Question 1

The long-run aggregate supply curve shifts right if

Accepted Answer

A)  technology improves. 
B)  the price level decreases. 
C)  the money supply increases. 
D)  All of the above are correct. 
A)  technology improves. 
B)  the price level decreases. 
C)  the money supply increases. 
D)  All of the above are correct.

Question 2

Which of the following rises when the U.S. price level falls?

Accepted Answer

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

Question 3

During recessions

Accepted Answer

A)  workers are laid off. 
B)  factories are idle. 
C)  firms may find they are unable to sell all they produce. 
D)  All of the above are correct. 
A)  workers are laid off. 
B)  factories are idle. 
C)  firms may find they are unable to sell all they produce. 
D)  All of the above are correct.

Question 4

The recession of 2008-2009 was preceded by

Accepted Answer

A)  a sharp decline in housing prices. 
B)  large losses among financial institutions that owned mortgage-backed securities. 
C)  rises in mortgage defaults and home foreclosures. 
D)  all of the above 
A)  a sharp decline in housing prices. 
B)  large losses among financial institutions that owned mortgage-backed securities. 
C)  rises in mortgage defaults and home foreclosures. 
D)  all of the above

Question 5

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

Accepted Answer

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

Question 6

Which of the following would not be included in aggregate demand?

Accepted Answer

A)  an increase in firms' inventories. 
B)  purchases of goods by households. 
C)  firms' purchases of newly produced machinery. 
D)  government's tax collections. 
A)  an increase in firms' inventories. 
B)  purchases of goods by households. 
C)  firms' purchases of newly produced machinery. 
D)  government's tax collections.

Question 7

Other things the same, continued technological progress and continued increases in the money supply would unambiguously lead to

Accepted Answer

A)  rising prices only. 
B)  rising real GDP only. 
C)  rising prices and rising real GDP. 
D)  neither rising prices nor rising real GDP. 
A)  rising prices only. 
B)  rising real GDP only. 
C)  rising prices and rising real GDP. 
D)  neither rising prices nor rising real GDP.

Question 8

Other things the same, as the price level rises, the real value of money

Accepted Answer

A)  and the exchange rate rise. 
B)  and the exchange rate fall. 
C)  rises and the exchange rate falls. 
D)  falls and the exchange rate rises. 
A)  and the exchange rate rise. 
B)  and the exchange rate fall. 
C)  rises and the exchange rate falls. 
D)  falls and the exchange rate rises.

Question 9

Increased uncertainty and pessimism about the future of the economy lead firms to desire less investment spending which shifts the aggregate-demand curve to the left.

Accepted Answer

A) True 
 B)False

Question 10

Aggregate demand includes

Accepted Answer

A)  the quantity of goods and services the government, households, firms, and customers abroad want to buy. 
B)  neither the quantity of goods and services the government, households, nor firms want to buy nor the quantity of goods and services customers abroad want to buy. 
C)  the quantity of goods and service the government wants to buy, but not the quantity of goods and services households, firms, or customers abroad want to buy. 
D)  the quantity of goods and services households and firms want to buy, but not the quantity of goods and services the government wants to buy. 
A)  the quantity of goods and services the government, households, firms, and customers abroad want to buy. 
B)  neither the quantity of goods and services the government, households, nor firms want to buy nor the quantity of goods and services customers abroad want to buy. 
C)  the quantity of goods and service the government wants to buy, but not the quantity of goods and services households, firms, or customers abroad want to buy. 
D)  the quantity of goods and services households and firms want to buy, but not the quantity of goods and services the government wants to buy.

Question 11

Which of the following is correct concerning recessions?

Accepted Answer

A)  They come at fairly regular and predictable intervals. 
B)  They are associated with comparatively large increases in investment spending. 
C)  They are any period when real GDP growth is less than average. 
D)  They tend to be associated with rising unemployment rates. 
A)  They come at fairly regular and predictable intervals. 
B)  They are associated with comparatively large increases in investment spending. 
C)  They are any period when real GDP growth is less than average. 
D)  They tend to be associated with rising unemployment rates.

Question 12

Figure 33-3.  
Refer to Figure 33-3. The natural rate of output occurs at

Accepted Answer

A)  Y1. 
B)  Y2. 
C)  Y3. 
D)  both Y1 and Y3. 
A)  Y1. 
B)  Y2. 
C)  Y3. 
D)  both Y1 and Y3.

