Question 1

Stagflation exists when prices

Accepted Answer

A)  rise and unemployment falls. 
B)  rise and unemployment falls 
C)  fall and unemployment rises. 
D)  fall and unemployment rises 
A)  rise and unemployment falls. 
B)  rise and unemployment falls 
C)  fall and unemployment rises. 
D)  fall and unemployment rises

Question 2

Figure 33-7.  
-Refer to Optimism. How is the new long-run equilibrium different from the original one?

Accepted Answer

A)  both price and real GDP are higher 
B)  both price and real GDP are lower. 
C)  the price level is the same and GDP is higher. 
D)  the price level is higher and real GDP is the same. 
A)  both price and real GDP are higher 
B)  both price and real GDP are lower. 
C)  the price level is the same and GDP is higher. 
D)  the price level is higher and real GDP is the same.

Question 3

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

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 4

List the three reasons for why the aggregate-demand curve slopes downward.

Accepted Answer

The wealth effect, t

Question 5

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

Accepted Answer

A)  an increase in price expectations 
B)  an increase in the actual price level 
C)  a decrease in the money supply 
D)  a decrease in the price of oil 
A)  an increase in price expectations 
B)  an increase in the actual price level 
C)  a decrease in the money supply 
D)  a decrease in the price of oil

Question 6

Other things the same, when the price level rises, interest rates

Accepted Answer

A)  rise, which means consumers will want to spend more on homebuilding. 
B)  rise, which means consumers will want to spend less on homebuilding. 
C)  fall, which means consumers will want to spend more on homebuilding. 
D)  fall, which means consumers will want to spend less on homebuilding. 
A)  rise, which means consumers will want to spend more on homebuilding. 
B)  rise, which means consumers will want to spend less on homebuilding. 
C)  fall, which means consumers will want to spend more on homebuilding. 
D)  fall, which means consumers will want to spend less on homebuilding.

Question 7

Other things the same, if the money supply rises by 2% and people were expecting it to rise by 5%, then some firms have

Accepted Answer

A)  higher than desired prices, which increases their sales. 
B)  higher than desired prices, which depresses their sales. 
C)  lower than desired prices, which increases their sales. 
D)  lower than desired prices, which depresses their sales. 
A)  higher than desired prices, which increases their sales. 
B)  higher than desired prices, which depresses their sales. 
C)  lower than desired prices, which increases their sales. 
D)  lower than desired prices, which depresses their sales.

Question 8

When the dollar appreciates, U.S.

Accepted Answer

A)  net exports rise, which increases the aggregate quantity of goods and services demanded. 
B)  net exports rise, which decreases the aggregate quantity of goods and services demanded. 
C)  net exports fall, which increases the aggregate quantity of goods and services demanded. 
D)  net exports fall, which decreases the aggregate quantity of goods and services demanded. 
A)  net exports rise, which increases the aggregate quantity of goods and services demanded. 
B)  net exports rise, which decreases the aggregate quantity of goods and services demanded. 
C)  net exports fall, which increases the aggregate quantity of goods and services demanded. 
D)  net exports fall, which decreases the aggregate quantity of goods and services demanded.

Question 9

Figure 33-7.  
-Refer to Optimism. 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 10

People had been expecting the price level to be 140 but it turns out to be 138. Johnson Family Restaurants increases the number of workers it employs. What could explain this?

Accepted Answer

A)  both sticky price theory and sticky wage theory 
B)  sticky price theory but not sticky wage theory 
C)  sticky wage theory but not sticky price theory 
D)  neither sticky wage theory nor sticky price theory 
A)  both sticky price theory and sticky wage theory 
B)  sticky price theory but not sticky wage theory 
C)  sticky wage theory but not sticky price theory 
D)  neither sticky wage theory nor sticky price theory

Question 11

Suppose a recession overseas reduces a country's exports. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

Accepted Answer

The aggregate-demand

Question 12

The classical dichotomy refers to the separation of

Accepted Answer

A)  prices and nominal interest rates. 
B)  taxes and government spending. 
C)  decisions made by the public and decisions made by the government. 
D)  real and nominal variables. 
A)  prices and nominal interest rates. 
B)  taxes and government spending. 
C)  decisions made by the public and decisions made by the government. 
D)  real and nominal variables.

