Question 1

Which of the following is correct?

Accepted Answer

A)  The short-run, but not the long-run, aggregate supply curve is consistent with the idea that nominal variables do not affect real variables. 
B)  The long-run, but not the short-run, aggregate supply curve is consistent with the idea that nominal variables do not affect real variables. 
C)  The long-run and short-run supply curves are both consistent with the idea that nominal variables affect real variables. 
D)  Neither the long-run nor the short-run aggregate supply curve is consistent with the idea that nominal variables affect real variables. 
A)  The short-run, but not the long-run, aggregate supply curve is consistent with the idea that nominal variables do not affect real variables. 
B)  The long-run, but not the short-run, aggregate supply curve is consistent with the idea that nominal variables do not affect real variables. 
C)  The long-run and short-run supply curves are both consistent with the idea that nominal variables affect real variables. 
D)  Neither the long-run nor the short-run aggregate supply curve is consistent with the idea that nominal variables affect real variables.

Question 2

The aggregate demand and aggregate supply graph has the

Accepted Answer

A)  quantity of output on the horizontal axis. Output is best measured by real GDP. 
B)  quantity of output on the horizontal axis. Output is best measured by nominal GDP. 
C)  quantity of output on the vertical axis. Output is best measured by real GDP. 
D)  quantity of output on the vertical axis. Output is best measured by nominal GDP. 
A)  quantity of output on the horizontal axis. Output is best measured by real GDP. 
B)  quantity of output on the horizontal axis. Output is best measured by nominal GDP. 
C)  quantity of output on the vertical axis. Output is best measured by real GDP. 
D)  quantity of output on the vertical axis. Output is best measured by nominal GDP.

Question 3

Which of the following rises during recessions?

Accepted Answer

A)  layoffs and consumer spending 
B)  layoffs but not consumer spending 
C)  consumer spending but not layoffs 
D)  neither layoffs nor consumer spending 
A)  layoffs and consumer spending 
B)  layoffs but not consumer spending 
C)  consumer spending but not layoffs 
D)  neither layoffs nor consumer spending

Question 4

During the last half of 2012, the U.S. unemployment rate was just under 8 percent. Historical experience suggests that this is

Accepted Answer

A)  above the natural rate, so real GDP growth was likely low. 
B)  above the natural rate, so real GDP growth was likely high. 
C)  below the natural rate, so real GDP growth was likely low. 
D)  below the natural rate, so real GDP growth was likely high. 
A)  above the natural rate, so real GDP growth was likely low. 
B)  above the natural rate, so real GDP growth was likely high. 
C)  below the natural rate, so real GDP growth was likely low. 
D)  below the natural rate, so real GDP growth was likely high.

Question 5

Figure 33-7.  
-Refer to Pessimism. Which curve shifts and in which direction?

Accepted Answer

A)  aggregate demand shifts right 
B)  aggregate demand shifts left 
C)  aggregate supply shifts right. 
D)  aggregate supply shifts left. 
A)  aggregate demand shifts right 
B)  aggregate demand shifts left 
C)  aggregate supply shifts right. 
D)  aggregate supply shifts left.

Question 6

If aggregate demand and aggregate supply both shift right, we can be sure that the price level is higher in the short run.

Accepted Answer

A) True 
 B)False

Question 7

Refer to U.S. Financial Crisis. U.S. net exports would

Accepted Answer

A)  rise which by itself would increase aggregate demand. 
B)  rise which by itself would decrease aggregate demand. 
C)  fall which by itself would increase aggregate demand. 
D)  fall which by itself would decrease aggregate demand. 
A)  rise which by itself would increase aggregate demand. 
B)  rise which by itself would decrease aggregate demand. 
C)  fall which by itself would increase aggregate demand. 
D)  fall which by itself would decrease aggregate demand.

Question 8

Which of the following explains why production rises in most years?

Accepted Answer

A)  increases in the labor force 
B)  increases in the capital stock 
C)  advances in technological knowledge 
D)  All of the above are correct. 
A)  increases in the labor force 
B)  increases in the capital stock 
C)  advances in technological knowledge 
D)  All of the above are correct.

Question 9

Other things the same, an increase in the expected price level shifts

Accepted Answer

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

Question 10

As the price level rises,

Accepted Answer

A)  the exchange rate falls, so net exports fall. 
B)  the exchange rate falls, so net exports rise. 
C)  the exchange rate rises, so net exports fall. 
D)  the exchange rate rises, so net exports rise. 
A)  the exchange rate falls, so net exports fall. 
B)  the exchange rate falls, so net exports rise. 
C)  the exchange rate rises, so net exports fall. 
D)  the exchange rate rises, so net exports rise.

Question 11

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 12

What do most economists believe concerning the relation between the price level and real output?

Accepted Answer

Most economists believe that in the long

Question 13

Increased output and prices in the United States in the early 1940s were mostly the result of increased government expenditures.

Accepted Answer

A) True 
 B)False

Question 14

The recession of 2008-2009 was associated with a fall in housing prices which shifted aggregate demand to the left.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

Accepted Answer

A) True 
 B)False

Question 17

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following shifts both the short-run and long-run aggregate supply right?

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 19

An increase in the actual price level does not shift the short-run aggregate supply curve, but an expected increase in the price level shifts the short-run aggregate supply curve to the left.

Accepted Answer

A) True 
 B)False

Question 20

The downward slope of the aggregate demand curve is based on logic that as the price level rises, consumption, investment, and net exports all fall.

Accepted Answer

A) True 
 B)False

Exam 20: Aggregate Demand and Aggregate Supply

Which of the following is correct?

The aggregate demand and aggregate supply graph has the

Which of the following rises during recessions?

During the last half of 2012, the U.S. unemployment rate was just under 8 percent. Historical experience suggests that this is

Figure 33-7. -Refer to Pessimism. Which curve shifts and in which direction?

If aggregate demand and aggregate supply both shift right, we can be sure that the price level is higher in the short run.

Refer to U.S. Financial Crisis. U.S. net exports would

Which of the following explains why production rises in most years?

Other things the same, an increase in the expected price level shifts

As the price level rises,

Other things the same, as the price level falls,

What do most economists believe concerning the relation between the price level and real output?

Increased output and prices in the United States in the early 1940s were mostly the result of increased government expenditures.

The recession of 2008-2009 was associated with a fall in housing prices which shifted aggregate demand to the left.

The recession of 2008-2009 was preceded by

Economists mostly agree that the Great Depression was principally caused by factors that shifted short-run aggregate supply left.

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

Which of the following shifts both the short-run and long-run aggregate supply right?

An increase in the actual price level does not shift the short-run aggregate supply curve, but an expected increase in the price level shifts the short-run aggregate supply curve to the left.

The downward slope of the aggregate demand curve is based on logic that as the price level rises, consumption, investment, and net exports all fall.

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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