Question 1

Other things the same, the aggregate quantity of output supplied will increase if the price level

Accepted Answer

A)  is lower than expected so that firms believe the relative price of their output has increased. 
B)  is lower than expected so that firms believe the relative price of their output has decreased. 
C)  is higher than expected so that firms believe the relative price of their output has increased. 
D)  is higher than expected so that firms believe the relative price of their output has decreased. 
A)  is lower than expected so that firms believe the relative price of their output has increased. 
B)  is lower than expected so that firms believe the relative price of their output has decreased. 
C)  is higher than expected so that firms believe the relative price of their output has increased. 
D)  is higher than expected so that firms believe the relative price of their output has decreased.

Question 2

Suppose the economy is in long-run equilibrium. If there is a tax cut at the same time that major new sources of oil are discovered in the country, then in the short-run

Accepted Answer

A)  real GDP will rise and the price level might rise, fall, or stay the same. 
B)  real GDP will fall and the price level might rise, fall, or stay the same. 
C)  the price level will rise, and real GDP might rise, fall, or stay the same. 
D)  the price level will fall, and real GDP might rise, fall, or stay the same. 
A)  real GDP will rise and the price level might rise, fall, or stay the same. 
B)  real GDP will fall and the price level might rise, fall, or stay the same. 
C)  the price level will rise, and real GDP might rise, fall, or stay the same. 
D)  the price level will fall, and real GDP might rise, fall, or stay the same.

Question 3

Changes in the price of oil

Accepted Answer

A)  can only lead to recessions. 
B)  have not contributed much to output fluctuations in the United States. 
C)  change the economy principally by changing aggregate demand. 
D)  created both inflation and recession in the United States in the 1970s. 
A)  can only lead to recessions. 
B)  have not contributed much to output fluctuations in the United States. 
C)  change the economy principally by changing aggregate demand. 
D)  created both inflation and recession in the United States in the 1970s.

Question 4

Use sticky-wage theory to explain why an increase in the expected price level shifts the aggregate supply curve.

Accepted Answer

When people expect the price l

Question 5

An economic contraction caused by a shift in aggregate demand causes prices to

Accepted Answer

A)  rise in the short run, and rise even more in the long run. 
B)  rise in the short run, and fall back to their original level in the long run. 
C)  fall in the short run, and fall even more in the long run. 
D)  fall in the short run, and rise back to their original level in the long run. 
A)  rise in the short run, and rise even more in the long run. 
B)  rise in the short run, and fall back to their original level in the long run. 
C)  fall in the short run, and fall even more in the long run. 
D)  fall in the short run, and rise back to their original level in the long run.

Question 6

The logic of the exchange-rate effect begins with a change in the price level changing the interest rate.

Accepted Answer

A) True 
 B)False

Question 7

The short-run effects of an increase in the expected price level include

Accepted Answer

A)  a lower level of output and a lower price level. 
B)  a lower level of output and a higher price level. 
C)  a higher level of output and a lower price level. 
D)  a higher level of output and a higher price level. 
A)  a lower level of output and a lower price level. 
B)  a lower level of output and a higher price level. 
C)  a higher level of output and a lower price level. 
D)  a higher level of output and a higher price level.

Question 8

The aggregate demand and aggregate supply graph has

Accepted Answer

A)  quantity of output on the horizontal axis. Output can be measured by the GDP deflator. 
B)  quantity of output on the horizontal axis. Output can be measured by real GDP. 
C)  quantity of output on the vertical axis. Output can be measured by the GDP deflator. 
D)  quantity of output on the vertical axis. Output can be measured by real GDP. 
A)  quantity of output on the horizontal axis. Output can be measured by the GDP deflator. 
B)  quantity of output on the horizontal axis. Output can be measured by real GDP. 
C)  quantity of output on the vertical axis. Output can be measured by the GDP deflator. 
D)  quantity of output on the vertical axis. Output can be measured by real GDP.

Question 9

When the money supply increases

Accepted Answer

A)  interest rates fall and so aggregate demand shifts right. 
B)  interest rates fall and so aggregate demand shifts left. 
C)  interest rates rise and so aggregate demand shifts right. 
D)  interest rates rise and so aggregate demand shifts left. 
A)  interest rates fall and so aggregate demand shifts right. 
B)  interest rates fall and so aggregate demand shifts left. 
C)  interest rates rise and so aggregate demand shifts right. 
D)  interest rates rise and so aggregate demand shifts left.

Question 10

Which of the following would cause prices and real GDP 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 11

During a recession the economy experiences

Accepted Answer

A)  rising employment and income. 
B)  rising employment and falling income. 
C)  rising income and falling employment. 
D)  falling employment and income. 
A)  rising employment and income. 
B)  rising employment and falling income. 
C)  rising income and falling employment. 
D)  falling employment and income.

Question 12

When the price level falls the quantity of

Accepted Answer

A)  consumption goods demanded rises, while the quantity of net exports demanded falls. 
B)  consumption goods demanded and the quantity of net exports demanded both rise. 
C)  consumption goods demanded and the quantity of net exports demanded both fall. 
D)  consumption goods demanded falls, while the quantity of net exports demand rises. 
A)  consumption goods demanded rises, while the quantity of net exports demanded falls. 
B)  consumption goods demanded and the quantity of net exports demanded both rise. 
C)  consumption goods demanded and the quantity of net exports demanded both fall. 
D)  consumption goods demanded falls, while the quantity of net exports demand rises.

