Question 1

During recessions

Accepted Answer

A)  sales and profits fall. 
B)  sales and profits rise. 
C)  sales rise, profits fall. 
D)  profits fall, sales rise. 
A)  sales and profits fall. 
B)  sales and profits rise. 
C)  sales rise, profits fall. 
D)  profits fall, sales rise.

Question 2

Suppose speculators lost confidence in foreign economies and bought more U.S. bonds. How would this affect net exports in the U.S., and which way would this cause the aggregate demand curve to shift?

Accepted Answer

Net exports would fa

Question 3

The long-run aggregate supply curve would shift right if the government were to

Accepted Answer

A)  reduce the minimum-wage. 
B)  make unemployment benefits more generous. 
C)  raise taxes on investment spending. 
D)  All of the above are correct. 
A)  reduce the minimum-wage. 
B)  make unemployment benefits more generous. 
C)  raise taxes on investment spending. 
D)  All of the above are correct.

Question 4

An increase in the money supply shifts the long-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 5

Suppose that a decrease in the demand for goods and services pushes the economy into recession. What happens to the price level? If the government does nothing, what ensures that the economy still eventually gets back to the natural rate of output?

Accepted Answer

A decrease in aggregate demand causes th

Question 6

Figure 33-12.  
-Refer to Figure 33-12. Explain how the aggregate demand and aggregate supply model changed during periods 1 and 2.

Accepted Answer

The aggregate-demand

Question 7

List the three alternative explanations for the upward slope of the short run aggregate supply curve.

Accepted Answer

Sticky wages, sticky

Question 8

Which of the following shifts both the short-run and long-run aggregate supply right?

Accepted Answer

A)  an increase in the actual price level 
B)  an increase in the expected price level 
C)  an increase in the capital stock 
D)  None of the above is correct. 
A)  an increase in the actual price level 
B)  an increase in the expected price level 
C)  an increase in the capital stock 
D)  None of the above is correct.

Question 9

Figure 33-1.  
Refer to Figure 33-1. Line A is

Accepted Answer

A)  investment spending. 
B)  real GDP. 
C)  unemployment rate. 
D)  CPI. 
A)  investment spending. 
B)  real GDP. 
C)  unemployment rate. 
D)  CPI.

Question 10

The explanations for the slopes of the aggregate demand and short-run aggregate supply curves are the same as the explanations for the slopes of demand and supply curves for specific goods and services.

Accepted Answer

A) True 
 B)False

Question 11

Other things the same, if the price level rises by 2% and people were expecting it to rise by 5%, then some firms have

Accepted Answer

A)  higher than desired prices, which increases their sales. 
B)  higher than desired prices, which depresses their sales. 
C)  lower than desired prices, which increases their sales. 
D)  lower than desired prices, which depresses their sales. 
A)  higher than desired prices, which increases their sales. 
B)  higher than desired prices, which depresses their sales. 
C)  lower than desired prices, which increases their sales. 
D)  lower than desired prices, which depresses their sales.

Question 12

Most economist agree that money changes real GDP in both the short and long run.

Accepted Answer

A) True 
 B)False

Question 13

In which case can we be sure real GDP rises in the short run?

Accepted Answer

A)  foreign economies expand and government purchases rise. 
B)  foreign economies expand and government purchases fall. 
C)  foreign economies contract and government purchases fall. 
D)  foreign economies contract and government purchases rise. 
A)  foreign economies expand and government purchases rise. 
B)  foreign economies expand and government purchases fall. 
C)  foreign economies contract and government purchases fall. 
D)  foreign economies contract and government purchases rise.

Question 14

According to the classical model, which of the following would double if the quantity of money doubled?

Accepted Answer

A)  prices but not nominal income 
B)  nominal income but not prices 
C)  both prices and nominal income 
D)  neither prices nor nominal income 
A)  prices but not nominal income 
B)  nominal income but not prices 
C)  both prices and nominal income 
D)  neither prices nor nominal income

Question 15

Figure 33-2.  
Refer to Figure 33-2. Line X is

Accepted Answer

A)  investment spending. 
B)  real GDP. 
C)  unemployment rate. 
D)  CPI. 
A)  investment spending. 
B)  real GDP. 
C)  unemployment rate. 
D)  CPI.

Question 16

Some countries have high minimum wages and require a lengthy and costly process to get permission to open a business

Accepted Answer

A)  Reducing either the minimum wage or the time and cost to open a business would have no effect on the long- run aggregate supply curve. 
B)  Reducing the minimum wage and the time and cost to open a business would both shift the long-run aggregate supply curve to the right. 
C)  Reducing the minimum wage would shift long-run aggregate supply to the right. Reducing the time and cost to open a business would have no affect on the long-run aggregate supply curve. 
D)  Reducing the minimum wage would have no affect on the long-run aggregate supply curve. Reducing the time and cost to open a business would shift the long-run aggregate supply curve to the right. 
A)  Reducing either the minimum wage or the time and cost to open a business would have no effect on the long- run aggregate supply curve. 
B)  Reducing the minimum wage and the time and cost to open a business would both shift the long-run aggregate supply curve to the right. 
C)  Reducing the minimum wage would shift long-run aggregate supply to the right. Reducing the time and cost to open a business would have no affect on the long-run aggregate supply curve. 
D)  Reducing the minimum wage would have no affect on the long-run aggregate supply curve. Reducing the time and cost to open a business would shift the long-run aggregate supply curve to the right.

