Question 1

Other things the same, the aggregate quantity of goods demanded in the U.S. increases if

Accepted Answer

A)  real wealth falls. 
B)  the interest rate rises. 
C)  the dollar depreciates. 
D)  None of the above is correct. 
A)  real wealth falls. 
B)  the interest rate rises. 
C)  the dollar depreciates. 
D)  None of the above is correct.

Question 2

An increase in the expected price level shifts the

Accepted Answer

A)  short-run and long-run aggregate supply curves left. 
B)  the short-run but not the long-run aggregate supply curve left. 
C)  the long-run but not the short-run aggregate supply curve left. 
D)  neither the long-run nor the short-run aggregate supply curve left. 
A)  short-run and long-run aggregate supply curves left. 
B)  the short-run but not the long-run aggregate supply curve left. 
C)  the long-run but not the short-run aggregate supply curve left. 
D)  neither the long-run nor the short-run aggregate supply curve left.

Question 3

Suppose the economy is in long-run equilibrium. If there is an increase in government purchases at the same time there is a large increase in the price of oil, then 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 4

If the price level is higher than expected, firms might raise their production in the short run if

Accepted Answer

A)  the nominal wage they pay their employees was set based on the expected price level. 
B)  prices are costly to adjust and they have set their price at some time in the past but are not ready to change it. 
C)  they believe that the price of their product has risen relative to the price of other products, when in fact the rise in the price of their product reflects an increase in the general price level. 
D)  All of the above are correct. 
A)  the nominal wage they pay their employees was set based on the expected price level. 
B)  prices are costly to adjust and they have set their price at some time in the past but are not ready to change it. 
C)  they believe that the price of their product has risen relative to the price of other products, when in fact the rise in the price of their product reflects an increase in the general price level. 
D)  All of the above are correct.

Question 5

The division of variables into real and nominal is a dichotomy assumed by

Accepted Answer

A)  classical economists. 
B)  John Maynard Keynes. 
C)  the wealth effect. 
D)  short-run macroeconomic theory. 
A)  classical economists. 
B)  John Maynard Keynes. 
C)  the wealth effect. 
D)  short-run macroeconomic theory.

Question 6

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

Accepted Answer

A)  both investment and consumption 
B)  consumption but not investment 
C)  investment but not consumption 
D)  neither investment nor consumption 
A)  both investment and consumption 
B)  consumption but not investment 
C)  investment but not consumption 
D)  neither investment nor consumption

Question 7

Other things the same, an increase in the price level causes the interest rate to

Accepted Answer

A)  increase, the dollar to depreciate, and net exports to increase. 
B)  increase, the dollar to appreciate, and net exports to decrease. 
C)  decrease, the dollar to depreciate, and net exports to increase. 
D)  decrease, the dollar to appreciate, and net exports to decrease. 
A)  increase, the dollar to depreciate, and net exports to increase. 
B)  increase, the dollar to appreciate, and net exports to decrease. 
C)  decrease, the dollar to depreciate, and net exports to increase. 
D)  decrease, the dollar to appreciate, and net exports to decrease.

Question 8

Suppose people anticipate an increase in the expected price level. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Accepted Answer

The short-run aggreg

Question 9

Part of the explanation for why the aggregate-demand curve slopes downward is that a decrease in the price level

Accepted Answer

A)  decreases the real value of money. 
B)  increases the real value of the dollar in foreign exchange markets. 
C)  decreases the interest rate. 
D)  All of the above are correct. 
A)  decreases the real value of money. 
B)  increases the real value of the dollar in foreign exchange markets. 
C)  decreases the interest rate. 
D)  All of the above are correct.

Question 10

Figure 33-6.  
-Refer to Figure 33-6. Which of the long-run aggregate-supply curves is consistent with a short-run economic expansion?

Accepted Answer

A)  LRAS1 
B)  LRAS2 
C)  LRAS3 
D)  Both LRAS1 and LRAS3 
A)  LRAS1 
B)  LRAS2 
C)  LRAS3 
D)  Both LRAS1 and LRAS3

Question 11

Figure 33-7.  
-Refer to Stock Market Boom 2015. In the long run, the change in price expectations created by the stock market boom 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 12

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

Accepted Answer

A)  an increase in the minimum wage 
B)  an increase in immigration from abroad 
C)  an increase in the price of oil 
D)  an increase in the actual price level 
A)  an increase in the minimum wage 
B)  an increase in immigration from abroad 
C)  an increase in the price of oil 
D)  an increase in the actual price level

Question 13

The investment component of GDP measures spending on

Accepted Answer

A)  financial assets such as stocks and bonds. During recessions it declines by a relatively large amount. 
B)  residential construction, business equipment, business structures, and changes in inventory. During recessions it declines by a relatively large amount. 
C)  financial assets such as stocks and bonds. During recessions it declines by a relatively small amount. 
D)  residential construction, business equipment, business structures, and changes in inventory. During recessions it declines by a relatively small amount. 
A)  financial assets such as stocks and bonds. During recessions it declines by a relatively large amount. 
B)  residential construction, business equipment, business structures, and changes in inventory. During recessions it declines by a relatively large amount. 
C)  financial assets such as stocks and bonds. During recessions it declines by a relatively small amount. 
D)  residential construction, business equipment, business structures, and changes in inventory. During recessions it declines by a relatively small amount.