Question 13

If the price level falls, the real value of a dollar

Accepted Answer

A)  rises, so people will want to buy more. This response helps explain the slope of the aggregate demand curve. 
B)  rises, so people will want to buy more. This response shifts aggregate demand to the right. 
C)  falls, so people will want to buy less. This response helps explain the slope of the aggregate demand curve. 
D)  falls, so people will want to buy less. This response shifts aggregate demand to the left. 
A)  rises, so people will want to buy more. This response helps explain the slope of the aggregate demand curve. 
B)  rises, so people will want to buy more. This response shifts aggregate demand to the right. 
C)  falls, so people will want to buy less. This response helps explain the slope of the aggregate demand curve. 
D)  falls, so people will want to buy less. This response shifts aggregate demand to the left.

Question 14

Make a list of expenditures whose sum equals GDP.

Accepted Answer

consumption, investm

Question 15

According to classical macroeconomic theory, changes in the money supply affect

Accepted Answer

A)  real GDP and the price level. 
B)  real GDP but not the price level. 
C)  the price level, but not real GDP. 
D)  neither the price level nor real GDP. 
A)  real GDP and the price level. 
B)  real GDP but not the price level. 
C)  the price level, but not real GDP. 
D)  neither the price level nor real GDP.

Question 16

When the price level falls the quantity of

Accepted Answer

A)  consumption goods demanded rises, while the quantity of net exports demanded falls. 
B)  consumption goods demanded and the quantity of net exports demanded both rise. 
C)  consumption goods demanded and the quantity of net exports demanded both fall. 
D)  consumption goods demanded falls, while the quantity of net exports demand rises. 
A)  consumption goods demanded rises, while the quantity of net exports demanded falls. 
B)  consumption goods demanded and the quantity of net exports demanded both rise. 
C)  consumption goods demanded and the quantity of net exports demanded both fall. 
D)  consumption goods demanded falls, while the quantity of net exports demand rises.

Question 17

Other things the same, technological progress raises the price level.

Accepted Answer

A) True 
 B)False

Question 18

Other things the same, when the price level rises more than expected, some firms will have

Accepted Answer

A)  higher than desired prices, which increases their sales. 
B)  higher than desired prices, which depresses their sales. 
C)  lower than desired prices, which increases their sales. 
D)  lower than desired prices, which depresses their sales. 
A)  higher than desired prices, which increases their sales. 
B)  higher than desired prices, which depresses their sales. 
C)  lower than desired prices, which increases their sales. 
D)  lower than desired prices, which depresses their sales.

Question 19

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)  Congress reduces purchases of new weapons systems. 
B)  The Fed buys bonds in the open market. 
C)  The price level falls. 
D)  Net exports fall. 
A)  Congress reduces purchases of new weapons systems. 
B)  The Fed buys bonds in the open market. 
C)  The price level falls. 
D)  Net exports fall.

Question 20

The recessions of the 1970s are often attributed to

Accepted Answer

A)  declining inflation expectations. 
B)  an increase in oil prices. 
C)  declines in the price of stock. 
D)  decreases in the money supply. 
A)  declining inflation expectations. 
B)  an increase in oil prices. 
C)  declines in the price of stock. 
D)  decreases in the money supply.

Exam 20: Aggregate Demand and Aggregate Supply

Stagflation exists when prices

Figure 33-7. -Refer to Optimism. How is the new long-run equilibrium different from the original one?

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

List the three reasons for why the aggregate-demand curve slopes downward.

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

Other things the same, when the price level rises, interest rates

Other things the same, if the money supply rises by 2% and people were expecting it to rise by 5%, then some firms have

When the dollar appreciates, U.S.

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

People had been expecting the price level to be 140 but it turns out to be 138. Johnson Family Restaurants increases the number of workers it employs. What could explain this?

Suppose a recession overseas reduces a country's exports. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

The classical dichotomy refers to the separation of

If the price level falls, the real value of a dollar

Make a list of expenditures whose sum equals GDP.

According to classical macroeconomic theory, changes in the money supply affect

When the price level falls the quantity of

Other things the same, technological progress raises the price level.

Other things the same, when the price level rises more than expected, some firms will have

Which of the following shifts aggregate demand to the right?

The recessions of the 1970s are often attributed to

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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