Question 1

If aggregate demand and aggregate supply both shift right, we can be sure that the price level is higher in the short run.

Accepted Answer

A) True 
 B)False

Question 2

Since the end of World War II, the U.S. has almost always had rising prices and an upward trend in real GDP. This can be explained

Accepted Answer

A)  only by technological progress. 
B)  only by money supply growth. 
C)  by technological progress and money supply growth. 
D)  None of the above is correct. 
A)  only by technological progress. 
B)  only by money supply growth. 
C)  by technological progress and money supply growth. 
D)  None of the above is correct.

Question 3

If aggregate demand shifts left, then in the short run

Accepted Answer

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

Question 4

Which of the following is correct?

Accepted Answer

A)  Economic fluctuations are easily predicted by competent economists. 
B)  Recessions have never occurred very close together. 
C)  Spending, income, and production do not fluctuate closely with real GDP. 
D)  None of the above is correct. 
A)  Economic fluctuations are easily predicted by competent economists. 
B)  Recessions have never occurred very close together. 
C)  Spending, income, and production do not fluctuate closely with real GDP. 
D)  None of the above is correct.

Question 5

Other things the same, as the price level decreases it induces greater spending on

Accepted Answer

A)  both net exports and investment. 
B)  net exports but not investment. 
C)  investment but not net exports. 
D)  neither net exports nor investment. 
A)  both net exports and investment. 
B)  net exports but not investment. 
C)  investment but not net exports. 
D)  neither net exports nor investment.

Question 6

Illustrate the classical analysis of growth and inflation with aggregate demand and long-run aggregate supply curves.

Accepted Answer

See graph.
 @#IMG-DLM& Over time, technological ad

Question 7

The recession of 2008-2009 was associated with a fall in housing prices which shifted aggregate demand to the left.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following did the Fed do during the recession of 2008-2009?

Accepted Answer

A)  lowered the federal funds rate and sold securities and loans 
B)  lowered the federal funds rate and purchased securities and loans 
C)  raised the federal funds rate and sold securities and loans 
D)  raised the federal funds rate and purchased securities and loans 
A)  lowered the federal funds rate and sold securities and loans 
B)  lowered the federal funds rate and purchased securities and loans 
C)  raised the federal funds rate and sold securities and loans 
D)  raised the federal funds rate and purchased securities and loans

Question 9

The Central Bank of Wiknam increases the money supply at the same time the Parliament of Wiknam passes a new investment tax credit. Which of these policies shift aggregate demand to the right?

Accepted Answer

A)  both the money supply increase and the investment tax credit 
B)  the money supply increase but not the investment tax credit 
C)  the investment tax credit but not the money supply increase 
D)  neither the investment tax credit nor the money supply increase 
A)  both the money supply increase and the investment tax credit 
B)  the money supply increase but not the investment tax credit 
C)  the investment tax credit but not the money supply increase 
D)  neither the investment tax credit nor the money supply increase

Question 10

Other things the same, an increase in the price level induces people to hold

Accepted Answer

A)  less money, so they lend less, and the interest rate rises. 
B)  less money, so they lend more, and the interest rate falls. 
C)  more money, so they lend more, and the interest rate falls. 
D)  more money, so they lend less, and the interest rate rises. 
A)  less money, so they lend less, and the interest rate rises. 
B)  less money, so they lend more, and the interest rate falls. 
C)  more money, so they lend more, and the interest rate falls. 
D)  more money, so they lend less, and the interest rate rises.

Question 11

Of the following theories, which is consistent with a vertical long-run aggregate supply curve?

Accepted Answer

A)  the sticky-wage theory 
B)  misperceptions theory 
C)  both the sticky-wage and misperceptions theories. 
D)  neither the sticky-wage nor the misperceptions theory. 
A)  the sticky-wage theory 
B)  misperceptions theory 
C)  both the sticky-wage and misperceptions theories. 
D)  neither the sticky-wage nor the misperceptions theory.

Question 12

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

Accepted Answer

A)  the supply of dollars in the market for foreign-currency exchange increases, so the exchange rate rises. 
B)  the supply of dollars in the market for foreign-currency exchange increases, so the exchange rate falls. 
C)  the supply of dollars in the market for foreign-currency exchange decreases, so the exchange rate rises. 
D)  the supply of dollars in the market for foreign-currency exchange decreases, so the exchange rate falls. 
A)  the supply of dollars in the market for foreign-currency exchange increases, so the exchange rate rises. 
B)  the supply of dollars in the market for foreign-currency exchange increases, so the exchange rate falls. 
C)  the supply of dollars in the market for foreign-currency exchange decreases, so the exchange rate rises. 
D)  the supply of dollars in the market for foreign-currency exchange decreases, so the exchange rate falls.

Question 13

Figure 15-1
  
-Refer to Figure 15-1. In the short run, a favorable shift in aggregate supply would move the economy from

Accepted Answer

A)  A to B. 
B)  B to C. 
C)  C to D. 
D)  D to A. 
A)  A to B. 
B)  B to C. 
C)  C to D. 
D)  D to A.

Question 14

The classical model is appropriate for analysis of the economy in the

Accepted Answer

A)  long run, since evidence indicates that money is not neutral in the long run. 
B)  long run, since real and nominal variables are essentially determined separately in the long run. 
C)  short run, provided money is not neutral. 
D)  short run, provided real and nominal variables are highly intertwined. 
A)  long run, since evidence indicates that money is not neutral in the long run. 
B)  long run, since real and nominal variables are essentially determined separately in the long run. 
C)  short run, provided money is not neutral. 
D)  short run, provided real and nominal variables are highly intertwined.