Question 17

If the actual price level is 165, but people had been expecting it to be 160, then

Accepted Answer

A)  the quantity of output supplied rises, but only in the short run. 
B)  the quantity of output supplied rises in the short run and the long run. 
C)  the quantity of output supplied falls, but only in the short run. 
D)  the quantity of output supplied falls in the short run and the long run. 
A)  the quantity of output supplied rises, but only in the short run. 
B)  the quantity of output supplied rises in the short run and the long run. 
C)  the quantity of output supplied falls, but only in the short run. 
D)  the quantity of output supplied falls in the short run and the long run.

Question 18

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

Accepted Answer

A)  increase foreign bond purchases, so the dollar appreciates. 
B)  increase foreign bond purchases, so the dollar depreciates. 
C)  increase domestic bond purchases, so the dollar appreciates. 
D)  increase domestic bond purchases, so the dollar depreciates. 
A)  increase foreign bond purchases, so the dollar appreciates. 
B)  increase foreign bond purchases, so the dollar depreciates. 
C)  increase domestic bond purchases, so the dollar appreciates. 
D)  increase domestic bond purchases, so the dollar depreciates.

Question 19

The Stock Market Boom of 2015
Imagine that in 2015 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time.
-Refer to Stock Market Boom 2015. In the short run what happens to the price level and real GDP?

Accepted Answer

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

Question 20

Which of the following shifts short-run aggregate supply right?

Accepted Answer

A)  an increase in the price level 
B)  an increase in the minimum wage 
C)  a decrease in the price of oil 
D)  more people migrate abroad than immigrate from abroad 
A)  an increase in the price level 
B)  an increase in the minimum wage 
C)  a decrease in the price of oil 
D)  more people migrate abroad than immigrate from abroad

During recessions

Suppose speculators lost confidence in foreign economies and bought more U.S. bonds. How would this affect net exports in the U.S., and which way would this cause the aggregate demand curve to shift?

The long-run aggregate supply curve would shift right if the government were to

An increase in the money supply shifts the long-run aggregate supply curve to the right.

Suppose that a decrease in the demand for goods and services pushes the economy into recession. What happens to the price level? If the government does nothing, what ensures that the economy still eventually gets back to the natural rate of output?

Figure 33-12. -Refer to Figure 33-12. Explain how the aggregate demand and aggregate supply model changed during periods 1 and 2.

List the three alternative explanations for the upward slope of the short run aggregate supply curve.

Which of the following shifts both the short-run and long-run aggregate supply right?

Figure 33-1. Refer to Figure 33-1. Line A is

The explanations for the slopes of the aggregate demand and short-run aggregate supply curves are the same as the explanations for the slopes of demand and supply curves for specific goods and services.

Other things the same, if the price level rises by 2% and people were expecting it to rise by 5%, then some firms have

Most economist agree that money changes real GDP in both the short and long run.

In which case can we be sure real GDP rises in the short run?

According to the classical model, which of the following would double if the quantity of money doubled?

Figure 33-2. Refer to Figure 33-2. Line X is

Some countries have high minimum wages and require a lengthy and costly process to get permission to open a business

If the actual price level is 165, but people had been expecting it to be 160, then

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

The Stock Market Boom of 2015 Imagine that in 2015 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time. -Refer to Stock Market Boom 2015. In the short run what happens to the price level and real GDP?

Which of the following shifts short-run aggregate supply right?

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

During recessions

Suppose speculators lost confidence in foreign economies and bought more U.S. bonds. How would this affect net exports in the U.S., and which way would this cause the aggregate demand curve to shift?

The long-run aggregate supply curve would shift right if the government were to

An increase in the money supply shifts the long-run aggregate supply curve to the right.

Suppose that a decrease in the demand for goods and services pushes the economy into recession. What happens to the price level? If the government does nothing, what ensures that the economy still eventually gets back to the natural rate of output?

Figure 33-12. -Refer to Figure 33-12. Explain how the aggregate demand and aggregate supply model changed during periods 1 and 2.

List the three alternative explanations for the upward slope of the short run aggregate supply curve.

Which of the following shifts both the short-run and long-run aggregate supply right?

Figure 33-1. Refer to Figure 33-1. Line A is

The explanations for the slopes of the aggregate demand and short-run aggregate supply curves are the same as the explanations for the slopes of demand and supply curves for specific goods and services.

Other things the same, if the price level rises by 2% and people were expecting it to rise by 5%, then some firms have

Most economist agree that money changes real GDP in both the short and long run.

In which case can we be sure real GDP rises in the short run?

According to the classical model, which of the following would double if the quantity of money doubled?

Figure 33-2. Refer to Figure 33-2. Line X is

Some countries have high minimum wages and require a lengthy and costly process to get permission to open a business

If the actual price level is 165, but people had been expecting it to be 160, then

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

The Stock Market Boom of 2015 Imagine that in 2015 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time. -Refer to Stock Market Boom 2015. In the short run what happens to the price level and real GDP?

Which of the following shifts short-run aggregate supply right?

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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