Question 1

Which of the following can explain the upward slope of the short-run aggregate supply curve?

Accepted Answer

A)  nominal wages are slow to adjust to changing economic conditions 
B)  as the price level falls, the exchange rate falls 
C)  an increase in the money supply lowers the interest rate 
D)  an increase in the interest rate increases investment spending 
A)  nominal wages are slow to adjust to changing economic conditions 
B)  as the price level falls, the exchange rate falls 
C)  an increase in the money supply lowers the interest rate 
D)  an increase in the interest rate increases investment spending

Question 2

The effects of a higher than expected price level are shown by

Accepted Answer

A)  shifting the short-run aggregate supply curve right. 
B)  shifting the short-run aggregate supply curve left. 
C)  moving to the right along a given aggregate supply curve. 
D)  moving to the left along a given aggregate supply curve. 
A)  shifting the short-run aggregate supply curve right. 
B)  shifting the short-run aggregate supply curve left. 
C)  moving to the right along a given aggregate supply curve. 
D)  moving to the left along a given aggregate supply curve.

Question 3

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 adv

Question 4

Briefly state the three key facts about economic fluctuations.

Accepted Answer

1) Economic fluctuations are i

Question 5

Suppose the economy is in long-run equilibrium. In a short span of time, there is an increase in the money supply, a tax decrease, a pessimistic revision of expectations about future business conditions, and a rise in the value of the dollar. In the short run, we would expect

Accepted Answer

A)  the price level and real GDP both to rise. 
B)  the price level and real GDP both to fall. 
C)  the price level and real GDP both to stay the same. 
D)  All of the above are possible. 
A)  the price level and real GDP both to rise. 
B)  the price level and real GDP both to fall. 
C)  the price level and real GDP both to stay the same. 
D)  All of the above are possible.

Question 6

Suppose the economy is in long-run equilibrium and the government decreases its expenditures. Which of the following helps explain the logic of why the economy moves back to long-run equilibrium?

Accepted Answer

A)  as people revise their price-level expectations upward, firms and workers strike bargains for higher nominal wages. 
B)  as people revise their price-level expectations upward, firms and workers strike bargains for lower nominal wages. 
C)  as people revise their price-level expectations downward, firms and workers strike bargains for higher nominal wages. 
D)  as people revise their price-level expectations downward, firms and workers strike bargains for lower nominal wages. 
A)  as people revise their price-level expectations upward, firms and workers strike bargains for higher nominal wages. 
B)  as people revise their price-level expectations upward, firms and workers strike bargains for lower nominal wages. 
C)  as people revise their price-level expectations downward, firms and workers strike bargains for higher nominal wages. 
D)  as people revise their price-level expectations downward, firms and workers strike bargains for lower nominal wages.

Question 7

From 1995 to 1999 there was a dramatic rise in stock prices. If this rise made people feel wealthier, 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 8

Suppose a stock market boom makes people feel wealthier. The increase in wealth would cause people to desire

Accepted Answer

A)  increased consumption, which shifts the aggregate-demand curve right. 
B)  increased consumption, which shifts the aggregate-demand curve left. 
C)  decreased consumption, which shifts the aggregate-demand curve right. 
D)  decreased consumption, which shifts the aggregate-demand curve left. 
A)  increased consumption, which shifts the aggregate-demand curve right. 
B)  increased consumption, which shifts the aggregate-demand curve left. 
C)  decreased consumption, which shifts the aggregate-demand curve right. 
D)  decreased consumption, which shifts the aggregate-demand curve left.

Question 9

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 10

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 11

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 12

Tax cuts shift aggregate demand

Accepted Answer

A)  right as do increases in government spending. 
B)  right while increases in government spending shift aggregate demand left. 
C)  left as do increases in government spending. 
D)  left while increases in government spending shift aggregate demand right. 
A)  right as do increases in government spending. 
B)  right while increases in government spending shift aggregate demand left. 
C)  left as do increases in government spending. 
D)  left while increases in government spending shift aggregate demand right.

Question 13

Suppose a boom in stock market prices helps make people feel wealthier. Using the model of aggregate demand and aggregate supply, identify the curves that are affected, and which way these curves would shift.

Accepted Answer

The aggregate demand

Question 14

If the government repeals an investment tax credit and increases income taxes,

Accepted Answer

A)  real GDP rises, and the price level could rise, fall, or stay the same. 
B)  real GDP falls, and the price level could rise, fall, or stay the same. 
C)  real GDP and the price level rise. 
D)  real GDP and the price level fall. 
A)  real GDP rises, and the price level could rise, fall, or stay the same. 
B)  real GDP falls, and the price level could rise, fall, or stay the same. 
C)  real GDP and the price level rise. 
D)  real GDP and the price level fall.

