Question 1

Which of the following would cause prices to fall and output to rise in the short run?

Accepted Answer

A)  short-run aggregate supply shifts right 
B)  short-run aggregate supply shifts left 
C)  aggregate demand shifts right 
D)  aggregate demand shifts left 
A)  short-run aggregate supply shifts right 
B)  short-run aggregate supply shifts left 
C)  aggregate demand shifts right 
D)  aggregate demand shifts left

Question 2

Figure 15-2.
  
-Refer to Pessimism. What happens to the expected price level and what's the result for wage bargaining?

Accepted Answer

A)  The expected price level rises. Bargains are struck for higher wages. 
B)  The expected price level rises. Bargains are struck for lower wages. 
C)  The expected price level falls. Bargains are struck for higher wages. 
D)  The expected price level falls. Bargains are struck for lower wages. 
A)  The expected price level rises. Bargains are struck for higher wages. 
B)  The expected price level rises. Bargains are struck for lower wages. 
C)  The expected price level falls. Bargains are struck for higher wages. 
D)  The expected price level falls. Bargains are struck for lower wages.

Question 3

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 4

An increase in the expected price level shifts short-run aggregate supply to the

Accepted Answer

A)  right, and an increase in the actual price level shifts short-run aggregate supply to the right. 
B)  right, and an increase in the actual price level does not shift short-run aggregate supply. 
C)  left, and an increase in the actual price level shifts short-run aggregate supply to the left. 
D)  left, and an increase in the actual price level does not shift short-run aggregate supply. 
A)  right, and an increase in the actual price level shifts short-run aggregate supply to the right. 
B)  right, and an increase in the actual price level does not shift short-run aggregate supply. 
C)  left, and an increase in the actual price level shifts short-run aggregate supply to the left. 
D)  left, and an increase in the actual price level does not shift short-run aggregate supply.

Question 5

Other things the same, an increase in the price level makes consumers feel

Accepted Answer

A)  less wealthy, so the quantity of goods and services demanded falls. 
B)  less wealthy, so the quantity of goods and services demanded rises. 
C)  more wealthy, so the quantity of goods and services demanded rises. 
D)  more wealthy, so the quantity of goods and services demanded falls. 
A)  less wealthy, so the quantity of goods and services demanded falls. 
B)  less wealthy, so the quantity of goods and services demanded rises. 
C)  more wealthy, so the quantity of goods and services demanded rises. 
D)  more wealthy, so the quantity of goods and services demanded falls.

Question 6

Although wages, incomes, and interest rates are most often discussed in nominal terms, what matters most are their real values.

Accepted Answer

A) True 
 B)False

Question 7

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

Accepted Answer

A) True 
 B)False

Question 8

When the price level rises unexpectedly, some businesses may mistake part of the increase for an increase in the price of their product relative to others and so decrease their production.

Accepted Answer

A) True 
 B)False

Question 9

Other things the same, as the price level rises,

Accepted Answer

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

Question 10

Aggregate demand shifts right when the government

Accepted Answer

A)  raises personal income taxes. 
B)  increases the money supply. 
C)  repeals an investment tax credit. 
D)  All of the above are correct. 
A)  raises personal income taxes. 
B)  increases the money supply. 
C)  repeals an investment tax credit. 
D)  All of the above are correct.

Question 11

Figure 15-2.
  
-Refer to Pessimism. In the short run what happens to the price level and real GDP?

Accepted Answer

A)  Both the price level and real GDP rise. 
B)  Both the price level and real GDP fall. 
C)  The price level rises and real GDP falls. 
D)  The price level falls and real GDP rises. 
A)  Both the price level and real GDP rise. 
B)  Both the price level and real GDP fall. 
C)  The price level rises and real GDP falls. 
D)  The price level falls and real GDP rises.

Question 12

Keynes explained that recessions and depressions occur because of

Accepted Answer

A)  excess aggregate demand. 
B)  inadequate aggregate demand. 
C)  excess aggregate supply. 
D)  inadequate aggregate supply. 
A)  excess aggregate demand. 
B)  inadequate aggregate demand. 
C)  excess aggregate supply. 
D)  inadequate aggregate supply.

Question 13

Which of the following both shift aggregate demand left?

Accepted Answer

A)  a decrease in taxes and at a given price level consumers feel more wealthy 
B)  a decrease in taxes and at a given price level consumers feel less wealthy 
C)  an increase in taxes and at a given price level consumers feel more wealthy 
D)  an increase in taxes and at a given price level consumers feel less wealthy 
A)  a decrease in taxes and at a given price level consumers feel more wealthy 
B)  a decrease in taxes and at a given price level consumers feel less wealthy 
C)  an increase in taxes and at a given price level consumers feel more wealthy 
D)  an increase in taxes and at a given price level consumers feel less wealthy

Question 14

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 15

Other things the same, continued increases in technology lead to

Accepted Answer

A)  continued increases in the price level and real GDP. 
B)  continued increases in the price level but not continued increases in real GDP. 
C)  continued increases in real GDP but not continued increases in the price level. 
D)  None of the above are correct. 
A)  continued increases in the price level and real GDP. 
B)  continued increases in the price level but not continued increases in real GDP. 
C)  continued increases in real GDP but not continued increases in the price level. 
D)  None of the above are correct.

