Question 1

When the dollar depreciates, each dollar buys

Accepted Answer

A)  more foreign currency, and so buys more foreign goods. 
B)  more foreign currency, and so buys fewer foreign goods. 
C)  less foreign currency, and so buys more foreign goods. 
D)  less foreign currency, and so buys fewer foreign goods. 
A)  more foreign currency, and so buys more foreign goods. 
B)  more foreign currency, and so buys fewer foreign goods. 
C)  less foreign currency, and so buys more foreign goods. 
D)  less foreign currency, and so buys fewer foreign goods.

Question 2

Other things the same, if the price level rises, then domestic interest rates

Accepted Answer

A)  rise, so domestic residents will want to hold more foreign bonds. 
B)  rise, so domestic residents will want to hold fewer foreign bonds. 
C)  fall, so domestic residents will want to hold more foreign bonds. 
D)  fall, so domestic residents will want to hold fewer foreign bonds. 
A)  rise, so domestic residents will want to hold more foreign bonds. 
B)  rise, so domestic residents will want to hold fewer foreign bonds. 
C)  fall, so domestic residents will want to hold more foreign bonds. 
D)  fall, so domestic residents will want to hold fewer foreign bonds.

Question 3

Other things the same, if the price level rises by 2% and people were expecting it to rise by 5%, then some firms have

Accepted Answer

A)  higher than desired prices, which increases their sales. 
B)  higher than desired prices, which depresses their sales. 
C)  lower than desired prices, which increases their sales. 
D)  lower than desired prices, which depresses their sales. 
A)  higher than desired prices, which increases their sales. 
B)  higher than desired prices, which depresses their sales. 
C)  lower than desired prices, which increases their sales. 
D)  lower than desired prices, which depresses their sales.

Question 4

Figure 33-7.  
-Refer to Stock Market Boom 2015. What happens to the expected price level and what impact does this have on wage bargaining?

Accepted Answer

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

Question 5

Which of the following shifts aggregate demand to the left?

Accepted Answer

A)  The price level rises. 
B)  Interest rates fall. 
C)  The dollar depreciates for some reason other than a change in the price level. 
D)  Stock prices fall for some reason other than a change in the price level. 
A)  The price level rises. 
B)  Interest rates fall. 
C)  The dollar depreciates for some reason other than a change in the price level. 
D)  Stock prices fall for some reason other than a change in the price level.

Question 6

As the price level rises

Accepted Answer

A)  people will want to hold more money, so the interest rate rises. 
B)  people will want to hold more money, so the interest rate falls. 
C)  people will want to hold less money, so the interest rate falls. 
D)  people will want to hold less money, so the interest rate rises. 
A)  people will want to hold more money, so the interest rate rises. 
B)  people will want to hold more money, so the interest rate falls. 
C)  people will want to hold less money, so the interest rate falls. 
D)  people will want to hold less money, so the interest rate rises.

Question 7

Figure 33-15.  
-Refer to Figure 33-15. Suppose the economy begins at point A. Decreases in what four variables could result in a movement to point D?

Accepted Answer

consumption, investm

Question 8

What curve shows the quantity of goods and services that households, firms, the government, and customers abroad want to buy at each price level?

Accepted Answer

The aggreg

Question 9

A relatively mild period of falling incomes and rising unemployment is called an)

Accepted Answer

A)  depression. 
B)  recession. 
C)  expansion. 
D)  business cycle. 
A)  depression. 
B)  recession. 
C)  expansion. 
D)  business cycle.

Question 10

When the price level increases, the real value of people's money holdings

Accepted Answer

A)  falls, so they buy more. 
B)  falls, so they buy less. 
C)  rises, so they buy more. 
D)  rises, so they buy less. 
A)  falls, so they buy more. 
B)  falls, so they buy less. 
C)  rises, so they buy more. 
D)  rises, so they buy less.

Question 11

Make a list of things that would shift the long-run aggregate supply curve to the right.

Accepted Answer

Examples in the text or variations) incl

Question 12

An increase in the expected price level shifts short-run aggregate supply to the

Accepted Answer

A)  right, and an increase in the actual price level shifts short-run aggregate supply to the right. 
B)  right, and an increase in the actual price level does not shift short-run aggregate supply. 
C)  left, and an increase in the actual price level shifts short-run aggregate supply to the left. 
D)  left, and an increase in the actual price level does not shift short-run aggregate supply. 
A)  right, and an increase in the actual price level shifts short-run aggregate supply to the right. 
B)  right, and an increase in the actual price level does not shift short-run aggregate supply. 
C)  left, and an increase in the actual price level shifts short-run aggregate supply to the left. 
D)  left, and an increase in the actual price level does not shift short-run aggregate supply.

