Question 1

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

Accepted Answer

A)  increase foreign bond purchases, so the dollar appreciates. 
B)  increase foreign bond purchases, so the dollar depreciates. 
C)  increase domestic bond purchases, so the dollar appreciates. 
D)  increase domestic bond purchases, so the dollar depreciates. 
A)  increase foreign bond purchases, so the dollar appreciates. 
B)  increase foreign bond purchases, so the dollar depreciates. 
C)  increase domestic bond purchases, so the dollar appreciates. 
D)  increase domestic bond purchases, so the dollar depreciates.

Question 2

The long-run aggregate supply curve shows that by itself a permanent change in aggregate demand would lead to a long-run change

Accepted Answer

A)  in the price level and output. 
B)  in the price level, but not output. 
C)  in output, but not the price level. 
D)  in neither the price level nor output. 
A)  in the price level and output. 
B)  in the price level, but not output. 
C)  in output, but not the price level. 
D)  in neither the price level nor output.

Question 3

Other things the same, when the government spends more, the initial effect is that

Accepted Answer

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

Question 4

Figure 15-2.
  
-Refer to Financial Crisis. Suppose the economy reaches long-run equilibrium without the Fed responding. Now suppose the financial crisis ends and the ability of banks to lend returns to normal. In which case is the price level lower compared to its value prior to the crisis?

Accepted Answer

A)  both after the economy reaches long-run equilibrium during the crisis and in the long-run equilibrium after the crisis is over 
B)  after the economy reaches long-run equilibrium during the crisis but not in the long-run equilibrium after the crisis is over 
C)  in the long-run equilibrium after the crisis is over but not after the economy reaches long-run equilibrium during the crisis 
D)  neither after the economy reaches long-run equilibrium during the crisis nor in the long-run equilibrium after the crisis is over 
A)  both after the economy reaches long-run equilibrium during the crisis and in the long-run equilibrium after the crisis is over 
B)  after the economy reaches long-run equilibrium during the crisis but not in the long-run equilibrium after the crisis is over 
C)  in the long-run equilibrium after the crisis is over but not after the economy reaches long-run equilibrium during the crisis 
D)  neither after the economy reaches long-run equilibrium during the crisis nor in the long-run equilibrium after the crisis is over

Question 5

The aggregate demand and aggregate supply model implies monetary neutrality

Accepted Answer

A)  only in the short run. 
B)  only in the long run. 
C)  in both the short run and the long run. 
D)  in neither the short run nor long run. 
A)  only in the short run. 
B)  only in the long run. 
C)  in both the short run and the long run. 
D)  in neither the short run nor long run.

Question 6

Which of the following affected aggregate demand during the recession of 2008-2009?

Accepted Answer

A)  a decline in residential construction and a decrease in lending 
B)  a decline in residential construction but not a decrease in lending 
C)  a decrease in lending but not a decline in residential construction 
D)  neither a decrease in residential construction nor a decrease in lending 
A)  a decline in residential construction and a decrease in lending 
B)  a decline in residential construction but not a decrease in lending 
C)  a decrease in lending but not a decline in residential construction 
D)  neither a decrease in residential construction nor a decrease in lending

Question 7

When we say that economic fluctuations are "irregular and unpredictable," we mean that

Accepted Answer

A)  the relationship between output and unemployment is erratic and difficult to characterize. 
B)  when one macroeconomic variable that measures income or spending is falling, other macroeconomic variables that measure income or spending are likely to be rising. 
C)  recessions do not occur at regular intervals. 
D)  All of the above are correct. 
A)  the relationship between output and unemployment is erratic and difficult to characterize. 
B)  when one macroeconomic variable that measures income or spending is falling, other macroeconomic variables that measure income or spending are likely to be rising. 
C)  recessions do not occur at regular intervals. 
D)  All of the above are correct.

Question 8

Suppose that during World War II the long-run aggregate supply curve shifted right. In order for price and output to have changed in the direction they did, what would have to have happened to aggregate demand?

Accepted Answer

A)  It would have to have shifted left by less than aggregate supply shifted 
B)  It would have to have to shifted left by more than aggregate supply shifted. 
C)  It would have to have shifted right by less than aggregate supply shifted 
D)  It would have to have to shifted right by more than aggregate supply shifted. 
A)  It would have to have shifted left by less than aggregate supply shifted 
B)  It would have to have to shifted left by more than aggregate supply shifted. 
C)  It would have to have shifted right by less than aggregate supply shifted 
D)  It would have to have to shifted right by more than aggregate supply shifted.

Question 9

The aggregate quantity of goods and services demanded changes as the price level falls 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 10

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

Accepted Answer

A) True 
 B)False

Question 11

If the price level falls, the real value of a dollar

Accepted Answer

A)  rises, so people will want to buy more. 
B)  rises, so people will want to buy less. 
C)  falls, so people will want to buy more. 
D)  falls, so people will want to buy less. 
A)  rises, so people will want to buy more. 
B)  rises, so people will want to buy less. 
C)  falls, so people will want to buy more. 
D)  falls, so people will want to buy less.

Question 12

Other things the same, a fall in an economy's overall level of prices tends to

Accepted Answer

A)  raise both the quantity demanded and supplied of goods and services. 
B)  raise the quantity demanded of goods and services, but lower the quantity supplied. 
C)  lower the quantity demanded of goods and services, but raise the quantity supplied. 
D)  lower both the quantity demanded and the quantity supplied of goods and services. 
A)  raise both the quantity demanded and supplied of goods and services. 
B)  raise the quantity demanded of goods and services, but lower the quantity supplied. 
C)  lower the quantity demanded of goods and services, but raise the quantity supplied. 
D)  lower both the quantity demanded and the quantity supplied of goods and services.