Question 16

If wages are sticky, then a greater than expected increase in the price level

Accepted Answer

A)  raises the real costs of production, so the short-run aggregate supply curve shifts left. 
B)  raises the real costs of production, so the aggregate quantity of goods and services declines. 
C)  reduces the real costs of production, so the short-run aggregate supply curve shifts right. 
D)  reduces the real costs of production, so the aggregate quantity of good and services rises. 
A)  raises the real costs of production, so the short-run aggregate supply curve shifts left. 
B)  raises the real costs of production, so the aggregate quantity of goods and services declines. 
C)  reduces the real costs of production, so the short-run aggregate supply curve shifts right. 
D)  reduces the real costs of production, so the aggregate quantity of good and services rises.

Question 17

Which of the following shifts aggregate demand to the left?

Accepted Answer

A)  The price level rises. 
B)  The price level falls. 
C)  The dollar depreciates for some reason other than a change in the price level. 
D)  Stock prices fall for some reason other than a change in the price level. 
A)  The price level rises. 
B)  The price level falls. 
C)  The dollar depreciates for some reason other than a change in the price level. 
D)  Stock prices fall for some reason other than a change in the price level.

Question 18

The classical dichotomy and monetary neutrality are represented graphically by

Accepted Answer

A)  an upward-sloping long-run aggregate-supply curve. 
B)  a vertical long-run aggregate-supply curve. 
C)  an upward-sloping short-run aggregate-curve. 
D)  a downward-sloping aggregate-demand curve. 
A)  an upward-sloping long-run aggregate-supply curve. 
B)  a vertical long-run aggregate-supply curve. 
C)  an upward-sloping short-run aggregate-curve. 
D)  a downward-sloping aggregate-demand curve.

Question 19

Which of the following is most commonly used to monitor short-run changes in economic activity?

Accepted Answer

A)  the inflation rate 
B)  real GDP 
C)  aggregate demand 
D)  aggregate supply 
A)  the inflation rate 
B)  real GDP 
C)  aggregate demand 
D)  aggregate supply

Question 20

At a given price level, an increase in which of the following shifts aggregate demand to the right?

Accepted Answer

A)  consumption 
B)  investment 
C)  government expenditures 
D)  All of the above are correct. 
A)  consumption 
B)  investment 
C)  government expenditures 
D)  All of the above are correct.

Which of the following would cause prices to fall and output to rise in the short run?

Figure 15-2. -Refer to Pessimism. What happens to the expected price level and what's the result for wage bargaining?

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

An increase in the expected price level shifts short-run aggregate supply to the

Other things the same, an increase in the price level makes consumers feel

Although wages, incomes, and interest rates are most often discussed in nominal terms, what matters most are their real values.

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

When the price level rises unexpectedly, some businesses may mistake part of the increase for an increase in the price of their product relative to others and so decrease their production.

Other things the same, as the price level rises,

Aggregate demand shifts right when the government

Figure 15-2. -Refer to Pessimism. In the short run what happens to the price level and real GDP?

Keynes explained that recessions and depressions occur because of

Which of the following both shift aggregate demand left?

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

Other things the same, continued increases in technology lead to

If wages are sticky, then a greater than expected increase in the price level

Which of the following shifts aggregate demand to the left?

The classical dichotomy and monetary neutrality are represented graphically by

Which of the following is most commonly used to monitor short-run changes in economic activity?

At a given price level, an increase in which of the following shifts aggregate demand to the right?

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

Which of the following would cause prices to fall and output to rise in the short run?

Figure 15-2. -Refer to Pessimism. What happens to the expected price level and what's the result for wage bargaining?

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

An increase in the expected price level shifts short-run aggregate supply to the

Other things the same, an increase in the price level makes consumers feel

Although wages, incomes, and interest rates are most often discussed in nominal terms, what matters most are their real values.

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

When the price level rises unexpectedly, some businesses may mistake part of the increase for an increase in the price of their product relative to others and so decrease their production.

Other things the same, as the price level rises,

Aggregate demand shifts right when the government

Figure 15-2. -Refer to Pessimism. In the short run what happens to the price level and real GDP?

Keynes explained that recessions and depressions occur because of

Which of the following both shift aggregate demand left?

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

Other things the same, continued increases in technology lead to

If wages are sticky, then a greater than expected increase in the price level

Which of the following shifts aggregate demand to the left?

The classical dichotomy and monetary neutrality are represented graphically by

Which of the following is most commonly used to monitor short-run changes in economic activity?

At a given price level, an increase in which of the following shifts aggregate demand to the right?

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