Question 1

The price level rises in the short run if

Accepted Answer

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

Question 2

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U. S. Which pair of GDP growth rates and unemployment rates is realistic?

Accepted Answer

A)  5 percent, 1 percent 
B)  3 percent, 5 percent 
C)  -1 percent, 3 percent 
D)  -2 percent, 4 percent 
A)  5 percent, 1 percent 
B)  3 percent, 5 percent 
C)  -1 percent, 3 percent 
D)  -2 percent, 4 percent

Question 3

Other things the same, which of the following is correct?

Accepted Answer

A)  A decrease in the price level causes the dollar to appreciate. Aggregate demand shifts right. 
B)  A decrease in the price level causes the dollar to depreciate. Aggregate demand shifts right. 
C)  If speculators lose confidence in the American economy, the dollar appreciates. Aggregate demand shifts right. 
D)  If speculators lose confidence in the American economy, the dollar depreciates. Aggregate demand shifts right. 
A)  A decrease in the price level causes the dollar to appreciate. Aggregate demand shifts right. 
B)  A decrease in the price level causes the dollar to depreciate. Aggregate demand shifts right. 
C)  If speculators lose confidence in the American economy, the dollar appreciates. Aggregate demand shifts right. 
D)  If speculators lose confidence in the American economy, the dollar depreciates. Aggregate demand shifts right.

Question 4

Figure 33-10.  
-Refer to Figure 33-10. If the economy starts at point A, a short-run fall in output would be consistent with a movement to point

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 5

The aggregate demand and aggregate supply model implies monetary neutrality

Accepted Answer

A)  only in the short run. 
B)  only in the long run. 
C)  in both the short run and the long run. 
D)  in neither the short run nor long run. 
A)  only in the short run. 
B)  only in the long run. 
C)  in both the short run and the long run. 
D)  in neither the short run nor long run.

Question 6

A decrease in the price level makes consumers feel wealthier, so they purchase more. This logic helps explain why the aggregate demand curve slopes downward.

Accepted Answer

A) True 
 B)False

Question 7

Other things the same, if the U.S. price level rises, then

Accepted Answer

A)  the supply of dollars in the market for foreign-currency exchange increases, and net exports fall. 
B)  the supply of dollars in the market for foreign-currency exchange increases, and net exports rise. 
C)  the supply of dollars in the market for foreign-currency exchange decreases, and net exports fall. 
D)  the supply of dollars in the market for foreign-currency exchange decreases, and net exports rise. 
A)  the supply of dollars in the market for foreign-currency exchange increases, and net exports fall. 
B)  the supply of dollars in the market for foreign-currency exchange increases, and net exports rise. 
C)  the supply of dollars in the market for foreign-currency exchange decreases, and net exports fall. 
D)  the supply of dollars in the market for foreign-currency exchange decreases, and net exports rise.

Question 8

Other things the same, a decrease in the price level causes the interest rate to

Accepted Answer

A)  increase, the dollar to appreciate, and net exports to increase. 
B)  increase, the dollar to depreciate, 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 appreciate, and net exports to increase. 
B)  increase, the dollar to depreciate, 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 9

When production costs rise,

Accepted Answer

A)  the short-run aggregate supply curve shifts to the right. 
B)  the short-run aggregate supply curve shifts to the left. 
C)  the aggregate demand curve shifts to the right. 
D)  the aggregate demand curve shifts to the left. 
A)  the short-run aggregate supply curve shifts to the right. 
B)  the short-run aggregate supply curve shifts to the left. 
C)  the aggregate demand curve shifts to the right. 
D)  the aggregate demand curve shifts to the left.

Question 10

Which of the following is correct?

Accepted Answer

A)  Real GDP is the variable most commonly used to measure short-run economic fluctuations. These fluctuations can be predicted with some accuracy. 
B)  Real GDP is the variable most commonly used to measure short-run economic fluctuations. It is almost impossible to predict these fluctuations with much accuracy. 
C)  Nominal GDP is the variable most commonly used to measure short-run economic fluctuations. These fluctuations can be predicted with some accuracy. 
D)  Nominal GDP is the variable most commonly used to measure short-run economic fluctuations. It is almost impossible to predict these fluctuations with much accuracy. 
A)  Real GDP is the variable most commonly used to measure short-run economic fluctuations. These fluctuations can be predicted with some accuracy. 
B)  Real GDP is the variable most commonly used to measure short-run economic fluctuations. It is almost impossible to predict these fluctuations with much accuracy. 
C)  Nominal GDP is the variable most commonly used to measure short-run economic fluctuations. These fluctuations can be predicted with some accuracy. 
D)  Nominal GDP is the variable most commonly used to measure short-run economic fluctuations. It is almost impossible to predict these fluctuations with much accuracy.