Question 13

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

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 14

When interest rates fall

Accepted Answer

A)  firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. 
B)  firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding. 
C)  firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding. 
D)  firms want to borrow less for new plants and equipment and households want to borrow less for homebuilding. 
A)  firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. 
B)  firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding. 
C)  firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding. 
D)  firms want to borrow less for new plants and equipment and households want to borrow less for homebuilding.

Question 15

Optimism
Imagine that the economy is in long-run equilibrium. Then, perhaps because of improved international relations and increased confidence in policy makers, people become more optimistic about the future and stay this way for some time.
-Refer to Optimism. In the long run, the change in price expectations created by optimism 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.

Question 16

The aggregate-demand curve shows the

Accepted Answer

A)  quantity of labor and other inputs that firms want to buy at each price level. 
B)  quantity of labor and other inputs that firms want to buy at each inflation rate. 
C)  quantity of domestically produced goods and services that households want to buy at each price level. 
D)  quantity of domestically produced goods and services that households, firms, the government, and customers abroad want to buy at each price level. 
A)  quantity of labor and other inputs that firms want to buy at each price level. 
B)  quantity of labor and other inputs that firms want to buy at each inflation rate. 
C)  quantity of domestically produced goods and services that households want to buy at each price level. 
D)  quantity of domestically produced goods and services that households, firms, the government, and customers abroad want to buy at each price level.

Question 17

Which of the following is not correct?

Accepted Answer

A)  The model of aggregate demand and aggregate supply is used by most economists to analyze short-run fluctuations. 
B)  During a recession firms cut back production and workers are laid off. 
C)  A recession is a period of declining real incomes and declining unemployment. 
D)  A depression is a severe recession. 
A)  The model of aggregate demand and aggregate supply is used by most economists to analyze short-run fluctuations. 
B)  During a recession firms cut back production and workers are laid off. 
C)  A recession is a period of declining real incomes and declining unemployment. 
D)  A depression is a severe recession.

Question 18

Real GDP

Accepted Answer

A)  moves in the opposite direction as unemployment. 
B)  increases as production falls. 
C)  falls when households save a smaller fraction of their income. 
D)  All of the above are correct. 
A)  moves in the opposite direction as unemployment. 
B)  increases as production falls. 
C)  falls when households save a smaller fraction of their income. 
D)  All of the above are correct.

Question 19

Stagflation exists when prices

Accepted Answer

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

Question 20

Aggregate demand shifts to the left if the money supply increases.

Accepted Answer

A) True 
 B)False

The long-run aggregate supply curve shifts right if

Which of the following rises when the U.S. price level falls?

During recessions

The recession of 2008-2009 was preceded by

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

Which of the following would not be included in aggregate demand?

Other things the same, continued technological progress and continued increases in the money supply would unambiguously lead to

Other things the same, as the price level rises, the real value of money

Increased uncertainty and pessimism about the future of the economy lead firms to desire less investment spending which shifts the aggregate-demand curve to the left.

Aggregate demand includes

Which of the following is correct concerning recessions?

Figure 33-3. Refer to Figure 33-3. The natural rate of output occurs at

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

When interest rates fall

The aggregate-demand curve shows the

Which of the following is not correct?

Real GDP

Stagflation exists when prices

Aggregate demand shifts to the left if the money supply increases.

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 long-run aggregate supply curve shifts right if

Which of the following rises when the U.S. price level falls?

During recessions

The recession of 2008-2009 was preceded by

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

Which of the following would not be included in aggregate demand?

Other things the same, continued technological progress and continued increases in the money supply would unambiguously lead to

Other things the same, as the price level rises, the real value of money

Increased uncertainty and pessimism about the future of the economy lead firms to desire less investment spending which shifts the aggregate-demand curve to the left.

Aggregate demand includes

Which of the following is correct concerning recessions?

Figure 33-3. Refer to Figure 33-3. The natural rate of output occurs at

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

When interest rates fall

The aggregate-demand curve shows the

Which of the following is not correct?

Real GDP

Stagflation exists when prices

Aggregate demand shifts to the left if the money supply increases.

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