Question 1

The sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if

Accepted Answer

A)  the price level is higher than expected making production more profitable. 
B)  the price level is higher than expected making production less profitable. 
C)  the price level is lower than expected making production more profitable. 
D)  the price level is higher than expected making production less profitable 
A)  the price level is higher than expected making production more profitable. 
B)  the price level is higher than expected making production less profitable. 
C)  the price level is lower than expected making production more profitable. 
D)  the price level is higher than expected making production less profitable

Question 2

When the dollar appreciates, U.S.

Accepted Answer

A)  exports decrease, while imports increase. 
B)  exports and imports decrease. 
C)  exports and imports increase. 
D)  exports increase, while imports decrease. 
A)  exports decrease, while imports increase. 
B)  exports and imports decrease. 
C)  exports and imports increase. 
D)  exports increase, while imports decrease.

Question 3

The recessions of the 1970s are often attributed to

Accepted Answer

A)  declining inflation expectations. 
B)  an increase in oil prices. 
C)  declines in the price of stock. 
D)  decreases in the money supply. 
A)  declining inflation expectations. 
B)  an increase in oil prices. 
C)  declines in the price of stock. 
D)  decreases in the money supply.

Question 4

If a central bank is independent,

Accepted Answer

A)  it has the ability to alter taxes. 
B)  it allocates savings to firms. 
C)  it restricts trade to increase domestic employment. 
D)  it operations are not controlled by the political process. 
A)  it has the ability to alter taxes. 
B)  it allocates savings to firms. 
C)  it restricts trade to increase domestic employment. 
D)  it operations are not controlled by the political process.

Question 5

A decrease in the money supply causes the interest rate to rise so that investment falls.

Accepted Answer

A) True 
 B)False

Question 6

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.
-Refer to Pessimism. What happens to the expected price level and what's the result for wage bargaining?

Accepted Answer

A)  The expected price level rises. Bargains are struck for higher wages. 
B)  The expected price level rises. Bargains are struck for lower wages. 
C)  The expected price level falls. Bargains are struck for higher wages. 
D)  The expected price level falls. Bargains are struck for lower wages. 
A)  The expected price level rises. Bargains are struck for higher wages. 
B)  The expected price level rises. Bargains are struck for lower wages. 
C)  The expected price level falls. Bargains are struck for higher wages. 
D)  The expected price level falls. Bargains are struck for lower wages.

Question 7

An economic expansion caused by a shift in aggregate demand remedies itself over time as the expected price level

Accepted Answer

A)  falls, shifting aggregate demand right. 
B)  rises, shifting aggregate demand left. 
C)  falls, shifting aggregate supply right. 
D)  rises, shifting aggregate supply left. 
A)  falls, shifting aggregate demand right. 
B)  rises, shifting aggregate demand left. 
C)  falls, shifting aggregate supply right. 
D)  rises, shifting aggregate supply left.

Question 8

From 2006 to 2008 there was a dramatic fall in the price of houses. If this fall made people feel less wealthy, 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 9

When the price level falls

Accepted Answer

A)  the interest rate rises, so the quantity of goods and services demand rises. 
B)  the interest rate rises, so the quantity of goods and services demand falls. 
C)  the interest rate falls, so the quantity of goods and services demand rises. 
D)  the interest rate falls, so the quantity of goods and services demand falls. 
A)  the interest rate rises, so the quantity of goods and services demand rises. 
B)  the interest rate rises, so the quantity of goods and services demand falls. 
C)  the interest rate falls, so the quantity of goods and services demand rises. 
D)  the interest rate falls, so the quantity of goods and services demand falls.

Question 10

Classical economist David Hume observed that as the money supply expanded after gold discoveries it took some time for prices to rise and in the meantime the economy enjoyed higher employment and production. This is inconsistent with monetary neutrality because

Accepted Answer

A)  monetary neutrality would mean that neither prices nor production should have risen. 
B)  monetary neutrality would mean that production should have risen, but prices should not have. 
C)  monetary neutrality would mean the prices should have risen, but production should not have changed. 
D)  monetary neutrality would mean that prices and production should both have fallen. 
A)  monetary neutrality would mean that neither prices nor production should have risen. 
B)  monetary neutrality would mean that production should have risen, but prices should not have. 
C)  monetary neutrality would mean the prices should have risen, but production should not have changed. 
D)  monetary neutrality would mean that prices and production should both have fallen.

Question 11

When the price level changes, which of the following variables will change and thereby cause a change in the aggregate quantity of goods and services demanded?

Accepted Answer

A)  the real value of wealth 
B)  the interest rate 
C)  the value of currency in the market for foreign exchange 
D)  All of the above are correct. 
A)  the real value of wealth 
B)  the interest rate 
C)  the value of currency in the market for foreign exchange 
D)  All of the above are correct.

Question 12

The division of variables into real and nominal is a dichotomy assumed by

Accepted Answer

A)  classical economists. 
B)  John Maynard Keynes. 
C)  the wealth effect. 
D)  short-run macroeconomic theory. 
A)  classical economists. 
B)  John Maynard Keynes. 
C)  the wealth effect. 
D)  short-run macroeconomic theory.