Question 15

Most economists believe that classical macroeconomic theory is a good description of the economy

Accepted Answer

A)  in neither the short nor long run. 
B)  in the short run and in the long run. 
C)  in the short run, but not in the long run. 
D)  in the long run, but not in the short run. 
A)  in neither the short nor long run. 
B)  in the short run and in the long run. 
C)  in the short run, but not in the long run. 
D)  in the long run, but not in the short run.

Question 16

Other things the same, if workers and firms expected prices to rise by 2 percent but instead they rise by 3 percent, then

Accepted Answer

A)  employment and production rise. 
B)  employment rises and production falls. 
C)  employment falls and production rises. 
D)  employment and production fall. 
A)  employment and production rise. 
B)  employment rises and production falls. 
C)  employment falls and production rises. 
D)  employment and production fall.

Question 17

In the short-run an increase in the costs of production makes

Accepted Answer

A)  output and prices rise. 
B)  output rise and prices fall. 
C)  output fall and prices rise. 
D)  output and prices fall. 
A)  output and prices rise. 
B)  output rise and prices fall. 
C)  output fall and prices rise. 
D)  output and prices fall.

Question 18

Other things the same, as the price level falls,

Accepted Answer

A)  the money supply falls. 
B)  interest rates rise. 
C)  a dollar buys more domestic goods. 
D)  the aggregate-demand curve shifts right. 
A)  the money supply falls. 
B)  interest rates rise. 
C)  a dollar buys more domestic goods. 
D)  the aggregate-demand curve shifts right.

Question 19

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)  both an investment tax credit and a decrease in income tax rates 
B)  an investment tax credit but not a decrease in income tax rates 
C)  a decrease in income tax rates but not an investment tax credit 
D)  neither an investment tax credit nor a decrease in income tax rates 
A)  both an investment tax credit and a decrease in income tax rates 
B)  an investment tax credit but not a decrease in income tax rates 
C)  a decrease in income tax rates but not an investment tax credit 
D)  neither an investment tax credit nor a decrease in income tax rates

Question 20

The aggregate supply curve is upward sloping in

Accepted Answer

A)  the short and long run. 
B)  neither the short nor long run. 
C)  the long run, but not the short run. 
D)  the short run, but not the long run. 
A)  the short and long run. 
B)  neither the short nor long run. 
C)  the long run, but not the short run. 
D)  the short run, but not the long run.

If aggregate demand and aggregate supply both shift right, we can be sure that the price level is higher in the short run.

Since the end of World War II, the U.S. has almost always had rising prices and an upward trend in real GDP. This can be explained

If aggregate demand shifts left, then in the short run

Which of the following is correct?

Other things the same, as the price level decreases it induces greater spending on

Illustrate the classical analysis of growth and inflation with aggregate demand and long-run aggregate supply curves.

The recession of 2008-2009 was associated with a fall in housing prices which shifted aggregate demand to the left.

Which of the following did the Fed do during the recession of 2008-2009?

The Central Bank of Wiknam increases the money supply at the same time the Parliament of Wiknam passes a new investment tax credit. Which of these policies shift aggregate demand to the right?

Other things the same, an increase in the price level induces people to hold

Of the following theories, which is consistent with a vertical long-run aggregate supply curve?

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

Figure 15-1 -Refer to Figure 15-1. In the short run, a favorable shift in aggregate supply would move the economy from

The classical model is appropriate for analysis of the economy in the

Most economists believe that classical macroeconomic theory is a good description of the economy

Other things the same, if workers and firms expected prices to rise by 2 percent but instead they rise by 3 percent, then

In the short-run an increase in the costs of production makes

Other things the same, as the price level falls,

Which of the following shifts aggregate demand to the right?

The aggregate supply curve is upward sloping 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

If aggregate demand and aggregate supply both shift right, we can be sure that the price level is higher in the short run.

Since the end of World War II, the U.S. has almost always had rising prices and an upward trend in real GDP. This can be explained

If aggregate demand shifts left, then in the short run

Which of the following is correct?

Other things the same, as the price level decreases it induces greater spending on

Illustrate the classical analysis of growth and inflation with aggregate demand and long-run aggregate supply curves.

The recession of 2008-2009 was associated with a fall in housing prices which shifted aggregate demand to the left.

Which of the following did the Fed do during the recession of 2008-2009?

The Central Bank of Wiknam increases the money supply at the same time the Parliament of Wiknam passes a new investment tax credit. Which of these policies shift aggregate demand to the right?

Other things the same, an increase in the price level induces people to hold

Of the following theories, which is consistent with a vertical long-run aggregate supply curve?

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

Figure 15-1 -Refer to Figure 15-1. In the short run, a favorable shift in aggregate supply would move the economy from

The classical model is appropriate for analysis of the economy in the

Most economists believe that classical macroeconomic theory is a good description of the economy

Other things the same, if workers and firms expected prices to rise by 2 percent but instead they rise by 3 percent, then

In the short-run an increase in the costs of production makes

Other things the same, as the price level falls,

Which of the following shifts aggregate demand to the right?

The aggregate supply curve is upward sloping 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