Question 1

A decrease in the expected price level shifts

Accepted Answer

A)  only the long-run aggregate supply curve right. 
B)  only the short-run aggregate supply curve right. 
C)  both the short-run and the long-run aggregate supply curve right. 
D)  Neither the short-run nor the long-run aggregate supply curve right. 
A)  only the long-run aggregate supply curve right. 
B)  only the short-run aggregate supply curve right. 
C)  both the short-run and the long-run aggregate supply curve right. 
D)  Neither the short-run nor the long-run aggregate supply curve right.

Question 2

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. How is the new long-run equilibrium different from the original one?

Accepted Answer

A)  the price level and real GDP are higher 
B)  the price level and real GDP are lower. 
C)  the price level is higher and real GDP is the same. 
D)  the price level is the same and real GDP is higher. 
A)  the price level and real GDP are higher 
B)  the price level and real GDP are lower. 
C)  the price level is higher and real GDP is the same. 
D)  the price level is the same and real GDP is higher.

Question 3

Figure 33-9.  
-Refer to Figure 33-9. Suppose the economy starts where LRAS = AD1 = SRAS1. A decrease in short-run aggregate supply would be consistent with the movement to

Accepted Answer

A)  P1, Y1. 
B)  P2, Y1. 
C)  P1, Y2. 
D)  P3, Y2. 
A)  P1, Y1. 
B)  P2, Y1. 
C)  P1, Y2. 
D)  P3, Y2.

Question 4

Real GDP

Accepted Answer

A)  is the current dollar value of all goods produced by the citizens of an economy within a given time. 
B)  measures economic activity and income. 
C)  is used primarily to measure long-run changes rather than short-run fluctuations. 
D)  All of the above are correct. 
A)  is the current dollar value of all goods produced by the citizens of an economy within a given time. 
B)  measures economic activity and income. 
C)  is used primarily to measure long-run changes rather than short-run fluctuations. 
D)  All of the above are correct.

Question 5

If there are floods or droughts or a decrease in the availability of raw materials

Accepted Answer

A)  aggregate supply shifts right. 
B)  output falls in the short run. 
C)  prices fall in the short run. 
D)  None of the above is correct. 
A)  aggregate supply shifts right. 
B)  output falls in the short run. 
C)  prices fall in the short run. 
D)  None of the above is correct.

Question 6

When the actual change in the price level differs from its expected change, which of the following can explain why firms might change their production?

Accepted Answer

A)  both menu costs and mistaking a price level change for a change in relative prices 
B)  menu costs but not mistaking a price level change for a change in relative prices 
C)  mistaking a price level change for a change in relative price but not menu costs 
D)  neither menu costs nor mistaking a price level change for a change in relative prices 
A)  both menu costs and mistaking a price level change for a change in relative prices 
B)  menu costs but not mistaking a price level change for a change in relative prices 
C)  mistaking a price level change for a change in relative price but not menu costs 
D)  neither menu costs nor mistaking a price level change for a change in relative prices

Question 7

According to classical macroeconomic theory, changes in the money supply change nominal but not real variables.

Accepted Answer

A) True 
 B)False

Question 8

The long-run effect of an increase in household consumption is to raise

Accepted Answer

A)  both real output and the price level. 
B)  real output and lower the price level. 
C)  real output and leave the price level unchanged. 
D)  the price level and leave real output unchanged. 
A)  both real output and the price level. 
B)  real output and lower the price level. 
C)  real output and leave the price level unchanged. 
D)  the price level and leave real output unchanged.

Question 9

As recessions begin, income

Accepted Answer

A)  and unemployment both rise. 
B)  rises and unemployment falls. 
C)  falls and unemployment rises. 
D)  and unemployment both fall. 
A)  and unemployment both rise. 
B)  rises and unemployment falls. 
C)  falls and unemployment rises. 
D)  and unemployment both fall.

Question 10

Figure 33-4  
-Refer to Figure 33-4. If the economy starts at A and there is a fall in aggregate demand, the economy moves

Accepted Answer

A)  back to A in the long run. 
B)  to B in the long run. 
C)  to C in the long run. 
D)  to D in the long run. 
A)  back to A in the long run. 
B)  to B in the long run. 
C)  to C in the long run. 
D)  to D in the long run.

Question 11

Classical economist David Hume observed that as the money supply expanded after gold discoveries

Accepted Answer

A)  prices and output both increased immediately. 
B)  prices increased immediately while output remained unchanged. 
C)  it took time for prices to rise; in the meantime output was lower. 
D)  it took time for prices to rise; in the meantime output was higher. 
A)  prices and output both increased immediately. 
B)  prices increased immediately while output remained unchanged. 
C)  it took time for prices to rise; in the meantime output was lower. 
D)  it took time for prices to rise; in the meantime output was higher.

Question 12

Other things the same, as the price level rises, exchange rates

Accepted Answer

A)  and interest rates rise. 
B)  and interest rates fall. 
C)  fall and interest rates rise. 
D)  rise and interest rates fall. 
A)  and interest rates rise. 
B)  and interest rates fall. 
C)  fall and interest rates rise. 
D)  rise and interest rates fall.

Question 13

Most economists believe that money neutrality

Accepted Answer

A)  does not hold in the short run. 
B)  does not hold in the long run. 
C)  does not hold in either the short run or long run. 
D)  holds in the short run and the long run. 
A)  does not hold in the short run. 
B)  does not hold in the long run. 
C)  does not hold in either the short run or long run. 
D)  holds in the short run and the long run.

