Question 1

Which of the following would shift long-run aggregate supply to the right?

Accepted Answer

A)  increased immigration from abroad 
B)  a decrease in the price of an imported natural resource 
C)  opening the economy to international trade 
D)  All of the above are correct. 
A)  increased immigration from abroad 
B)  a decrease in the price of an imported natural resource 
C)  opening the economy to international trade 
D)  All of the above are correct.

Question 2

Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage. They may infer that the reward to working is

Accepted Answer

A)  temporarily low and so supply a smaller quantity of labor. 
B)  temporarily low and so supply a larger quantity of labor. 
C)  temporarily high and so supply a smaller quantity of labor. 
D)  temporarily high and so supply a larger quantity of labor. 
A)  temporarily low and so supply a smaller quantity of labor. 
B)  temporarily low and so supply a larger quantity of labor. 
C)  temporarily high and so supply a smaller quantity of labor. 
D)  temporarily high and so supply a larger quantity of labor.

Question 3

As the price level rises

Accepted Answer

A)  people will want to hold more money, so the interest rate rises. 
B)  people will want to hold more money, so the interest rate falls. 
C)  people will want to hold less money, so the interest rate falls. 
D)  people will want to hold less money, so the interest rate rises. 
A)  people will want to hold more money, so the interest rate rises. 
B)  people will want to hold more money, so the interest rate falls. 
C)  people will want to hold less money, so the interest rate falls. 
D)  people will want to hold less money, so the interest rate rises.

Question 4

Suppose businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases. Their reaction 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 5

The saying "Money is a veil." means that

Accepted Answer

A)  while nominal variables are the first thing we may observe about an economy, what's important are the real variables and the forces that determine them. 
B)  money is the principal medium of exchange in most economies. 
C)  the primary determinant of short-run economic fluctuations is not real variables, but rather changes in the money supply. 
D)  in the long run money is of no importance to the determination of either real or nominal variables. 
A)  while nominal variables are the first thing we may observe about an economy, what's important are the real variables and the forces that determine them. 
B)  money is the principal medium of exchange in most economies. 
C)  the primary determinant of short-run economic fluctuations is not real variables, but rather changes in the money supply. 
D)  in the long run money is of no importance to the determination of either real or nominal variables.

Question 6

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

Accepted Answer

A)  increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. 
B)  increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. 
C)  decrease foreign bond purchases, so the supply of dollars in market for foreign-currency exchange increases. 
D)  decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. 
A)  increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. 
B)  increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. 
C)  decrease foreign bond purchases, so the supply of dollars in market for foreign-currency exchange increases. 
D)  decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases.

Which of the following would shift long-run aggregate supply to the right?

Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage. They may infer that the reward to working is

As the price level rises

Suppose businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases. Their reaction would initially shift

The saying "Money is a veil." means that

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

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 shift long-run aggregate supply to the right?

Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage. They may infer that the reward to working is

As the price level rises

Suppose businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases. Their reaction would initially shift

The saying "Money is a veil." means that

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

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