Question 1

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

Accepted Answer

A)  both an increase in the price level that is greater than expected and an increase in the expected price level. 
B)  an increase in the price level that is greater than expected, but not an increase in the expected price level. 
C)  an increase in the expected price level, but not an increase in the price level that is greater than expected. 
D)  neither an increase in the price level that is greater than expected nor an increase in the expected price level. 
A)  both an increase in the price level that is greater than expected and an increase in the expected price level. 
B)  an increase in the price level that is greater than expected, but not an increase in the expected price level. 
C)  an increase in the expected price level, but not an increase in the price level that is greater than expected. 
D)  neither an increase in the price level that is greater than expected nor an increase in the expected price level.

Question 2

Explain the short-run effects on output and the price level from a decrease in the aggregate-demand curve.

Accepted Answer

The price

Question 3

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

Accepted Answer

A)  increase foreign bond purchases, so the dollar appreciates. 
B)  increase foreign bond purchases, so the dollar depreciates. 
C)  increase domestic bond purchases, so the dollar appreciates. 
D)  increase domestic bond purchases, so the dollar depreciates. 
A)  increase foreign bond purchases, so the dollar appreciates. 
B)  increase foreign bond purchases, so the dollar depreciates. 
C)  increase domestic bond purchases, so the dollar appreciates. 
D)  increase domestic bond purchases, so the dollar depreciates.

Question 4

When taxes decrease, consumption

Accepted Answer

A)  increases, so aggregate demand shifts right. 
B)  increases, so aggregate supply shifts right. 
C)  decreases, so aggregate demand shifts left. 
D)  decreases, so aggregate supply shifts left. 
A)  increases, so aggregate demand shifts right. 
B)  increases, so aggregate supply shifts right. 
C)  decreases, so aggregate demand shifts left. 
D)  decreases, so aggregate supply shifts left.

Question 5

Which of the following is included in the aggregate demand for goods and services?

Accepted Answer

A)  consumption demand 
B)  investment demand 
C)  net exports 
D)  All of the above are correct. 
A)  consumption demand 
B)  investment demand 
C)  net exports 
D)  All of the above are correct.

Question 6

Which of the following is not included in aggregate demand?

Accepted Answer

A)  purchases of stock and bonds 
B)  purchases of services such as visits to the doctor 
C)  purchases of capital goods such as equipment in a factory 
D)  purchases by foreigners of consumer goods produced in the United States 
A)  purchases of stock and bonds 
B)  purchases of services such as visits to the doctor 
C)  purchases of capital goods such as equipment in a factory 
D)  purchases by foreigners of consumer goods produced in the United States

Question 7

Other things the same, an increase in the price level makes consumers feel

Accepted Answer

A)  less wealthy, so the quantity of goods and services demanded falls. 
B)  less wealthy, so the quantity of goods and services demanded rises. 
C)  more wealthy, so the quantity of goods and services demanded rises. 
D)  more wealthy, so the quantity of goods and services demanded falls. 
A)  less wealthy, so the quantity of goods and services demanded falls. 
B)  less wealthy, so the quantity of goods and services demanded rises. 
C)  more wealthy, so the quantity of goods and services demanded rises. 
D)  more wealthy, so the quantity of goods and services demanded falls.

Question 8

Which of the following would raise the price level in both the short and long run?

Accepted Answer

A)  an increase in taxes 
B)  an increase in government expenditures 
C)  a decrease in the minimum wage 
D)  an increase in the capital stock 
A)  an increase in taxes 
B)  an increase in government expenditures 
C)  a decrease in the minimum wage 
D)  an increase in the capital stock

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

Which of the following is not a determinant of the long-run level of real GDP?

Accepted Answer

A)  the price level. 
B)  the amount of capital used by firms. 
C)  available stock of human capital. 
D)  available technology 
A)  the price level. 
B)  the amount of capital used by firms. 
C)  available stock of human capital. 
D)  available technology

Question 11

According to classical macroeconomic theory, changes in the money supply change real GDP but not the price level.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Menu costs help explain

Accepted Answer

A)  sticky-price theory. 
B)  misperceptions theory. 
C)  sticky-wage theory. 
D)  All of the above are correct. 
A)  sticky-price theory. 
B)  misperceptions theory. 
C)  sticky-wage theory. 
D)  All of the above are correct.

Question 14

Other things the same, what happens in the long run to the price level and quantity of output after a contraction in aggregate demand?

Accepted Answer

The price level decr

Question 15

Other things the same, a decrease in the price level causes real wealth to

Accepted Answer

A)  fall, interest rates to fall, and the dollar to appreciate. 
B)  fall, interest rates to rise, and the dollar to depreciate. 
C)  rise, interest rates to rise, and the dollar to appreciate. 
D)  rise, interest rates to fall, and the dollar to depreciate. 
A)  fall, interest rates to fall, and the dollar to appreciate. 
B)  fall, interest rates to rise, and the dollar to depreciate. 
C)  rise, interest rates to rise, and the dollar to appreciate. 
D)  rise, interest rates to fall, and the dollar to depreciate.

Question 16

Suppose a nation experiences increased immigration from abroad. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Accepted Answer

The short run and lo

Question 17

If speculators bid up the value of the dollar in the market for foreign-currency exchange, U.S. aggregate demand would shift to the left.

Accepted Answer

A) True 
 B)False

Question 18

The position of the long-run aggregate supply curve

Accepted Answer

A)  is determined by resource usage and technology. 
B)  is at the point where the unemployment rate is zero. 
C)  shifts to the right when the money supply increases. 
D)  is at the point where the economy would cease to grow. 
A)  is determined by resource usage and technology. 
B)  is at the point where the unemployment rate is zero. 
C)  shifts to the right when the money supply increases. 
D)  is at the point where the economy would cease to grow.

Question 19

In response to a decrease in output, the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in short-run aggregate supply.

Accepted Answer

A) True 
 B)False

Question 20

Other things the same, as the price level rises,

Accepted Answer

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

Exam 20: Aggregate Demand and Aggregate Supply

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

Explain the short-run effects on output and the price level from a decrease in the aggregate-demand curve.

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

When taxes decrease, consumption

Which of the following is included in the aggregate demand for goods and services?

Which of the following is not included in aggregate demand?

Other things the same, an increase in the price level makes consumers feel

Which of the following would raise the price level in both the short and long run?

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.

Which of the following is not a determinant of the long-run level of real GDP?

According to classical macroeconomic theory, changes in the money supply change real GDP but not the price level.

Real GDP

Menu costs help explain

Other things the same, what happens in the long run to the price level and quantity of output after a contraction in aggregate demand?

Other things the same, a decrease in the price level causes real wealth to

Suppose a nation experiences increased immigration from abroad. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

If speculators bid up the value of the dollar in the market for foreign-currency exchange, U.S. aggregate demand would shift to the left.

The position of the long-run aggregate supply curve

In response to a decrease in output, the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in short-run aggregate supply.

Other things the same, as the price level rises,

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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