Question 14

The aggregate quantity of goods and services demanded changes as the price level falls because

Accepted Answer

A)  real wealth falls, interest rates rise, and the dollar appreciates. 
B)  real wealth falls, interest rates rise, and the dollar depreciates. 
C)  real wealth rises, interest rates fall, and the dollar appreciates. 
D)  real wealth rises, interest rates fall, and the dollar depreciates. 
A)  real wealth falls, interest rates rise, and the dollar appreciates. 
B)  real wealth falls, interest rates rise, and the dollar depreciates. 
C)  real wealth rises, interest rates fall, and the dollar appreciates. 
D)  real wealth rises, interest rates fall, and the dollar depreciates.

Question 15

Suppose a country offers a new investment tax credit. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Accepted Answer

The aggregate-demand

Question 16

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

Accepted Answer

A) True 
 B)False

Question 17

Recession come at

Accepted Answer

A)  regular intervals. During recessions consumption spending falls relatively more than investment spending. 
B)  regular intervals. During recessions investment spending falls relatively more than consumption spending. 
C)  irregular intervals. During recessions consumption spending falls relatively more than investment spending. 
D)  irregular intervals. During recessions investment spending falls relatively more than consumption spending. 
A)  regular intervals. During recessions consumption spending falls relatively more than investment spending. 
B)  regular intervals. During recessions investment spending falls relatively more than consumption spending. 
C)  irregular intervals. During recessions consumption spending falls relatively more than investment spending. 
D)  irregular intervals. During recessions investment spending falls relatively more than consumption spending.

Question 18

According to the misperceptions theory of the short-run aggregate supply curve, if a firm thought that inflation was going to be 4 percent and actual inflation was 2 percent, then the firm would believe that the relative price of what it produces 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 19

A change in the expected price level is likely to cause which of the following?

Accepted Answer

A)  a shift in the short-run aggregate supply curve and long-run aggregate supply curve 
B)  a shift in the short run aggregate supply curve 
C)  a shift in the aggregate demand curve 
D)  a shift in the long-run aggregate supply curve 
A)  a shift in the short-run aggregate supply curve and long-run aggregate supply curve 
B)  a shift in the short run aggregate supply curve 
C)  a shift in the aggregate demand curve 
D)  a shift in the long-run aggregate supply curve

Question 20

If output is above its natural rate, then according to sticky-wage theory

Accepted Answer

A)  workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve right. 
B)  workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve left. 
C)  workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve right. 
D)  workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve left. 
A)  workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve right. 
B)  workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve left. 
C)  workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve right. 
D)  workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve left.

A decrease in the expected price level shifts

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. How is the new long-run equilibrium different from the original one?

Figure 33-9. -Refer to Figure 33-9. Suppose the economy starts where LRAS = AD1 = SRAS1. A decrease in short-run aggregate supply would be consistent with the movement to

Real GDP

If there are floods or droughts or a decrease in the availability of raw materials

When the actual change in the price level differs from its expected change, which of the following can explain why firms might change their production?

According to classical macroeconomic theory, changes in the money supply change nominal but not real variables.

The long-run effect of an increase in household consumption is to raise

As recessions begin, income

Figure 33-4 -Refer to Figure 33-4. If the economy starts at A and there is a fall in aggregate demand, the economy moves

Classical economist David Hume observed that as the money supply expanded after gold discoveries

Other things the same, as the price level rises, exchange rates

Most economists believe that money neutrality

The aggregate quantity of goods and services demanded changes as the price level falls because

Suppose a country offers a new investment tax credit. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

Recession come at

According to the misperceptions theory of the short-run aggregate supply curve, if a firm thought that inflation was going to be 4 percent and actual inflation was 2 percent, then the firm would believe that the relative price of what it produces had

A change in the expected price level is likely to cause which of the following?

If output is above its natural rate, then according to sticky-wage theory

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

Exam 15: Aggregate Demand and Aggregate Supply

A decrease in the expected price level shifts

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. How is the new long-run equilibrium different from the original one?

Figure 33-9. -Refer to Figure 33-9. Suppose the economy starts where LRAS = AD1 = SRAS1. A decrease in short-run aggregate supply would be consistent with the movement to

Real GDP

If there are floods or droughts or a decrease in the availability of raw materials

When the actual change in the price level differs from its expected change, which of the following can explain why firms might change their production?

According to classical macroeconomic theory, changes in the money supply change nominal but not real variables.

The long-run effect of an increase in household consumption is to raise

As recessions begin, income

Figure 33-4 -Refer to Figure 33-4. If the economy starts at A and there is a fall in aggregate demand, the economy moves

Classical economist David Hume observed that as the money supply expanded after gold discoveries

Other things the same, as the price level rises, exchange rates

Most economists believe that money neutrality

The aggregate quantity of goods and services demanded changes as the price level falls because

Suppose a country offers a new investment tax credit. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

Recession come at

According to the misperceptions theory of the short-run aggregate supply curve, if a firm thought that inflation was going to be 4 percent and actual inflation was 2 percent, then the firm would believe that the relative price of what it produces had

A change in the expected price level is likely to cause which of the following?

If output is above its natural rate, then according to sticky-wage theory

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