Question 1

When production costs rise,

Accepted Answer

A)  the short-run aggregate supply curve shifts to the right. 
B)  the short-run aggregate supply curve shifts to the left. 
C)  the aggregate demand curve shifts to the right. 
D)  the aggregate demand curve shifts to the left. 
A)  the short-run aggregate supply curve shifts to the right. 
B)  the short-run aggregate supply curve shifts to the left. 
C)  the aggregate demand curve shifts to the right. 
D)  the aggregate demand curve shifts to the left.

Question 2

Using the aggregate demand and aggregate supply model, a decrease of what curve is by itself consistent with the changes in prices and output that occurred during the onset of the Great Depression?

Accepted Answer

The answer of Using the aggregate demand and aggregate supply...

Question 3

Other things the same, an increase in the price level makes the dollars people hold worth

Accepted Answer

A)  more, so they can buy more. 
B)  more, so they can buy less. 
C)  less, so they can buy more. 
D)  less, so they can buy less. 
A)  more, so they can buy more. 
B)  more, so they can buy less. 
C)  less, so they can buy more. 
D)  less, so they can buy less.

Question 4

During recessions employment typically

Accepted Answer

A)  falls substantially. As the recession ends, employment rises rapidly. 
B)  rises substantially. As the recession ends, employment declines gradually. 
C)  falls substantially. As the recession ends, employment rises gradually. 
D)  rises substantially. As the recession ends, employment declines rapidly. 
A)  falls substantially. As the recession ends, employment rises rapidly. 
B)  rises substantially. As the recession ends, employment declines gradually. 
C)  falls substantially. As the recession ends, employment rises gradually. 
D)  rises substantially. As the recession ends, employment declines rapidly.

Question 5

Other things the same, continued increases in the money supply lead to

Accepted Answer

A)  continued increases in the price level and real GDP. 
B)  continued increases in the price level but not continued increases in real GDP. 
C)  continued increases in real GDP but not continued increases in the price level. 
D)  a one-time permanent increase in both prices and real GDP. 
A)  continued increases in the price level and real GDP. 
B)  continued increases in the price level but not continued increases in real GDP. 
C)  continued increases in real GDP but not continued increases in the price level. 
D)  a one-time permanent increase in both prices and real GDP.

Question 6

Increased output and prices in the United States in the early 1940s were mostly the result of increased government expenditures.

Accepted Answer

A) True 
 B)False

Question 7

Figure 33-6.  
-Refer to Figure 33-6. Which of the long-run aggregate-supply curves is consistent with a recession?

Accepted Answer

A)  LRAS1 
B)  LRAS2 
C)  LRAS3 
D)  Both LRAS1 and LRAS3 
A)  LRAS1 
B)  LRAS2 
C)  LRAS3 
D)  Both LRAS1 and LRAS3

Question 8

Which of the following does not help explain the direction the quantity of aggregate goods demanded changes when the price level decreases?

Accepted Answer

A)  consumer wealth rises 
B)  borrowing rises 
C)  each dollar is worth more domestic goods 
D)  the dollar appreciates relative to other currencies 
A)  consumer wealth rises 
B)  borrowing rises 
C)  each dollar is worth more domestic goods 
D)  the dollar appreciates relative to other currencies

Question 9

According to classical macroeconomic theory, changes in the money supply affect

Accepted Answer

A)  unemployment and the price level. 
B)  unemployment but not the price level. 
C)  the price level, but not unemployment. 
D)  neither the price level nor unemployment. 
A)  unemployment and the price level. 
B)  unemployment but not the price level. 
C)  the price level, but not unemployment. 
D)  neither the price level nor unemployment.

Question 10

The long-run aggregate supply curve shifts left if

Accepted Answer

A)  the capital stock increases. 
B)  there is a natural disaster. 
C)  the government removes some environmental regulations that limit production methods. 
D)  None of the above is correct. 
A)  the capital stock increases. 
B)  there is a natural disaster. 
C)  the government removes some environmental regulations that limit production methods. 
D)  None of the above is correct.

Question 11

Suppose the expected price level increases. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Accepted Answer

The short run aggreg

Question 12

An increase in the money supply causes the interest rate to fall, investment spending to rise, and aggregate demand to shift right.

Accepted Answer

A) True 
 B)False

Question 13

The position of the long-run aggregate supply curve

Accepted Answer

A)  is determined by resource usage and technology. 
B)  is at the point where the unemployment rate is zero. 
C)  shifts to the right when the money supply increases. 
D)  is at the point where the economy would cease to grow. 
A)  is determined by resource usage and technology. 
B)  is at the point where the unemployment rate is zero. 
C)  shifts to the right when the money supply increases. 
D)  is at the point where the economy would cease to grow.

Question 14

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)  a decrease in the money supply 
B)  increases in the profitability of capital due perhaps to technological progress. 
C)  the repeal of an investment tax credit 
D)  a decrease in the price level 
A)  a decrease in the money supply 
B)  increases in the profitability of capital due perhaps to technological progress. 
C)  the repeal of an investment tax credit 
D)  a decrease in the price level

Question 15

Because the price level does not affect the long-run determinants of real GDP, the long-run aggregate-supply is vertical.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following accounts for about two-thirds of the decline in output during a recession?