Question 13

Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions, then in the short run, real GDP will

Accepted Answer

A)  rise and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be unaffected. 
B)  fall and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be unaffected. 
C)  rise and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be lower. 
D)  fall and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be lower. 
A)  rise and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be unaffected. 
B)  fall and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be unaffected. 
C)  rise and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be lower. 
D)  fall and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be lower.

Question 14

Figure 15-2.
  
-Refer to Optimism. Which curve shifts and in which direction?

Accepted Answer

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

Question 15

Which of the following will reduce the price level and real output in the short run?

Accepted Answer

A)  an increase in the money supply 
B)  an increase in oil prices 
C)  a decrease in the money supply 
D)  technical progress 
A)  an increase in the money supply 
B)  an increase in oil prices 
C)  a decrease in the money supply 
D)  technical progress

Question 16

When production costs rise,

Accepted Answer

A)  the short-run aggregate supply curve shifts to the right. 
B)  the short-run aggregate supply curve shifts to the left. 
C)  the aggregate demand curve shifts to the right. 
D)  the aggregate demand curve shifts to the left. 
A)  the short-run aggregate supply curve shifts to the right. 
B)  the short-run aggregate supply curve shifts to the left. 
C)  the aggregate demand curve shifts to the right. 
D)  the aggregate demand curve shifts to the left.

Question 17

According to classical macroeconomic theory, changes in the money supply change real GDP but not the price level.

Accepted Answer

A) True 
 B)False

Question 18

Other things the same, if the U.S. price level falls, then

Accepted Answer

A)  U.S. residents want to buy more foreign bonds. The real exchange rate rises. 
B)  U.S. residents want to buy more foreign bonds. The real exchange rate falls. 
C)  U.S. residents want to buy fewer foreign bonds. The real exchange rate rises. 
D)  U.S. residents want to buy fewer foreign bonds. The real exchange rate falls. 
A)  U.S. residents want to buy more foreign bonds. The real exchange rate rises. 
B)  U.S. residents want to buy more foreign bonds. The real exchange rate falls. 
C)  U.S. residents want to buy fewer foreign bonds. The real exchange rate rises. 
D)  U.S. residents want to buy fewer foreign bonds. The real exchange rate falls.

Question 19

In the early 1930s in the United States, there was a

Accepted Answer

A)  large increase in output. In the early 1940s there was also a large increase in output. 
B)  large increase in output. In the early 1940s there was a large decrease in output. 
C)  large decrease in output. In the early 1940s there was a large increase in output. 
D)  large decrease in output. In the early 1940s there was also a large decrease in output. 
A)  large increase in output. In the early 1940s there was also a large increase in output. 
B)  large increase in output. In the early 1940s there was a large decrease in output. 
C)  large decrease in output. In the early 1940s there was a large increase in output. 
D)  large decrease in output. In the early 1940s there was also a large decrease in output.

Question 20

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.

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

The long-run aggregate supply curve shows that by itself a permanent change in aggregate demand would lead to a long-run change

Other things the same, when the government spends more, the initial effect is that

Figure 15-2. -Refer to Financial Crisis. Suppose the economy reaches long-run equilibrium without the Fed responding. Now suppose the financial crisis ends and the ability of banks to lend returns to normal. In which case is the price level lower compared to its value prior to the crisis?

The aggregate demand and aggregate supply model implies monetary neutrality

Which of the following affected aggregate demand during the recession of 2008-2009?

When we say that economic fluctuations are "irregular and unpredictable," we mean that

Suppose that during World War II the long-run aggregate supply curve shifted right. In order for price and output to have changed in the direction they did, what would have to have happened to aggregate demand?

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

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

If the price level falls, the real value of a dollar

Other things the same, a fall in an economy's overall level of prices tends to

Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions, then in the short run, real GDP will

Figure 15-2. -Refer to Optimism. Which curve shifts and in which direction?

Which of the following will reduce the price level and real output in the short run?

When production costs rise,

According to classical macroeconomic theory, changes in the money supply change real GDP but not the price level.

Other things the same, if the U.S. price level falls, then

In the early 1930s in the United States, there was a

An increase in the money supply

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

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

The long-run aggregate supply curve shows that by itself a permanent change in aggregate demand would lead to a long-run change

Other things the same, when the government spends more, the initial effect is that

Figure 15-2. -Refer to Financial Crisis. Suppose the economy reaches long-run equilibrium without the Fed responding. Now suppose the financial crisis ends and the ability of banks to lend returns to normal. In which case is the price level lower compared to its value prior to the crisis?

The aggregate demand and aggregate supply model implies monetary neutrality

Which of the following affected aggregate demand during the recession of 2008-2009?

When we say that economic fluctuations are "irregular and unpredictable," we mean that

Suppose that during World War II the long-run aggregate supply curve shifted right. In order for price and output to have changed in the direction they did, what would have to have happened to aggregate demand?

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

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

If the price level falls, the real value of a dollar

Other things the same, a fall in an economy's overall level of prices tends to

Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions, then in the short run, real GDP will

Figure 15-2. -Refer to Optimism. Which curve shifts and in which direction?

Which of the following will reduce the price level and real output in the short run?

When production costs rise,

According to classical macroeconomic theory, changes in the money supply change real GDP but not the price level.

Other things the same, if the U.S. price level falls, then

In the early 1930s in the United States, there was a

An increase in the money supply

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