Question 1

The downward slope of the aggregate demand curve is based on logic that as the price level rises, consumption, investment, and net exports all fall.

Accepted Answer

A) True 
 B)False

Question 2

Other things the same, an increase in the amount of capital firms wish to purchase would initially shift

Accepted Answer

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

Question 3

Which of the following would not be included in aggregate demand?

Accepted Answer

A)  additions of newly produced goods to inventory 
B)  purchases of U.S. services by foreigners 
C)  the purchase of newly produced capital goods 
D)  government transfer payments such as Social Security payments 
A)  additions of newly produced goods to inventory 
B)  purchases of U.S. services by foreigners 
C)  the purchase of newly produced capital goods 
D)  government transfer payments such as Social Security payments

Question 4

Which of the following alone can explain the change in the price level and output during World War II?

Accepted Answer

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

Question 5

Figure 15-2.
  
-Refer to Optimism. How is the new long-run equilibrium different from the original one?

Accepted Answer

A)  both price and real GDP are higher 
B)  both price and real GDP are lower. 
C)  the price level is the same and GDP is higher. 
D)  the price level is higher and real GDP is the same. 
A)  both price and real GDP are higher 
B)  both price and real GDP are lower. 
C)  the price level is the same and GDP is higher. 
D)  the price level is higher and real GDP is the same.

Question 6

When the dollar depreciates, U.S.

Accepted Answer

A)  exports and imports increase. 
B)  exports increase, while imports decrease. 
C)  exports decrease, while imports increase. 
D)  exports and imports decrease. 
A)  exports and imports increase. 
B)  exports increase, while imports decrease. 
C)  exports decrease, while imports increase. 
D)  exports and imports decrease.

Question 7

Which of the following is included in the aggregate demand for goods and services?

Accepted Answer

A)  consumption demand 
B)  investment demand 
C)  net exports 
D)  All of the above are correct. 
A)  consumption demand 
B)  investment demand 
C)  net exports 
D)  All of the above are correct.

Question 8

In the last half of 1999, the U.S. unemployment rate was about 4 percent. Historical experience suggests that this is

Accepted Answer

A)  above the natural rate, so real GDP growth was likely low. 
B)  above the natural rate, so real GDP growth was likely high. 
C)  below the natural rate, so real GDP growth was likely low. 
D)  below the natural rate, so real GDP growth was likely high. 
A)  above the natural rate, so real GDP growth was likely low. 
B)  above the natural rate, so real GDP growth was likely high. 
C)  below the natural rate, so real GDP growth was likely low. 
D)  below the natural rate, so real GDP growth was likely high.

Question 9

The variables on the vertical and horizontal axes of the aggregate demand and supply graph are

Accepted Answer

A)  the price level and real output. 
B)  real output and employment. 
C)  employment and the inflation rate. 
D)  the value of money and the price level. 
A)  the price level and real output. 
B)  real output and employment. 
C)  employment and the inflation rate. 
D)  the value of money and the price level.

Question 10

The long-run aggregate supply curve shifts right if

Accepted Answer

A)  immigration from abroad increases. 
B)  the capital stock increases. 
C)  technology advances. 
D)  All of the above are correct. 
A)  immigration from abroad increases. 
B)  the capital stock increases. 
C)  technology advances. 
D)  All of the above are correct.

Question 11

Other things the same, if the price level rises, then domestic interest rates

Accepted Answer

A)  rise, so domestic residents will want to hold more foreign bonds. 
B)  rise, so domestic residents will want to hold fewer foreign bonds. 
C)  fall, so domestic residents will want to hold more foreign bonds. 
D)  fall, so domestic residents will want to hold fewer foreign bonds. 
A)  rise, so domestic residents will want to hold more foreign bonds. 
B)  rise, so domestic residents will want to hold fewer foreign bonds. 
C)  fall, so domestic residents will want to hold more foreign bonds. 
D)  fall, so domestic residents will want to hold fewer foreign bonds.

Question 12

Figure 15-2.
  
-Refer to Financial Crisis. What happens to the price level and real GDP in the short run?

Accepted Answer

A)  both the price level and real GDP rise 
B)  the the price level level rises and real GDP falls 
C)  the the price level level falls and real GDP rises 
D)  both the price level and real GDP fall 
A)  both the price level and real GDP rise 
B)  the the price level level rises and real GDP falls 
C)  the the price level level falls and real GDP rises 
D)  both the price level and real GDP fall

Question 13

Other things the same, a decrease in the price level makes the interest rate decrease, which leads to a depreciation of the dollar in the market for foreign-currency exchange.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A)  an increase in the expected price level 
B)  an increase in the capital stock 
C)  an increase in the quantity of labor available 
D)  All of the above are correct. 
A)  an increase in the expected price level 
B)  an increase in the capital stock 
C)  an increase in the quantity of labor available 
D)  All of the above are correct.