Question 11

Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp increase in the supply of labor, a major new discovery of oil, and new environmental regulations that raise the cost of electricity production. In the short run

Accepted Answer

A)  the price level will rise and real GDP will fall. 
B)  the price level will fall and real GDP will rise. 
C)  the price level and real GDP will both stay the same. 
D)  All of the above are possible. 
A)  the price level will rise and real GDP will fall. 
B)  the price level will fall and real GDP will rise. 
C)  the price level and real GDP will both stay the same. 
D)  All of the above are possible.

Question 12

List the three alternative explanations for the upward slope of the short run aggregate supply curve.

Accepted Answer

Sticky wages, sticky

Question 13

Which of the following is correct?

Accepted Answer

A)  Over the business cycle investment fluctuates more than consumption. 
B)  Economic fluctuations are easy to predict. 
C)  During recessions employment rises. 
D)  Because of government policy the U.S. had zero recessions in the last 25 years. 
A)  Over the business cycle investment fluctuates more than consumption. 
B)  Economic fluctuations are easy to predict. 
C)  During recessions employment rises. 
D)  Because of government policy the U.S. had zero recessions in the last 25 years.

Question 14

In the aggregate demand and aggregate supply model, the point where the aggregate demand curve crosses the long run aggregate supply curve, and the expected price level equals the actual price level, is known as what?

Accepted Answer

Long run e

Question 15

The primary purpose of the aggregate demand and aggregate supply model is to demonstrate the classical dichotomy.

Accepted Answer

A) True 
 B)False

Question 16

Use sticky-wage theory to explain why an increase in the expected price level shifts the aggregate supply curve.

Accepted Answer

When people expect the price l

Question 17

If the dollar depreciates because of speculation or government policy, U.S.

Accepted Answer

A)  aggregate demand shifts left. U.S. aggregate demand also shifts left if other countries experience an increase in real GDP. 
B)  aggregate demand shifts left. U.S. aggregate demand shifts right if other countries experience an increase in real GDP. 
C)  aggregate demand shifts right. U.S. aggregate demand also shifts right if other countries experience a decrease in real GDP. 
D)  aggregate demand shifts right. U.S. aggregate demand shifts left if other countries experience a decrease in real GDP. 
A)  aggregate demand shifts left. U.S. aggregate demand also shifts left if other countries experience an increase in real GDP. 
B)  aggregate demand shifts left. U.S. aggregate demand shifts right if other countries experience an increase in real GDP. 
C)  aggregate demand shifts right. U.S. aggregate demand also shifts right if other countries experience a decrease in real GDP. 
D)  aggregate demand shifts right. U.S. aggregate demand shifts left if other countries experience a decrease in real GDP.

Question 18

Figure 33-4  
-Refer to Figure 33-4. If the economy starts at A, a decrease in the money supply moves the economy

Accepted Answer

A)  to A in the long run. 
B)  to C in the long run. 
C)  back to A in the long run. 
D)  to D in the long run. 
A)  to A in the long run. 
B)  to C in the long run. 
C)  back to A in the long run. 
D)  to D in the long run.

Question 19

During a recession the economy experiences

Accepted Answer

A)  rising employment and income. 
B)  rising employment and falling income. 
C)  rising income and falling employment. 
D)  falling employment and income. 
A)  rising employment and income. 
B)  rising employment and falling income. 
C)  rising income and falling employment. 
D)  falling employment and income.

Question 20

Most economists believe that classical theory describes the world in the short run but not in the long run.

Accepted Answer

A) True 
 B)False

Exam 20: Aggregate Demand and Aggregate Supply

The price level rises in the short run if

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U. S. Which pair of GDP growth rates and unemployment rates is realistic?

Other things the same, which of the following is correct?

Figure 33-10. -Refer to Figure 33-10. If the economy starts at point A, a short-run fall in output would be consistent with a movement to point

The aggregate demand and aggregate supply model implies monetary neutrality

A decrease in the price level makes consumers feel wealthier, so they purchase more. This logic helps explain why the aggregate demand curve slopes downward.

Other things the same, if the U.S. price level rises, then

Other things the same, a decrease in the price level causes the interest rate to

When production costs rise,

Which of the following is correct?

Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp increase in the supply of labor, a major new discovery of oil, and new environmental regulations that raise the cost of electricity production. In the short run

List the three alternative explanations for the upward slope of the short run aggregate supply curve.

Which of the following is correct?

In the aggregate demand and aggregate supply model, the point where the aggregate demand curve crosses the long run aggregate supply curve, and the expected price level equals the actual price level, is known as what?

The primary purpose of the aggregate demand and aggregate supply model is to demonstrate the classical dichotomy.

Use sticky-wage theory to explain why an increase in the expected price level shifts the aggregate supply curve.

If the dollar depreciates because of speculation or government policy, U.S.

Figure 33-4 -Refer to Figure 33-4. If the economy starts at A, a decrease in the money supply moves the economy

During a recession the economy experiences

Most economists believe that classical theory describes the world in the short run but not in the long run.

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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