Question 14

An increase in the money supply causes the interest rate to fall, investment spending to rise, and aggregate demand to shift right.

Accepted Answer

A) True 
 B)False

Question 15

During the 2008-2009 unemployment rose from about 4.4% to about

Accepted Answer

A)  6% 
B)  8% 
C)  10% 
D)  12% 
A)  6% 
B)  8% 
C)  10% 
D)  12%

Question 16

Over the last fifty years both real GDP and prices have trended upward in most countries. Continuing real GDP growth and inflation can be explained by

Accepted Answer

A)  continuing technological progress alone. 
B)  continuing increases in the money supply alone. 
C)  continued technological progress and continuing increases in the money supply. 
D)  None of the above can explain continuing real GDP growth and inflation. 
A)  continuing technological progress alone. 
B)  continuing increases in the money supply alone. 
C)  continued technological progress and continuing increases in the money supply. 
D)  None of the above can explain continuing real GDP growth and inflation.

Question 17

A decrease in the availability of an important major resource such as oil shifts

Accepted Answer

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

Question 18

Of the following theories, which is consistent with a vertical long-run aggregate supply curve?

Accepted Answer

A)  the sticky-wage theory 
B)  misperceptions theory 
C)  both the sticky-wage and misperceptions theories. 
D)  neither the sticky-wage nor the misperceptions theory. 
A)  the sticky-wage theory 
B)  misperceptions theory 
C)  both the sticky-wage and misperceptions theories. 
D)  neither the sticky-wage nor the misperceptions theory.

Question 19

When the money supply increases

Accepted Answer

A)  interest rates fall and so aggregate demand shifts right. 
B)  interest rates fall and so aggregate demand shifts left. 
C)  interest rates rise and so aggregate demand shifts right. 
D)  interest rates rise and so aggregate demand shifts left. 
A)  interest rates fall and so aggregate demand shifts right. 
B)  interest rates fall and so aggregate demand shifts left. 
C)  interest rates rise and so aggregate demand shifts right. 
D)  interest rates rise and so aggregate demand shifts left.

Question 20

If banks and speculators in the U.S. decided to exchange U.S. dollars for the foreign currencies of other countries, but foreigners do not desire to increase their holdings of U.S. dollars, then U.S. net exports would

Accepted Answer

A)  rise and aggregate demand would shift left. 
B)  rise and aggregate demand would shift right. 
C)  fall and aggregate demand would shift left. 
D)  fall and aggregate demand would shift right. 
A)  rise and aggregate demand would shift left. 
B)  rise and aggregate demand would shift right. 
C)  fall and aggregate demand would shift left. 
D)  fall and aggregate demand would shift right.

Exam 20: Aggregate Demand and Aggregate Supply

Other things the same, the aggregate quantity of goods demanded in the U.S. increases if

An increase in the expected price level shifts the

Suppose the economy is in long-run equilibrium. If there is an increase in government purchases at the same time there is a large increase in the price of oil, then in the short-run

If the price level is higher than expected, firms might raise their production in the short run if

The division of variables into real and nominal is a dichotomy assumed by

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

Other things the same, an increase in the price level causes the interest rate to

Suppose people anticipate an increase in the expected price level. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Part of the explanation for why the aggregate-demand curve slopes downward is that a decrease in the price level

Figure 33-6. -Refer to Figure 33-6. Which of the long-run aggregate-supply curves is consistent with a short-run economic expansion?

Figure 33-7. -Refer to Stock Market Boom 2015. In the long run, the change in price expectations created by the stock market boom shifts

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

The investment component of GDP measures spending on

An increase in the money supply causes the interest rate to fall, investment spending to rise, and aggregate demand to shift right.

During the 2008-2009 unemployment rose from about 4.4% to about

Over the last fifty years both real GDP and prices have trended upward in most countries. Continuing real GDP growth and inflation can be explained by

A decrease in the availability of an important major resource such as oil shifts

Of the following theories, which is consistent with a vertical long-run aggregate supply curve?

When the money supply increases

If banks and speculators in the U.S. decided to exchange U.S. dollars for the foreign currencies of other countries, but foreigners do not desire to increase their holdings of U.S. dollars, then U.S. net exports would

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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