Question 13

Other things the same, as the price level falls,

Accepted Answer

A)  the dollar depreciates. 
B)  the interest rate rises. 
C)  people feel less wealthy. 
D)  All of the above are correct. 
A)  the dollar depreciates. 
B)  the interest rate rises. 
C)  people feel less wealthy. 
D)  All of the above are correct.

Question 14

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

Accepted Answer

A) True 
 B)False

Question 15

We can explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time.

Accepted Answer

A) True 
 B)False

Question 16

Other things the same, the aggregate quantity of goods demanded in the U.S. increases if

Accepted Answer

A)  real wealth falls. 
B)  the interest rate rises. 
C)  the dollar depreciates. 
D)  None of the above is correct. 
A)  real wealth falls. 
B)  the interest rate rises. 
C)  the dollar depreciates. 
D)  None of the above is correct.

Question 17

Economic variables we are most interested in are

Accepted Answer

A)  real variables, but we usually observe nominal variables. 
B)  nominal variables, but we usually observe real variables. 
C)  real variables, which we usually observe. 
D)  nominal variables, which we usually observe. 
A)  real variables, but we usually observe nominal variables. 
B)  nominal variables, but we usually observe real variables. 
C)  real variables, which we usually observe. 
D)  nominal variables, which we usually observe.

Question 18

Which of the following effects provide incentives for consumers to spend less when the price level rises?

Accepted Answer

A)  the wealth effect and the interest-rate effect 
B)  the wealth effect but not the interest-rate effect 
C)  the interest-rate effect but not the wealth effect 
D)  neither the wealth-effect nor the interest rate effect 
A)  the wealth effect and the interest-rate effect 
B)  the wealth effect but not the interest-rate effect 
C)  the interest-rate effect but not the wealth effect 
D)  neither the wealth-effect nor the interest rate effect

Question 19

The discovery of a large amount of previously-undiscovered oil in the U.S. would shift

Accepted Answer

A)  the long-run aggregate-supply curve to the right. 
B)  the long-run aggregate-supply curve to the left. 
C)  the aggregate-demand curve to the left. 
D)  None of the above is correct. 
A)  the long-run aggregate-supply curve to the right. 
B)  the long-run aggregate-supply curve to the left. 
C)  the aggregate-demand curve to the left. 
D)  None of the above is correct.

Question 20

When the dollar appreciates, U.S.

Accepted Answer

A)  net exports rise, which increases the aggregate quantity of goods and services demanded. 
B)  net exports rise, which decreases the aggregate quantity of goods and services demanded. 
C)  net exports fall, which increases the aggregate quantity of goods and services demanded. 
D)  net exports fall, which decreases the aggregate quantity of goods and services demanded. 
A)  net exports rise, which increases the aggregate quantity of goods and services demanded. 
B)  net exports rise, which decreases the aggregate quantity of goods and services demanded. 
C)  net exports fall, which increases the aggregate quantity of goods and services demanded. 
D)  net exports fall, which decreases the aggregate quantity of goods and services demanded.

The sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if

When the dollar appreciates, U.S.

The recessions of the 1970s are often attributed to

If a central bank is independent,

A decrease in the money supply causes the interest rate to rise so that investment falls.

An economic expansion caused by a shift in aggregate demand remedies itself over time as the expected price level

From 2006 to 2008 there was a dramatic fall in the price of houses. If this fall made people feel less wealthy, then it would have shifted

When the price level falls

Classical economist David Hume observed that as the money supply expanded after gold discoveries it took some time for prices to rise and in the meantime the economy enjoyed higher employment and production. This is inconsistent with monetary neutrality because

When the price level changes, which of the following variables will change and thereby cause a change in the aggregate quantity of goods and services demanded?

The division of variables into real and nominal is a dichotomy assumed by

Other things the same, as the price level falls,

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

We can explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time.

Other things the same, the aggregate quantity of goods demanded in the U.S. increases if

Economic variables we are most interested in are

Which of the following effects provide incentives for consumers to spend less when the price level rises?

The discovery of a large amount of previously-undiscovered oil in the U.S. would shift

When the dollar appreciates, U.S.

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

The sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if

When the dollar appreciates, U.S.

The recessions of the 1970s are often attributed to

If a central bank is independent,

A decrease in the money supply causes the interest rate to rise so that investment falls.

An economic expansion caused by a shift in aggregate demand remedies itself over time as the expected price level

From 2006 to 2008 there was a dramatic fall in the price of houses. If this fall made people feel less wealthy, then it would have shifted

When the price level falls

Classical economist David Hume observed that as the money supply expanded after gold discoveries it took some time for prices to rise and in the meantime the economy enjoyed higher employment and production. This is inconsistent with monetary neutrality because

When the price level changes, which of the following variables will change and thereby cause a change in the aggregate quantity of goods and services demanded?

The division of variables into real and nominal is a dichotomy assumed by

Other things the same, as the price level falls,

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

We can explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time.

Other things the same, the aggregate quantity of goods demanded in the U.S. increases if

Economic variables we are most interested in are

Which of the following effects provide incentives for consumers to spend less when the price level rises?

The discovery of a large amount of previously-undiscovered oil in the U.S. would shift

When the dollar appreciates, U.S.

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