Question 15

Which of the following would increase the price level?

Accepted Answer

A)  an increase in the money supply. 
B)  an increase in taxes. 
C)  a decrease in the expected price level. 
D)  a decrease in the natural rate of unemployment. 
A)  an increase in the money supply. 
B)  an increase in taxes. 
C)  a decrease in the expected price level. 
D)  a decrease in the natural rate of unemployment.

Question 16

According to classical macroeconomic theory, changes in the money supply change real GDP but not the price level.

Accepted Answer

A) True 
 B)False

Question 17

Most economists believe that classical theory describes the world in the short run but not in the long run.

Accepted Answer

A) True 
 B)False

Question 18

Who wrote the 1936 book titled The General Theory of Employment, Interest, and Money?

Accepted Answer

The answer of Who wrote the 1936 book titled The...

Question 19

Most economists use the aggregate demand and aggregate supply model primarily to analyze

Accepted Answer

A)  short-run fluctuations in the economy. 
B)  the effects of macroeconomic policy on the prices of individual goods. 
C)  the long-run effects of international trade policies. 
D)  productivity and economic growth. 
A)  short-run fluctuations in the economy. 
B)  the effects of macroeconomic policy on the prices of individual goods. 
C)  the long-run effects of international trade policies. 
D)  productivity and economic growth.

Question 20

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

Which of the following can explain the upward slope of the short-run aggregate supply curve?

The effects of a higher than expected price level are shown by

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

Briefly state the three key facts about economic fluctuations.

Suppose the economy is in long-run equilibrium. In a short span of time, there is an increase in the money supply, a tax decrease, a pessimistic revision of expectations about future business conditions, and a rise in the value of the dollar. In the short run, we would expect

Suppose the economy is in long-run equilibrium and the government decreases its expenditures. Which of the following helps explain the logic of why the economy moves back to long-run equilibrium?

From 1995 to 1999 there was a dramatic rise in stock prices. If this rise made people feel wealthier, then it would have shifted

Suppose a stock market boom makes people feel wealthier. The increase in wealth would cause people to desire

As the price level rises

When the price level falls the quantity of

The model of aggregate demand and aggregate supply

Tax cuts shift aggregate demand

Suppose a boom in stock market prices helps make people feel wealthier. Using the model of aggregate demand and aggregate supply, identify the curves that are affected, and which way these curves would shift.

If the government repeals an investment tax credit and increases income taxes,

Which of the following would increase the price level?

According to classical macroeconomic theory, changes in the money supply change real GDP but not the price level.

Most economists believe that classical theory describes the world in the short run but not in the long run.

Who wrote the 1936 book titled The General Theory of Employment, Interest, and Money?

Most economists use the aggregate demand and aggregate supply model primarily to analyze

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

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 and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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Exam 15: Aggregate Demand and Aggregate Supply

Which of the following can explain the upward slope of the short-run aggregate supply curve?

The effects of a higher than expected price level are shown by

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

Briefly state the three key facts about economic fluctuations.

Suppose the economy is in long-run equilibrium. In a short span of time, there is an increase in the money supply, a tax decrease, a pessimistic revision of expectations about future business conditions, and a rise in the value of the dollar. In the short run, we would expect

Suppose the economy is in long-run equilibrium and the government decreases its expenditures. Which of the following helps explain the logic of why the economy moves back to long-run equilibrium?

From 1995 to 1999 there was a dramatic rise in stock prices. If this rise made people feel wealthier, then it would have shifted

Suppose a stock market boom makes people feel wealthier. The increase in wealth would cause people to desire

As the price level rises

When the price level falls the quantity of

The model of aggregate demand and aggregate supply

Tax cuts shift aggregate demand

Suppose a boom in stock market prices helps make people feel wealthier. Using the model of aggregate demand and aggregate supply, identify the curves that are affected, and which way these curves would shift.

If the government repeals an investment tax credit and increases income taxes,

Which of the following would increase the price level?

According to classical macroeconomic theory, changes in the money supply change real GDP but not the price level.

Most economists believe that classical theory describes the world in the short run but not in the long run.

Who wrote the 1936 book titled The General Theory of Employment, Interest, and Money?

Most economists use the aggregate demand and aggregate supply model primarily to analyze

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

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 and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters