
A)  only the increased funding for states 
B)  only the tax cuts 
C)  both the increased funding for states and the tax cuts 
D)  neither the increased funding for states nor the tax cuts

Question 15

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

Accepted Answer

A) True 
 B)False

Question 16

Historically, the change in real GDP during recessions has been

Accepted Answer

A)  mostly a change in investment spending. 
B)  mostly a change in consumption spending. 
C)  about equally divided between consumption and investment spending. 
D)  sometimes mostly a change in consumption and sometimes mostly a change in investment. 
A)  mostly a change in investment spending. 
B)  mostly a change in consumption spending. 
C)  about equally divided between consumption and investment spending. 
D)  sometimes mostly a change in consumption and sometimes mostly a change in investment.

Question 17

The equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level), where a is a positive number, represents

Accepted Answer

A)  an upward-sloping short-run aggregate supply curve 
B)  a vertical short-run aggregate supply curve 
C)  a downward-sloping aggregate demand curve 
D)  None of the above is correct. 
A)  an upward-sloping short-run aggregate supply curve 
B)  a vertical short-run aggregate supply curve 
C)  a downward-sloping aggregate demand curve 
D)  None of the above is correct.

Question 18

Other things the same, a decrease in the price level causes real wealth to

Accepted Answer

A)  fall, interest rates to fall, and the dollar to appreciate. 
B)  fall, interest rates to rise, and the dollar to depreciate. 
C)  rise, interest rates to rise, and the dollar to appreciate. 
D)  rise, interest rates to fall, and the dollar to depreciate. 
A)  fall, interest rates to fall, and the dollar to appreciate. 
B)  fall, interest rates to rise, and the dollar to depreciate. 
C)  rise, interest rates to rise, and the dollar to appreciate. 
D)  rise, interest rates to fall, and the dollar to depreciate.

Question 19

Figure 15-2.
  
-Refer to Figure 15-2. Point B represents

Accepted Answer

A)  a short-run equilibrium and a long-run equilibrium. 
B)  a short-run equilibrium but not a long-run equilibrium. 
C)  a long-run equilibrium but not a short-run equilibrium. 
D)  neither a short-run equilibrium nor a long-run equilibrium. 
A)  a short-run equilibrium and a long-run equilibrium. 
B)  a short-run equilibrium but not a long-run equilibrium. 
C)  a long-run equilibrium but not a short-run equilibrium. 
D)  neither a short-run equilibrium nor a long-run equilibrium.

Question 20

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.

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

What variables besides real GDP tend to decline during recessions? Given the definition of real GDP, argue that declines in these variables are to be expected.

The long-run aggregate supply curve shifts left if

Suppose a shift in aggregate demand creates an economic contraction. If policymakers can respond with sufficient speed and precision, they can offset the initial shift by shifting

If the price level is higher than expected, firms might raise their production in the short run if

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

When the price level falls

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

As the price level rises, the exchange rate

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

In the mid-1970s the price of oil rose dramatically. This

The quantity of money has no real impact on things people really care about like whether or not they have a job. Most economists would agree that this statement is appropriate concerning

According to the classical model, which of the following would double if the quantity of money doubled?

In 2009 Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right?

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

Historically, the change in real GDP during recessions has been

The equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level), where a is a positive number, represents

Other things the same, a decrease in the price level causes real wealth to

Figure 15-2. -Refer to Figure 15-2. Point B represents

Which of the following will both make people buy more?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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Exam 15: Aggregate Demand and Aggregate Supply

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

What variables besides real GDP tend to decline during recessions? Given the definition of real GDP, argue that declines in these variables are to be expected.

The long-run aggregate supply curve shifts left if

Suppose a shift in aggregate demand creates an economic contraction. If policymakers can respond with sufficient speed and precision, they can offset the initial shift by shifting

If the price level is higher than expected, firms might raise their production in the short run if

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

When the price level falls

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

As the price level rises, the exchange rate

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

In the mid-1970s the price of oil rose dramatically. This

The quantity of money has no real impact on things people really care about like whether or not they have a job. Most economists would agree that this statement is appropriate concerning

According to the classical model, which of the following would double if the quantity of money doubled?

In 2009 Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right?

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

Historically, the change in real GDP during recessions has been

The equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level), where a is a positive number, represents

Other things the same, a decrease in the price level causes real wealth to

Figure 15-2. -Refer to Figure 15-2. Point B represents

Which of the following will both make people buy more?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters