Question 1

Which of the following both shift aggregate demand right?

Accepted Answer

A)  net exports rise for some reason other than a price change and government purchases rise. 
B)  net exports rise for some reason other than a price change and taxes increase. 
C)  net exports fall for some reason other than a price change and government purchases fall. 
D)  net exports fall for some reason other than a price change and taxes fall. 
A)  net exports rise for some reason other than a price change and government purchases rise. 
B)  net exports rise for some reason other than a price change and taxes increase. 
C)  net exports fall for some reason other than a price change and government purchases fall. 
D)  net exports fall for some reason other than a price change and taxes fall.

Question 2

When looking at a graph of aggregate demand, which of the following is correct?

Accepted Answer

A)  There are nominal variables on both the vertical and the horizontal axes. 
B)  There are real variables on both the vertical and horizontal axes. 
C)  The variable on the vertical axis is nominal; the variable on the horizontal axis is real 
D)  The variable on the vertical axis is real; the variable on the horizontal axis is nominal 
A)  There are nominal variables on both the vertical and the horizontal axes. 
B)  There are real variables on both the vertical and horizontal axes. 
C)  The variable on the vertical axis is nominal; the variable on the horizontal axis is real 
D)  The variable on the vertical axis is real; the variable on the horizontal axis is nominal

Question 3

The long-run effect of an increase in household consumption is to raise

Accepted Answer

A)  both real output and the price level. 
B)  real output and lower the price level. 
C)  real output and leave the price level unchanged. 
D)  the price level and leave real output unchanged. 
A)  both real output and the price level. 
B)  real output and lower the price level. 
C)  real output and leave the price level unchanged. 
D)  the price level and leave real output unchanged.

Question 4

Investment is a

Accepted Answer

A)  small part of real GDP, so it accounts for a small share of the fluctuation in real GDP. 
B)  small part of real GDP, yet it accounts for a large share of the fluctuation in real GDP. 
C)  large part of real GDP, so it accounts for a large share of the fluctuation in real GDP. 
D)  large part of real GDP, yet it accounts for a small share of the fluctuation in real GDP. 
A)  small part of real GDP, so it accounts for a small share of the fluctuation in real GDP. 
B)  small part of real GDP, yet it accounts for a large share of the fluctuation in real GDP. 
C)  large part of real GDP, so it accounts for a large share of the fluctuation in real GDP. 
D)  large part of real GDP, yet it accounts for a small share of the fluctuation in real GDP.

Question 5

The logic of the exchange-rate effect begins with a change in the price level changing the interest rate.

Accepted Answer

A) True 
 B)False

Question 6

Figure 33-7.  
-Refer to Financial Crisis. What happens to the price level and real GDP in the short run?

Accepted Answer

A)  both the price level and real GDP rise 
B)  the price level rises and real GDP falls 
C)  the price level falls and real GDP rises 
D)  both the price level and real GDP fall 
A)  both the price level and real GDP rise 
B)  the price level rises and real GDP falls 
C)  the price level falls and real GDP rises 
D)  both the price level and real GDP fall

Question 7

The long-run aggregate supply curve shifts left if

Accepted Answer

A)  the capital stock increases. 
B)  there is a natural disaster. 
C)  the government removes some environmental regulations that limit production methods. 
D)  None of the above is correct. 
A)  the capital stock increases. 
B)  there is a natural disaster. 
C)  the government removes some environmental regulations that limit production methods. 
D)  None of the above is correct.

Question 8

Explain how a recession differs from a depression.

Accepted Answer

Recessions are relatively mild

Question 9

Which of the following would increase the price level?

Accepted Answer

A)  an increase in the money supply. 
B)  an increase in taxes. 
C)  a decrease in the expected price level. 
D)  a decrease in the natural rate of unemployment. 
A)  an increase in the money supply. 
B)  an increase in taxes. 
C)  a decrease in the expected price level. 
D)  a decrease in the natural rate of unemployment.

Question 10

Economic variables we are most interested in are

Accepted Answer

A)  real variables, but we usually observe nominal variables. 
B)  nominal variables, but we usually observe real variables. 
C)  real variables, which we usually observe. 
D)  nominal variables, which we usually observe. 
A)  real variables, but we usually observe nominal variables. 
B)  nominal variables, but we usually observe real variables. 
C)  real variables, which we usually observe. 
D)  nominal variables, which we usually observe.

Question 11

The initial impact of an increase in an investment tax credit is to shift

Accepted Answer

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

Question 12

We can explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time.

Accepted Answer

A) True 
 B)False

Question 13

The variables on the vertical and horizontal axes of the aggregate demand and supply graph are

Accepted Answer

A)  the price level and real output. 
B)  real output and employment. 
C)  employment and the inflation rate. 
D)  the value of money and the price level. 
A)  the price level and real output. 
B)  real output and employment. 
C)  employment and the inflation rate. 
D)  the value of money and the price level.

Question 14

When the Fed buys bonds

Accepted Answer

A)  the supply of money increases and so aggregate demand shifts right. 
B)  the supply of money decreases and so aggregate demand shifts left. 
C)  the supply of money decreases and so aggregate demand shifts right. 
D)  the supply of money increases and so aggregate demand shifts left. 
A)  the supply of money increases and so aggregate demand shifts right. 
B)  the supply of money decreases and so aggregate demand shifts left. 
C)  the supply of money decreases and so aggregate demand shifts right. 
D)  the supply of money increases and so aggregate demand shifts left.

Question 15

Figure 33-11.  
-Refer to Figure 33-11. A movement from P1 and Y2, to P2 and Y1 would be consistent with

Accepted Answer

A)  a decrease in consumption expenditures. 
B)  stagflation. 
C)  sticky-wages. 
D)  an increase in net exports. 
A)  a decrease in consumption expenditures. 
B)  stagflation. 
C)  sticky-wages. 
D)  an increase in net exports.

Question 16

In the mid-1970s the price of oil rose dramatically. This

Accepted Answer

A)  shifted aggregate supply left, the price level rose, and real GDP fell. 
B)  caused U.S. prices to fall, and real GDP rose. 
C)  caused an increase in U.S. prices and real GDP. 
D)  caused a decrease in U.S. prices and real GDP. 
A)  shifted aggregate supply left, the price level rose, and real GDP fell. 
B)  caused U.S. prices to fall, and real GDP rose. 
C)  caused an increase in U.S. prices and real GDP. 
D)  caused a decrease in U.S. prices and real GDP.

Question 17

Other things the same, what happens to the price level and quantity of output when an adverse shift in the short run aggregate supply curve occurs?

Accepted Answer

Price leve

Question 18

Figure 33-7.  
-Refer to Figure 33-7. If the economy starts at Y, then a recession occurs at

Accepted Answer

A)  V. 
B)  W. 
C)  X. 
D)  Z. 
A)  V. 
B)  W. 
C)  X. 
D)  Z.

Question 19

Other things the same, as the price level falls, the real value of a dollar

Accepted Answer

A)  rises, and interest rates rise. 
B)  rises, and interest rates fall. 
C)  falls, and interest rates rise. 
D)  falls, and interest rates fall. 
A)  rises, and interest rates rise. 
B)  rises, and interest rates fall. 
C)  falls, and interest rates rise. 
D)  falls, and interest rates fall.

Question 20

Figure 33-5.  
-Refer to Figure 33-5. In Figure 33-5,

Accepted Answer

A)  Point B represents a short-run equilibrium and a long-run equilibrium. 
B)  Point B represents a short-run equilibrium, and Point A represents a long-run equilibrium. 
C)  Point B represents a long-run equilibrium, and Point A represents a short-run equilibrium. 
D)  Point B represents a long-run equilibrium, and Point C represents a short-run equilibrium. 
A)  Point B represents a short-run equilibrium and a long-run equilibrium. 
B)  Point B represents a short-run equilibrium, and Point A represents a long-run equilibrium. 
C)  Point B represents a long-run equilibrium, and Point A represents a short-run equilibrium. 
D)  Point B represents a long-run equilibrium, and Point C represents a short-run equilibrium.

Exam 20: Aggregate Demand and Aggregate Supply

Which of the following both shift aggregate demand right?

When looking at a graph of aggregate demand, which of the following is correct?

The long-run effect of an increase in household consumption is to raise

Investment is a

The logic of the exchange-rate effect begins with a change in the price level changing the interest rate.

Figure 33-7. -Refer to Financial Crisis. What happens to the price level and real GDP in the short run?

The long-run aggregate supply curve shifts left if

Explain how a recession differs from a depression.

Which of the following would increase the price level?

Economic variables we are most interested in are

The initial impact of an increase in an investment tax credit is to shift

We can explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time.

The variables on the vertical and horizontal axes of the aggregate demand and supply graph are

When the Fed buys bonds

Figure 33-11. -Refer to Figure 33-11. A movement from P1 and Y2, to P2 and Y1 would be consistent with

In the mid-1970s the price of oil rose dramatically. This

Other things the same, what happens to the price level and quantity of output when an adverse shift in the short run aggregate supply curve occurs?

Figure 33-7. -Refer to Figure 33-7. If the economy starts at Y, then a recession occurs at

Other things the same, as the price level falls, the real value of a dollar

Figure 33-5. -Refer to Figure 33-5. In Figure 33-5,

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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