Accepted Answer

A)  the decline in government purchases. 
B)  the decline in total consumption spending. 
C)  the decline in investment spending. 
D)  the decline in net exports. 
A)  the decline in government purchases. 
B)  the decline in total consumption spending. 
C)  the decline in investment spending. 
D)  the decline in net exports.

Question 17

Which of the following would cause stagflation?

Accepted Answer

A)  aggregate demand shifts right 
B)  aggregate demand shifts left 
C)  aggregate supply shifts right 
D)  aggregate supply shifts left 
A)  aggregate demand shifts right 
B)  aggregate demand shifts left 
C)  aggregate supply shifts right 
D)  aggregate supply shifts left

Question 18

Investment is a

Accepted Answer

A)  small part of real GDP, so it accounts for a small share of the fluctuation in real GDP. 
B)  small part of real GDP, yet it accounts for a large share of the fluctuation in real GDP. 
C)  large part of real GDP, so it accounts for a large share of the fluctuation in real GDP. 
D)  large part of real GDP, yet it accounts for a small share of the fluctuation in real GDP. 
A)  small part of real GDP, so it accounts for a small share of the fluctuation in real GDP. 
B)  small part of real GDP, yet it accounts for a large share of the fluctuation in real GDP. 
C)  large part of real GDP, so it accounts for a large share of the fluctuation in real GDP. 
D)  large part of real GDP, yet it accounts for a small share of the fluctuation in real GDP.

Question 19

According to the classical model, an increase in the money supply causes

Accepted Answer

A)  output to increase in the long run. 
B)  the unemployment rate to fall in the long run. 
C)  prices to rise in the long run. 
D)  interest rates to fall in the long run. 
A)  output to increase in the long run. 
B)  the unemployment rate to fall in the long run. 
C)  prices to rise in the long run. 
D)  interest rates to fall in the long run.

Question 20

The misperceptions theory of the short-run aggregate supply curve says that if the price level is higher than people expected, then some firms believe that the relative price of what they produce has

Accepted Answer

A)  decreased, so they increase production. 
B)  decreased, so they decrease production. 
C)  increased, so they increase production. 
D)  increased, so they decrease production. 
A)  decreased, so they increase production. 
B)  decreased, so they decrease production. 
C)  increased, so they increase production. 
D)  increased, so they decrease production.

When production costs rise,

Using the aggregate demand and aggregate supply model, a decrease of what curve is by itself consistent with the changes in prices and output that occurred during the onset of the Great Depression?

Other things the same, an increase in the price level makes the dollars people hold worth

During recessions employment typically

Other things the same, continued increases in the money supply lead to

Increased output and prices in the United States in the early 1940s were mostly the result of increased government expenditures.

Figure 33-6. -Refer to Figure 33-6. Which of the long-run aggregate-supply curves is consistent with a recession?

Which of the following does not help explain the direction the quantity of aggregate goods demanded changes when the price level decreases?

According to classical macroeconomic theory, changes in the money supply affect

The long-run aggregate supply curve shifts left if

Suppose the expected price level increases. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

An increase in the money supply causes the interest rate to fall, investment spending to rise, and aggregate demand to shift right.

The position of the long-run aggregate supply curve

Which of the following shifts aggregate demand to the right?

Because the price level does not affect the long-run determinants of real GDP, the long-run aggregate-supply is vertical.

Which of the following accounts for about two-thirds of the decline in output during a recession?

Which of the following would cause stagflation?

Investment is a

According to the classical model, an increase in the money supply causes

The misperceptions theory of the short-run aggregate supply curve says that if the price level is higher than people expected, then some firms believe that the relative price of what they produce has

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

When production costs rise,

Using the aggregate demand and aggregate supply model, a decrease of what curve is by itself consistent with the changes in prices and output that occurred during the onset of the Great Depression?

Other things the same, an increase in the price level makes the dollars people hold worth

During recessions employment typically

Other things the same, continued increases in the money supply lead to

Increased output and prices in the United States in the early 1940s were mostly the result of increased government expenditures.

Figure 33-6. -Refer to Figure 33-6. Which of the long-run aggregate-supply curves is consistent with a recession?

Which of the following does not help explain the direction the quantity of aggregate goods demanded changes when the price level decreases?

According to classical macroeconomic theory, changes in the money supply affect

The long-run aggregate supply curve shifts left if

Suppose the expected price level increases. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

An increase in the money supply causes the interest rate to fall, investment spending to rise, and aggregate demand to shift right.

The position of the long-run aggregate supply curve

Which of the following shifts aggregate demand to the right?

Because the price level does not affect the long-run determinants of real GDP, the long-run aggregate-supply is vertical.

Which of the following accounts for about two-thirds of the decline in output during a recession?

Which of the following would cause stagflation?

Investment is a

According to the classical model, an increase in the money supply causes

The misperceptions theory of the short-run aggregate supply curve says that if the price level is higher than people expected, then some firms believe that the relative price of what they produce has

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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