Question 1

The recessions associated with the business cycle come at regular intervals.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)  Congress reduces purchases of new weapons systems. 
B)  The Fed buys bonds in the open market. 
C)  The price level falls. 
D)  Net exports fall. 
A)  Congress reduces purchases of new weapons systems. 
B)  The Fed buys bonds in the open market. 
C)  The price level falls. 
D)  Net exports fall.

Question 3

As the price level rises

Accepted Answer

A)  people are more willing to lend, so interest rates rise. 
B)  people are more willing to lend, so interest rates fall. 
C)  people are less willing to lend, so interest rates fall. 
D)  people are less willing to lend, so interest rates rise. 
A)  people are more willing to lend, so interest rates rise. 
B)  people are more willing to lend, so interest rates fall. 
C)  people are less willing to lend, so interest rates fall. 
D)  people are less willing to lend, so interest rates rise.

Question 4

Other things the same, an unexpected fall in the price level results in some firms having

Accepted Answer

A)  lower than desired prices which increases their sales. 
B)  lower than desired prices which depresses their sales. 
C)  higher than desired prices which increases their sales. 
D)  higher than desired prices which depresses their sales. 
A)  lower than desired prices which increases their sales. 
B)  lower than desired prices which depresses their sales. 
C)  higher than desired prices which increases their sales. 
D)  higher than desired prices which depresses their sales.

Question 5

As the price level falls

Accepted Answer

A)  people are more willing to lend, so interest rates rise. 
B)  people are more willing to lend, so interest rates fall. 
C)  people are less willing to lend, so interest rates fall. 
D)  people are less willing to lend, so interest rates rise. 
A)  people are more willing to lend, so interest rates rise. 
B)  people are more willing to lend, so interest rates fall. 
C)  people are less willing to lend, so interest rates fall. 
D)  people are less willing to lend, so interest rates rise.

Question 6

Which of the following correctly describes actions of the U.S. government during the recession of 2008-2009?

Accepted Answer

A)  It refused to provide banks funding and made no significant changes in government spending. 
B)  It refused to provide banks funding but made a large increase in government spending. 
C)  It became part owner of some banks but made no significant change in government spending 
D)  It became part owner of some banks and made a large increase in government spending. 
A)  It refused to provide banks funding and made no significant changes in government spending. 
B)  It refused to provide banks funding but made a large increase in government spending. 
C)  It became part owner of some banks but made no significant change in government spending 
D)  It became part owner of some banks and made a large increase in government spending.

Question 7

Other things the same, an increase in the expected price level shifts

Accepted Answer

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

Question 8

Aggregate demand shifts right if

Accepted Answer

A)  taxes rise and shifts left if stock prices rise. 
B)  taxes rise and shifts left if stock prices fall. 
C)  taxes fall and shifts left if stock prices rise. 
D)  taxes fall and shifts left is stock prices fall. 
A)  taxes rise and shifts left if stock prices rise. 
B)  taxes rise and shifts left if stock prices fall. 
C)  taxes fall and shifts left if stock prices rise. 
D)  taxes fall and shifts left is stock prices fall.

Question 9

The model of aggregate demand and aggregate supply explains the relationship between

Accepted Answer

A)  the price and quantity of a particular good. 
B)  unemployment and output. 
C)  wages and employment. 
D)  real GDP and the price level. 
A)  the price and quantity of a particular good. 
B)  unemployment and output. 
C)  wages and employment. 
D)  real GDP and the price level.

Question 10

If output is above its natural rate, then according to sticky-wage theory

Accepted Answer

A)  workers and firms will strike bargains for lower wages. In response to the lower wages firms will produce less at any given price level. 
B)  workers and firms will strike bargains for lower wages. In response to the lower wages firms will produce more at any given price level. 
C)  will strike bargains for higher wages. In response to the higher wages firms will produce less at any given price level. 
D)  workers and firms will strike bargains for higher wages. In response to the higher wages firms will produce more at any given price level. 
A)  workers and firms will strike bargains for lower wages. In response to the lower wages firms will produce less at any given price level. 
B)  workers and firms will strike bargains for lower wages. In response to the lower wages firms will produce more at any given price level. 
C)  will strike bargains for higher wages. In response to the higher wages firms will produce less at any given price level. 
D)  workers and firms will strike bargains for higher wages. In response to the higher wages firms will produce more at any given price level.