Question 13

Which of the following effects provide incentives for consumers to spend less when the price level rises?

Accepted Answer

A)  the wealth effect and the interest-rate effect 
B)  the wealth effect but not the interest-rate effect 
C)  the interest-rate effect but not the wealth effect 
D)  neither the wealth-effect nor the interest rate effect 
A)  the wealth effect and the interest-rate effect 
B)  the wealth effect but not the interest-rate effect 
C)  the interest-rate effect but not the wealth effect 
D)  neither the wealth-effect nor the interest rate effect

Question 14

The curve that shows the quantity of goods and services that firms produce and sell

Accepted Answer

A)  as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-demand curve. 
B)  as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-supply curve. 
C)  as it relates to the overall price level is called the aggregate-demand curve. 
D)  as it relates to the overall price level is called the aggregate-supply curve. 
A)  as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-demand curve. 
B)  as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-supply curve. 
C)  as it relates to the overall price level is called the aggregate-demand curve. 
D)  as it relates to the overall price level is called the aggregate-supply curve.

Question 15

A decrease in the money supply causes the interest rate to rise so that investment falls.

Accepted Answer

A) True 
 B)False

Question 16

The model of aggregate demand and aggregate supply

Accepted Answer

A)  is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution of resources between markets to explain aggregate relationships. 
B)  is different from the model of supply and demand for a particular market, in that we have to separate real and nominal variables in the aggregate model. 
C)  is a straightforward extension of the model of supply and demand for a particular market, in which substitution of resources between markets is highlighted. 
D)  is a straightforward extension of the model of supply and demand for a particular market, in which the interaction between real and nominal variables is highlighted. 
A)  is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution of resources between markets to explain aggregate relationships. 
B)  is different from the model of supply and demand for a particular market, in that we have to separate real and nominal variables in the aggregate model. 
C)  is a straightforward extension of the model of supply and demand for a particular market, in which substitution of resources between markets is highlighted. 
D)  is a straightforward extension of the model of supply and demand for a particular market, in which the interaction between real and nominal variables is highlighted.

Question 17

The long-run aggregate supply curve would shift right if immigration from abroad

Accepted Answer

A)  increased or Congress made a substantial increase in the minimum wage. 
B)  decreased or Congress abolished the minimum wage. 
C)  increased or Congress abolished the minimum wage. 
D)  decreased or Congress made a substantial increase in the minimum wage. 
A)  increased or Congress made a substantial increase in the minimum wage. 
B)  decreased or Congress abolished the minimum wage. 
C)  increased or Congress abolished the minimum wage. 
D)  decreased or Congress made a substantial increase in the minimum wage.

Question 18

Other things the same, as the price level rises, 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 19

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,

Accepted Answer

A)  production is more profitable and employment rises. 
B)  production is more profitable and employment falls. 
C)  production is less profitable and employment rises. 
D)  production is less profitable and employment falls. 
A)  production is more profitable and employment rises. 
B)  production is more profitable and employment falls. 
C)  production is less profitable and employment rises. 
D)  production is less profitable and employment falls.

Question 20

Economic variables are most often expressed in

Accepted Answer

A)  nominal terms, and that's what's important. 
B)  nominal terms, but real variables are what's important. 
C)  real terms, and that's what's important. 
D)  real terms, but nominal variables are what's important. 
A)  nominal terms, and that's what's important. 
B)  nominal terms, but real variables are what's important. 
C)  real terms, and that's what's important. 
D)  real terms, but nominal variables are what's important.

Other things the same, the aggregate quantity of output supplied will increase if the price level

Suppose the economy is in long-run equilibrium. If there is a tax cut at the same time that major new sources of oil are discovered in the country, then in the short-run

Changes in the price of oil

Use sticky-wage theory to explain why an increase in the expected price level shifts the aggregate supply curve.

An economic contraction caused by a shift in aggregate demand causes prices to

The logic of the exchange-rate effect begins with a change in the price level changing the interest rate.

The short-run effects of an increase in the expected price level include

The aggregate demand and aggregate supply graph has

When the money supply increases

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

During a recession the economy experiences

When the price level falls the quantity of

Which of the following effects provide incentives for consumers to spend less when the price level rises?

The curve that shows the quantity of goods and services that firms produce and sell

A decrease in the money supply causes the interest rate to rise so that investment falls.

The model of aggregate demand and aggregate supply

The long-run aggregate supply curve would shift right if immigration from abroad

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

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,

Economic variables are most often expressed in

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, the aggregate quantity of output supplied will increase if the price level

Suppose the economy is in long-run equilibrium. If there is a tax cut at the same time that major new sources of oil are discovered in the country, then in the short-run

Changes in the price of oil

Use sticky-wage theory to explain why an increase in the expected price level shifts the aggregate supply curve.

An economic contraction caused by a shift in aggregate demand causes prices to

The logic of the exchange-rate effect begins with a change in the price level changing the interest rate.

The short-run effects of an increase in the expected price level include

The aggregate demand and aggregate supply graph has

When the money supply increases

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

During a recession the economy experiences

When the price level falls the quantity of

Which of the following effects provide incentives for consumers to spend less when the price level rises?

The curve that shows the quantity of goods and services that firms produce and sell

A decrease in the money supply causes the interest rate to rise so that investment falls.

The model of aggregate demand and aggregate supply

The long-run aggregate supply curve would shift right if immigration from abroad

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

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,

Economic variables are most often expressed in

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