Question 1

Which of the following shifts aggregate demand right?

Accepted Answer

A)  both a decrease in the price level and the implementation of an investment tax credit 
B)  a decrease in the price level but not the implementation of an investment tax credit 
C)  the implementation of an investment tax credit but not a decrease in the price level 
D)  neither a decrease in the price level nor the implementation of an investment tax credit 
A)  both a decrease in the price level and the implementation of an investment tax credit 
B)  a decrease in the price level but not the implementation of an investment tax credit 
C)  the implementation of an investment tax credit but not a decrease in the price level 
D)  neither a decrease in the price level nor the implementation of an investment tax credit

Question 2

Identify the direction of the change during a recession in each of the following: consumption expenditures, investment expenditures, and unemployment.

Accepted Answer

Consumption expendit

Question 3

In response to a decrease in output, the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in short-run aggregate supply.

Accepted Answer

A) True 
 B)False

Question 4

The aggregate supply curve is

Accepted Answer

A)  vertical in the long run and slopes upward in the short run. 
B)  upward sloping in the long run and vertical in the short run. 
C)  vertical in the short run and in the long run. 
D)  upward sloping in the short run and in the long run. 
A)  vertical in the long run and slopes upward in the short run. 
B)  upward sloping in the long run and vertical in the short run. 
C)  vertical in the short run and in the long run. 
D)  upward sloping in the short run and in the long run.

Question 5

Other things the same, a decrease in the price level causes the interest rate to

Accepted Answer

A)  increase, the dollar to appreciate, and net exports to increase. 
B)  increase, the dollar to depreciate, and net exports to decrease. 
C)  decrease, the dollar to depreciate, and net exports to increase. 
D)  decrease, the dollar to appreciate, and net exports to decrease. 
A)  increase, the dollar to appreciate, and net exports to increase. 
B)  increase, the dollar to depreciate, and net exports to decrease. 
C)  decrease, the dollar to depreciate, and net exports to increase. 
D)  decrease, the dollar to appreciate, and net exports to decrease.

Question 6

Figure 33-5.  
-Refer to Figure 33-5. In Figure 33-5,

Accepted Answer

A)  Point B represents a short-run equilibrium and a long-run equilibrium. 
B)  Point B represents a short-run equilibrium, and Point A represents a long-run equilibrium. 
C)  Point B represents a long-run equilibrium, and Point A represents a short-run equilibrium. 
D)  Point B represents a long-run equilibrium, and Point C represents a short-run equilibrium. 
A)  Point B represents a short-run equilibrium and a long-run equilibrium. 
B)  Point B represents a short-run equilibrium, and Point A represents a long-run equilibrium. 
C)  Point B represents a long-run equilibrium, and Point A represents a short-run equilibrium. 
D)  Point B represents a long-run equilibrium, and Point C represents a short-run equilibrium.

Question 7

Other things the same, if prices fell when firms and workers were expecting them to rise, then

Accepted Answer

A)  employment and production would rise. 
B)  employment would rise and production would fall. 
C)  employment would fall and production would rise. 
D)  employment and production would fall. 
A)  employment and production would rise. 
B)  employment would rise and production would fall. 
C)  employment would fall and production would rise. 
D)  employment and production would fall.

Question 8

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Accepted Answer

A) True 
 B)False

Question 9

Other things the same, when the price level rises, interest rates

Accepted Answer

A)  rise, so firms increase investment. 
B)  rise, so firms decrease investment. 
C)  fall, so firms increase investment. 
D)  fall, so firms decrease investment. 
A)  rise, so firms increase investment. 
B)  rise, so firms decrease investment. 
C)  fall, so firms increase investment. 
D)  fall, so firms decrease investment.

Question 10

Suppose the economy is in long-run equilibrium. Senator A succeeds in getting taxes raised. At the same time,
Senator B succeeds in getting major restrictions on logging removed. In the short run

Accepted Answer

A)  real GDP will rise and the price level might rise, fall, or stay the same. 
B)  real GDP will fall and the price level might rise, fall, or stay the same. 
C)  the price level will rise, and real GDP might rise, fall, or stay the same. 
D)  the price level will fall, and real GDP might rise, fall, or stay the same. 
A)  real GDP will rise and the price level might rise, fall, or stay the same. 
B)  real GDP will fall and the price level might rise, fall, or stay the same. 
C)  the price level will rise, and real GDP might rise, fall, or stay the same. 
D)  the price level will fall, and real GDP might rise, fall, or stay the same.

Question 11

Financial Crisis
Suppose that banks are less able to raise funds and so lend less. Consequently, because people and households are less able to borrow, they spend less at any given price level than they would otherwise. The crisis is persistent so lending should remain depressed for some time.
-Refer to Financial Crisis. In the long run, if the Fed does not respond, the change in price expectations created by the crisis shifts

Accepted Answer

A)  aggregate demand right. 
B)  aggregate demand left. 
C)  short-run aggregate supply right. 
D)  short-run aggregate supply left. 
A)  aggregate demand right. 
B)  aggregate demand left. 
C)  short-run aggregate supply right. 
D)  short-run aggregate supply left.