Question 11

Figure 15-2.
  
-Refer to Optimism. In the long run, the change in price expectations created by optimism shifts

Accepted Answer

A)  long-run aggregate supply right. 
B)  long-run aggregate supply left. 
C)  short-run aggregate supply right. 
D)  short-run aggregate supply left. 
A)  long-run aggregate supply right. 
B)  long-run aggregate supply left. 
C)  short-run aggregate supply right. 
D)  short-run aggregate supply left.

Question 12

Aggregate demand includes

Accepted Answer

A)  both the quantity of goods and services the government and customers abroad want to buy. 
B)  neither the quantity of goods and services the government wants to buy nor the quantity of goods and services customers abroad want to buy. 
C)  the quantity of goods and service the government wants to buy, but not the quantity of goods and services customers abroad want to buy. 
D)  the quantity of goods and services customers abroad want to buy, but not the quantity of goods and services the government wants to buy. 
A)  both the quantity of goods and services the government and customers abroad want to buy. 
B)  neither the quantity of goods and services the government wants to buy nor the quantity of goods and services customers abroad want to buy. 
C)  the quantity of goods and service the government wants to buy, but not the quantity of goods and services customers abroad want to buy. 
D)  the quantity of goods and services customers abroad want to buy, but not the quantity of goods and services the government wants to buy.

Question 13

Other things the same, a decrease in the price level causes the interest rate to

Accepted Answer

A)  increase, the dollar to appreciate, and net exports to increase. 
B)  increase, the dollar to depreciate, and net exports to decrease. 
C)  decrease, the dollar to depreciate, and net exports to increase. 
D)  decrease, the dollar to appreciate, and net exports to decrease. 
A)  increase, the dollar to appreciate, and net exports to increase. 
B)  increase, the dollar to depreciate, and net exports to decrease. 
C)  decrease, the dollar to depreciate, and net exports to increase. 
D)  decrease, the dollar to appreciate, and net exports to decrease.

Question 14

When the price level falls

Accepted Answer

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

Question 15

People had been expecting the price level to be 170 but it turns out to be 165. Diamond Power Tools increases the number of workers it employs. What could explain this?

Accepted Answer

A)  both sticky price theory and sticky wage theory 
B)  sticky price theory but not sticky wage theory 
C)  sticky wage theory but not sticky price theory 
D)  neither sticky wage theory nor sticky price theory 
A)  both sticky price theory and sticky wage theory 
B)  sticky price theory but not sticky wage theory 
C)  sticky wage theory but not sticky price theory 
D)  neither sticky wage theory nor sticky price theory

Question 16

Figure 15-2.
  
-Refer to Figure 15-2. The shift of the short-run aggregate-supply curve from AS1 to AS2

Accepted Answer

A)  could be caused by an outbreak of war in the Middle East. 
B)  could be caused by a decrease in the expected price level. 
C)  causes the economy to experience an increase in the unemployment rate. 
D)  causes the economy to experience stagflation. 
A)  could be caused by an outbreak of war in the Middle East. 
B)  could be caused by a decrease in the expected price level. 
C)  causes the economy to experience an increase in the unemployment rate. 
D)  causes the economy to experience stagflation.

Question 17

Which of the following shifts short-run, but not long-run aggregate supply right?

Accepted Answer

A)  a decrease in the actual price level 
B)  a decrease in the expected price level 
C)  a decrease in the capital stock 
D)  an increase in the money supply 
A)  a decrease in the actual price level 
B)  a decrease in the expected price level 
C)  a decrease in the capital stock 
D)  an increase in the money supply

Question 18

Which of the following is not included in aggregate demand?