Question 15

The long-run effect of an increase in government spending is to raise

Accepted Answer

A)  both real output and the price level. 
B)  real output and lower the price level. 
C)  real output and leave the price level unchanged. 
D)  the price level and leave real output unchanged. 
A)  both real output and the price level. 
B)  real output and lower the price level. 
C)  real output and leave the price level unchanged. 
D)  the price level and leave real output unchanged.

Question 16

The long-run trend in real GDP is upward. How is this possible given business cycles? What explains the upward trend?

Accepted Answer

There are occasional short-lived periods

Question 17

From 2006 to 2008 there was a dramatic fall in the price of houses. If this fall made people feel less wealthy, then it would have shifted

Accepted Answer

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

Question 18

Other things the same, a decrease 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 19

If the dollar appreciates because of speculation or government policy U.S.

Accepted Answer

A)  aggregate demand shifts left. U.S. aggregate demand also shifts left if other countries experience recessions. 
B)  aggregate demand shifts left. U.S. aggregate demand shifts right if other countries experience recessions. 
C)  aggregate demand shifts right. U.S. aggregate demand also shifts right if other countries experience recessions. 
D)  aggregate demand shifts right. U.S. aggregate demand shifts left if other countries experience recessions. 
A)  aggregate demand shifts left. U.S. aggregate demand also shifts left if other countries experience recessions. 
B)  aggregate demand shifts left. U.S. aggregate demand shifts right if other countries experience recessions. 
C)  aggregate demand shifts right. U.S. aggregate demand also shifts right if other countries experience recessions. 
D)  aggregate demand shifts right. U.S. aggregate demand shifts left if other countries experience recessions.

Question 20

If the central bank increased the money supply in response to a decrease in short-run aggregate supply, unemployment would return towards its natural rate, but prices would rise even more.

Accepted Answer

A) True 
 B)False

The downward slope of the aggregate demand curve is based on logic that as the price level rises, consumption, investment, and net exports all fall.

Other things the same, an increase in the amount of capital firms wish to purchase would initially shift

Which of the following would not be included in aggregate demand?

Which of the following alone can explain the change in the price level and output during World War II?

Figure 15-2. -Refer to Optimism. How is the new long-run equilibrium different from the original one?

When the dollar depreciates, U.S.

Which of the following is included in the aggregate demand for goods and services?

In the last half of 1999, the U.S. unemployment rate was about 4 percent. Historical experience suggests that this is

The variables on the vertical and horizontal axes of the aggregate demand and supply graph are

The long-run aggregate supply curve shifts right if

Other things the same, if the price level rises, then domestic interest rates

Figure 15-2. -Refer to Financial Crisis. What happens to the price level and real GDP in the short run?

Other things the same, a decrease in the price level makes the interest rate decrease, which leads to a depreciation of the dollar in the market for foreign-currency exchange.

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

The long-run effect of an increase in government spending is to raise

The long-run trend in real GDP is upward. How is this possible given business cycles? What explains the upward trend?

From 2006 to 2008 there was a dramatic fall in the price of houses. If this fall made people feel less wealthy, then it would have shifted

Other things the same, a decrease in the price level makes consumers feel

If the dollar appreciates because of speculation or government policy U.S.

If the central bank increased the money supply in response to a decrease in short-run aggregate supply, unemployment would return towards its natural rate, but prices would rise even 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

The downward slope of the aggregate demand curve is based on logic that as the price level rises, consumption, investment, and net exports all fall.

Other things the same, an increase in the amount of capital firms wish to purchase would initially shift

Which of the following would not be included in aggregate demand?

Which of the following alone can explain the change in the price level and output during World War II?

Figure 15-2. -Refer to Optimism. How is the new long-run equilibrium different from the original one?

When the dollar depreciates, U.S.

Which of the following is included in the aggregate demand for goods and services?

In the last half of 1999, the U.S. unemployment rate was about 4 percent. Historical experience suggests that this is

The variables on the vertical and horizontal axes of the aggregate demand and supply graph are

The long-run aggregate supply curve shifts right if

Other things the same, if the price level rises, then domestic interest rates

Figure 15-2. -Refer to Financial Crisis. What happens to the price level and real GDP in the short run?

Other things the same, a decrease in the price level makes the interest rate decrease, which leads to a depreciation of the dollar in the market for foreign-currency exchange.

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

The long-run effect of an increase in government spending is to raise

The long-run trend in real GDP is upward. How is this possible given business cycles? What explains the upward trend?

From 2006 to 2008 there was a dramatic fall in the price of houses. If this fall made people feel less wealthy, then it would have shifted

Other things the same, a decrease in the price level makes consumers feel

If the dollar appreciates because of speculation or government policy U.S.

If the central bank increased the money supply in response to a decrease in short-run aggregate supply, unemployment would return towards its natural rate, but prices would rise even 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