Question 12

Other things the same, continued increases in technology lead to

Accepted Answer

A)  continued increases in the price level and real GDP. 
B)  continued decreases in the price level and real GDP. 
C)  continued increases in real GDP and continued increases in the price level. 
D)  continued increases in real GDP and continued decreases in the price level. 
A)  continued increases in the price level and real GDP. 
B)  continued decreases in the price level and real GDP. 
C)  continued increases in real GDP and continued increases in the price level. 
D)  continued increases in real GDP and continued decreases in the price level.

Question 13

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

Accepted Answer

A)  both an increase in the price level that is greater than expected and an increase in the expected price level. 
B)  an increase in the price level that is greater than expected, but not an increase in the expected price level. 
C)  an increase in the expected price level, but not an increase in the price level that is greater than expected. 
D)  neither an increase in the price level that is greater than expected nor an increase in the expected price level. 
A)  both an increase in the price level that is greater than expected and an increase in the expected price level. 
B)  an increase in the price level that is greater than expected, but not an increase in the expected price level. 
C)  an increase in the expected price level, but not an increase in the price level that is greater than expected. 
D)  neither an increase in the price level that is greater than expected nor an increase in the expected price level.

Question 14

According to the misperceptions theory of aggregate supply, if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent, then the firm would believe that the relative price of what it produce had

Accepted Answer

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

Question 15

Figure 33-4  
-Refer to Figure 33-4. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from

Accepted Answer

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

Question 16

A decrease in the price level

Accepted Answer

A)  increases the quantity of goods and services supplied in the short run. 
B)  decreases the quantity of goods and services supplied in the long run. 
C)  decreases the quantity of goods and services demanded. 
D)  increases the quantity of goods and services demanded. 
A)  increases the quantity of goods and services supplied in the short run. 
B)  decreases the quantity of goods and services supplied in the long run. 
C)  decreases the quantity of goods and services demanded. 
D)  increases the quantity of goods and services demanded.

Question 17

What curve shows the quantity of goods and services that firms choose to produce and sell at each price level?

Accepted Answer

The aggreg

Question 18

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

Accepted Answer

A) True 
 B)False

Question 19

What do most economists believe concerning the relation between the price level and real output?

Accepted Answer

Most economists believe that in the long

Question 20

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 long run, the change in price expectations created by the stock market boom shifts

Accepted Answer

A)  long-run aggregate supply right. 
B)  long-run aggregate supply left. 
C)  short-run aggregate supply right. 
D)  short-run aggregate supply left. 
A)  long-run aggregate supply right. 
B)  long-run aggregate supply left. 
C)  short-run aggregate supply right. 
D)  short-run aggregate supply left.

Which of the following shifts aggregate demand right?

Identify the direction of the change during a recession in each of the following: consumption expenditures, investment expenditures, and unemployment.

In response to a decrease in output, the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in short-run aggregate supply.

The aggregate supply curve is

Other things the same, a decrease in the price level causes the interest rate to

Figure 33-5. -Refer to Figure 33-5. In Figure 33-5,

Other things the same, if prices fell when firms and workers were expecting them to rise, then

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Other things the same, when the price level rises, interest rates

Suppose the economy is in long-run equilibrium. Senator A succeeds in getting taxes raised. At the same time, Senator B succeeds in getting major restrictions on logging removed. In the short run

Other things the same, continued increases in technology lead to

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

According to the misperceptions theory of aggregate supply, if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent, then the firm would believe that the relative price of what it produce had

Figure 33-4 -Refer to Figure 33-4. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from

A decrease in the price level

What curve shows the quantity of goods and services that firms choose to produce and sell at each price level?

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

What do most economists believe concerning the relation between the price level and real output?

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 long run, the change in price expectations created by the stock market boom shifts

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 shifts aggregate demand right?

Identify the direction of the change during a recession in each of the following: consumption expenditures, investment expenditures, and unemployment.

In response to a decrease in output, the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in short-run aggregate supply.

The aggregate supply curve is

Other things the same, a decrease in the price level causes the interest rate to

Figure 33-5. -Refer to Figure 33-5. In Figure 33-5,

Other things the same, if prices fell when firms and workers were expecting them to rise, then

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Other things the same, when the price level rises, interest rates

Suppose the economy is in long-run equilibrium. Senator A succeeds in getting taxes raised. At the same time, Senator B succeeds in getting major restrictions on logging removed. In the short run

Other things the same, continued increases in technology lead to

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

According to the misperceptions theory of aggregate supply, if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent, then the firm would believe that the relative price of what it produce had

Figure 33-4 -Refer to Figure 33-4. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from

A decrease in the price level

What curve shows the quantity of goods and services that firms choose to produce and sell at each price level?

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

What do most economists believe concerning the relation between the price level and real output?

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 long run, the change in price expectations created by the stock market boom shifts

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