Accepted Answer

A)  purchases of stock and bonds 
B)  purchases of services such as visits to the doctor 
C)  purchases of capital goods such as equipment in a factory 
D)  purchases by foreigners of consumer goods produced in the United States 
A)  purchases of stock and bonds 
B)  purchases of services such as visits to the doctor 
C)  purchases of capital goods such as equipment in a factory 
D)  purchases by foreigners of consumer goods produced in the United States

Question 19

Other things the same, if the price level rises by 2% and people were expecting it to rise by 5%, then some firms have

Accepted Answer

A)  higher than desired prices which increases their sales. 
B)  higher than desired prices which depresses their sales. 
C)  lower than desired prices which increases their sales. 
D)  lower than desired prices which depresses their sales. 
A)  higher than desired prices which increases their sales. 
B)  higher than desired prices which depresses their sales. 
C)  lower than desired prices which increases their sales. 
D)  lower than desired prices which depresses their sales.

Question 20

The position of the long-run aggregate supply curve

Accepted Answer

A)  is determined by the things that determine output in the classical model. 
B)  is at the point where the unemployment rate is zero. 
C)  shifts to the right when the price level increases. 
D)  is at the point where the economy would cease to grow. 
A)  is determined by the things that determine output in the classical model. 
B)  is at the point where the unemployment rate is zero. 
C)  shifts to the right when the price level increases. 
D)  is at the point where the economy would cease to grow.

The recessions associated with the business cycle come at regular intervals.

Which of the following shifts aggregate demand to the right?

As the price level rises

Other things the same, an unexpected fall in the price level results in some firms having

As the price level falls

Which of the following correctly describes actions of the U.S. government during the recession of 2008-2009?

Other things the same, an increase in the expected price level shifts

Aggregate demand shifts right if

The model of aggregate demand and aggregate supply explains the relationship between

If output is above its natural rate, then according to sticky-wage theory

Figure 15-2. -Refer to Optimism. In the long run, the change in price expectations created by optimism shifts

Aggregate demand includes

Other things the same, a decrease in the price level causes the interest rate to

When the price level falls

People had been expecting the price level to be 170 but it turns out to be 165. Diamond Power Tools increases the number of workers it employs. What could explain this?

Figure 15-2. -Refer to Figure 15-2. The shift of the short-run aggregate-supply curve from AS₁ to AS₂

Which of the following shifts short-run, but not long-run aggregate supply right?

Which of the following is not included in aggregate demand?

Other things the same, if the price level rises by 2% and people were expecting it to rise by 5%, then some firms have

The position of the long-run aggregate supply curve

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

Exam 15: Aggregate Demand and Aggregate Supply

The recessions associated with the business cycle come at regular intervals.

Which of the following shifts aggregate demand to the right?

As the price level rises

Other things the same, an unexpected fall in the price level results in some firms having

As the price level falls

Which of the following correctly describes actions of the U.S. government during the recession of 2008-2009?

Other things the same, an increase in the expected price level shifts

Aggregate demand shifts right if

The model of aggregate demand and aggregate supply explains the relationship between

If output is above its natural rate, then according to sticky-wage theory

Figure 15-2. -Refer to Optimism. In the long run, the change in price expectations created by optimism shifts

Aggregate demand includes

Other things the same, a decrease in the price level causes the interest rate to

When the price level falls

People had been expecting the price level to be 170 but it turns out to be 165. Diamond Power Tools increases the number of workers it employs. What could explain this?

Figure 15-2. -Refer to Figure 15-2. The shift of the short-run aggregate-supply curve from AS1 to AS2

Which of the following shifts short-run, but not long-run aggregate supply right?

Which of the following is not included in aggregate demand?

Other things the same, if the price level rises by 2% and people were expecting it to rise by 5%, then some firms have

The position of the long-run aggregate supply curve

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

Figure 15-2. -Refer to Figure 15-2. The shift of the short-run aggregate-supply curve from AS₁ to AS₂