Question 13

Which of the following would cause prices to fall and output to rise in the short run?

Accepted Answer

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

Question 14

Other things the same, the aggregate quantity of goods demanded decreases if

Accepted Answer

A)  real wealth falls. 
B)  the interest rate rises. 
C)  the dollar appreciates. 
D)  All of the above are correct. 
A)  real wealth falls. 
B)  the interest rate rises. 
C)  the dollar appreciates. 
D)  All of the above are correct.

Question 15

During World War II, the economy's production increased about

Accepted Answer

A)  25 percent and prices rose about 5 percent. 
B)  50 percent and prices rose about 10 percent. 
C)  75 percent and prices rose about 15 percent. 
D)  100 percent and prices rose about 20 percent. 
A)  25 percent and prices rose about 5 percent. 
B)  50 percent and prices rose about 10 percent. 
C)  75 percent and prices rose about 15 percent. 
D)  100 percent and prices rose about 20 percent.

Question 16

Suppose the economy is in long-run equilibrium. Concerns about pollution cause the government to significantly restrict the production of electricity. At the same time, taxes fall. 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 17

Sticky nominal wages can result in

Accepted Answer

A)  lower profits for firms when the price level is lower than expected. 
B)  a decrease in real wages when the price level is lower than expected. 
C)  a short-run aggregate-supply curve that is vertical. 
D)  a long-run aggregate-supply curve that is upward-sloping. 
A)  lower profits for firms when the price level is lower than expected. 
B)  a decrease in real wages when the price level is lower than expected. 
C)  a short-run aggregate-supply curve that is vertical. 
D)  a long-run aggregate-supply curve that is upward-sloping.

Question 18

As the price level falls

Accepted Answer

A)  people will want to buy more bonds, so the interest rate rises. 
B)  people will want to buy fewer bonds, so the interest rate falls. 
C)  people will want to buy more bonds, so the interest rate falls. 
D)  people will want to buy fewer bonds, so the interest rate rises. 
A)  people will want to buy more bonds, so the interest rate rises. 
B)  people will want to buy fewer bonds, so the interest rate falls. 
C)  people will want to buy more bonds, so the interest rate falls. 
D)  people will want to buy fewer bonds, so the interest rate rises.

Question 19

The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,

Accepted Answer

A)  production is more profitable and employment rises. 
B)  production is more profitable and employment falls. 
C)  production is less profitable and employment rises. 
D)  production is less profitable and employment falls. 
A)  production is more profitable and employment rises. 
B)  production is more profitable and employment falls. 
C)  production is less profitable and employment rises. 
D)  production is less profitable and employment falls.

Question 20

We depart from the assumptions of classical economics when we focus on the relationship between

Accepted Answer

A)  the quantity of output and the price level. 
B)  the quantity of output and the unemployment rate. 
C)  the price level and the inflation rate. 
D)  inflation and the nominal interest rate. 
A)  the quantity of output and the price level. 
B)  the quantity of output and the unemployment rate. 
C)  the price level and the inflation rate. 
D)  inflation and the nominal interest rate.

Exam 20: Aggregate Demand and Aggregate Supply

When the dollar depreciates, each dollar buys

Other things the same, if the price level rises, then domestic interest rates

Other things the same, if the price level rises by 2% and people were expecting it to rise by 5%, then some firms have

Figure 33-7. -Refer to Stock Market Boom 2015. What happens to the expected price level and what impact does this have on wage bargaining?

Which of the following shifts aggregate demand to the left?

As the price level rises

Figure 33-15. -Refer to Figure 33-15. Suppose the economy begins at point A. Decreases in what four variables could result in a movement to point D?

What curve shows the quantity of goods and services that households, firms, the government, and customers abroad want to buy at each price level?

A relatively mild period of falling incomes and rising unemployment is called an)

When the price level increases, the real value of people's money holdings

Make a list of things that would shift the long-run aggregate supply curve to the right.

An increase in the expected price level shifts short-run aggregate supply to the

Which of the following would cause prices to fall and output to rise in the short run?

Other things the same, the aggregate quantity of goods demanded decreases if

During World War II, the economy's production increased about

Suppose the economy is in long-run equilibrium. Concerns about pollution cause the government to significantly restrict the production of electricity. At the same time, taxes fall. In the short-run

Sticky nominal wages can result in

As the price level falls

The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,

We depart from the assumptions of classical economics when we focus on the relationship between

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

Filters