Question 1

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  False

Question 2

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

Accepted Answer

The aggregate supply curve

Question 3

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. A

Question 4

Figure 33-4  
-Refer to Figure 33-4. The economy would be moving to long-run equilibrium if it started at

Accepted Answer

A)  A and moved to B. 
B)  C and moved to B. 
C)  D and moved to C. 
D)  None of the above is correct. 
A)  A and moved to B. 
B)  C and moved to B. 
C)  D and moved to C. 
D)  None of the above is correct.

Question 5

Who wrote the 1936 book titled The General Theory of Employment, Interest, and Money?

Accepted Answer

The answer of Who wrote the 1936 book titled The...

Question 6

Suppose speculators lost confidence in foreign economies and bought more U.S. bonds. How would this affect net exports in the U.S., and which way would this cause the aggregate demand curve to shift?

Accepted Answer

Net exports would fa

Question 7

Policymakers who control monetary and fiscal policy and want to offset the effects on output of an economic contraction caused by a shift in aggregate supply could use policy to shift

Accepted Answer

A)  aggregate supply to the right. 
B)  aggregate supply to the left. 
C)  aggregate demand to the right. 
D)  aggregate demand to the left. 
A)  aggregate supply to the right. 
B)  aggregate supply to the left. 
C)  aggregate demand to the right. 
D)  aggregate demand to the left.

Question 8

In the long run, an increase in the stock of human capital

Accepted Answer

A)  and increases in the money supply both make the price level rise. 
B)  and increases in the money supply both make the price level fall. 
C)  makes the price level rise, while increases in the money supply make prices fall. 
D)  makes the price level fall, while increases in the money supply make prices rise. 
A)  and increases in the money supply both make the price level rise. 
B)  and increases in the money supply both make the price level fall. 
C)  makes the price level rise, while increases in the money supply make prices fall. 
D)  makes the price level fall, while increases in the money supply make prices rise.

Question 9

Which of the following would increase output in the short run?

Accepted Answer

A)  an increase in stock prices makes people feel wealthier 
B)  government spending increases 
C)  firms chose to purchase more investment goods 
D)  All of the above are correct. 
A)  an increase in stock prices makes people feel wealthier 
B)  government spending increases 
C)  firms chose to purchase more investment goods 
D)  All of the above are correct.

Question 10

Refer to Political Instability Abroad. What would happen to the dollar?

Accepted Answer

A)  It would appreciate in foreign exchange markets making U.S goods more expensive compared to foreign goods. 
B)  It would appreciate in foreign exchange markets making U.S. goods less expensive compared to foreign goods. 
C)  It would depreciate in foreign exchange markets making U.S. goods more expensive compared to foreign goods. 
D)  It would depreciate in foreign exchange markets making U.S. goods less expensive compared to foreign goods. 
A)  It would appreciate in foreign exchange markets making U.S goods more expensive compared to foreign goods. 
B)  It would appreciate in foreign exchange markets making U.S. goods less expensive compared to foreign goods. 
C)  It would depreciate in foreign exchange markets making U.S. goods more expensive compared to foreign goods. 
D)  It would depreciate in foreign exchange markets making U.S. goods less expensive compared to foreign goods.

Question 11

The long-run aggregate supply curve would shift left if the amount of labor available

Accepted Answer

A)  increased or Congress made a substantial increase in the minimum wage. 
B)  decreased or Congress abolished the minimum wage. 
C)  increased or Congress abolished the minimum wage. 
D)  decreased or Congress made a substantial increase in the minimum wage. 
A)  increased or Congress made a substantial increase in the minimum wage. 
B)  decreased or Congress abolished the minimum wage. 
C)  increased or Congress abolished the minimum wage. 
D)  decreased or Congress made a substantial increase in the minimum wage.

Question 12

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 13

Other things the same, if the price level rises, people

Accepted Answer

A)  increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. 
B)  increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. 
C)  decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. 
D)  decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. 
A)  increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. 
B)  increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. 
C)  decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. 
D)  decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases.

Question 14

If speculators bid up the value of the U.S. dollar in the market for foreign exchange, then

Accepted Answer

A)  U.S. goods become more expensive relative to foreign goods so aggregate demand shifts right. 
B)  U.S. goods become less expensive relative to foreign goods so aggregate demand shifts right. 
C)  U.S. goods become more expensive relative to foreign goods so aggregate demand shifts left. 
D)  U.S. goods become less expensive relative to foreign goods so aggregate demand shifts left. 
A)  U.S. goods become more expensive relative to foreign goods so aggregate demand shifts right. 
B)  U.S. goods become less expensive relative to foreign goods so aggregate demand shifts right. 
C)  U.S. goods become more expensive relative to foreign goods so aggregate demand shifts left. 
D)  U.S. goods become less expensive relative to foreign goods so aggregate demand shifts left.

Question 15

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 16

Briefly state the three key facts about economic fluctuations.

Accepted Answer

1) Economic fluctuations are i

Question 17

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 18

The aggregate demand and aggregate supply graph has

Accepted Answer

A)  the price level on the horizontal axis. The price level can be measured by the GDP deflator. 
B)  the price level on the horizontal axis. The price level can be measured by real GDP. 
C)  the price level on the vertical axis. The price level can be measured by the GDP deflator. 
D)  the price level on the vertical axis. The price level can be measured by GDP. 
A)  the price level on the horizontal axis. The price level can be measured by the GDP deflator. 
B)  the price level on the horizontal axis. The price level can be measured by real GDP. 
C)  the price level on the vertical axis. The price level can be measured by the GDP deflator. 
D)  the price level on the vertical axis. The price level can be measured by GDP.

Question 19

The aggregate-demand curve

Accepted Answer

A)  has a slope that is explained in the same way as the slope of the demand curve for a particular product. 
B)  is vertical in the long run. 
C)  shows an inverse relation between the price level and the quantity of all goods and services demanded. 
D)  All of the above are correct. 
A)  has a slope that is explained in the same way as the slope of the demand curve for a particular product. 
B)  is vertical in the long run. 
C)  shows an inverse relation between the price level and the quantity of all goods and services demanded. 
D)  All of the above are correct.

Question 20

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

Accepted Answer

A)  an increase in the money supply 
B)  an increase in the price level 
C)  a decrease in the expected price level 
D)  All of the above are correct. 
A)  an increase in the money supply 
B)  an increase in the price level 
C)  a decrease in the expected price level 
D)  All of the above are correct.

Exam 20: Aggregate Demand and Aggregate Supply

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

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

Most economists believe that money neutrality

Figure 33-4 -Refer to Figure 33-4. The economy would be moving to long-run equilibrium if it started at

Who wrote the 1936 book titled The General Theory of Employment, Interest, and Money?

Suppose speculators lost confidence in foreign economies and bought more U.S. bonds. How would this affect net exports in the U.S., and which way would this cause the aggregate demand curve to shift?

Policymakers who control monetary and fiscal policy and want to offset the effects on output of an economic contraction caused by a shift in aggregate supply could use policy to shift

In the long run, an increase in the stock of human capital

Which of the following would increase output in the short run?

Refer to Political Instability Abroad. What would happen to the dollar?

The long-run aggregate supply curve would shift left if the amount of labor available

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?

Other things the same, if the price level rises, people

If speculators bid up the value of the U.S. dollar in the market for foreign exchange, then

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

Briefly state the three key facts about economic fluctuations.

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

The aggregate demand and aggregate supply graph has

The aggregate-demand curve

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

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

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 Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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