Question 1

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

Accepted Answer

A)  U.S. residents want to buy more foreign bonds. The real exchange rate rises. 
B)  U.S. residents want to buy more foreign bonds. The real exchange rate falls. 
C)  U.S. residents want to buy fewer foreign bonds. The real exchange rate rises. 
D)  U.S. residents want to buy fewer foreign bonds. The real exchange rate falls. 
A)  U.S. residents want to buy more foreign bonds. The real exchange rate rises. 
B)  U.S. residents want to buy more foreign bonds. The real exchange rate falls. 
C)  U.S. residents want to buy fewer foreign bonds. The real exchange rate rises. 
D)  U.S. residents want to buy fewer foreign bonds. The real exchange rate falls.

Question 2

The long-run aggregate supply curve shifts right if

Accepted Answer

A)  either immigration from abroad increases or technology improves. 
B)  immigration from abroad increases, but not if technology improves. 
C)  technology improves, but not if immigration from abroad increases. 
D)  None of the above are correct. 
A)  either immigration from abroad increases or technology improves. 
B)  immigration from abroad increases, but not if technology improves. 
C)  technology improves, but not if immigration from abroad increases. 
D)  None of the above are correct.

Question 3

Historically, the change in real GDP during recessions has been

Accepted Answer

A)  mostly a change in investment spending. 
B)  mostly a change in consumption spending. 
C)  about equally divided between consumption and investment spending. 
D)  sometimes mostly a change in consumption and sometimes mostly a change in investment. 
A)  mostly a change in investment spending. 
B)  mostly a change in consumption spending. 
C)  about equally divided between consumption and investment spending. 
D)  sometimes mostly a change in consumption and sometimes mostly a change in investment.

Question 4

The model of aggregate demand and aggregate supply

Accepted Answer

A)  is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution of resources between markets to explain aggregate relationships. 
B)  is different from the model of supply and demand for a particular market, in that we have to separate real and nominal variables in the aggregate model. 
C)  is a straightforward extension of the model of supply and demand for a particular market, in which substitution of resources between markets is highlighted. 
D)  is a straightforward extension of the model of supply and demand for a particular market, in which the interaction between real and nominal variables is highlighted. 
A)  is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution of resources between markets to explain aggregate relationships. 
B)  is different from the model of supply and demand for a particular market, in that we have to separate real and nominal variables in the aggregate model. 
C)  is a straightforward extension of the model of supply and demand for a particular market, in which substitution of resources between markets is highlighted. 
D)  is a straightforward extension of the model of supply and demand for a particular market, in which the interaction between real and nominal variables is highlighted.

Question 5

Refer to U.S. Financial Crisis. What would happen in the market for foreign-currency exchange?

Accepted Answer

A)  the supply of dollars would shift right and the exchange rate would rise. 
B)  the supply of dollars would shift right and the exchange rate would fall. 
C)  the supply of dollars would shift left and the exchange rate would rise. 
D)  None of the above is correct. 
A)  the supply of dollars would shift right and the exchange rate would rise. 
B)  the supply of dollars would shift right and the exchange rate would fall. 
C)  the supply of dollars would shift left and the exchange rate would rise. 
D)  None of the above is correct.

Question 6

Which of the following both shift aggregate demand left?

Accepted Answer

A)  a decrease in taxes and at a given price level consumers feel more wealthy 
B)  a decrease in taxes and at a given price level consumers feel less wealthy 
C)  an increase in taxes and at a given price level consumers feel more wealthy 
D)  an increase in taxes and at a given price level consumers feel less wealthy 
A)  a decrease in taxes and at a given price level consumers feel more wealthy 
B)  a decrease in taxes and at a given price level consumers feel less wealthy 
C)  an increase in taxes and at a given price level consumers feel more wealthy 
D)  an increase in taxes and at a given price level consumers feel less wealthy

Question 7

A candidate for political office announces the following policies which, he says, economics clearly demonstrates will lead to higher output in the long run: 1. increase immigration from abroad 2. make trade more open between the US and other countries.

Accepted Answer

A)  1 and 2 both shift long-run aggregate supply right. 
B)  1 and 2 both shift long-run aggregate supply left. 
C)  1 shifts long-run aggregate supply right, 2 shifts long-run aggregate supply left. 
D)  1 shifts long-run aggregate supply left, 2 shifts long-run aggregate supply right. 
A)  1 and 2 both shift long-run aggregate supply right. 
B)  1 and 2 both shift long-run aggregate supply left. 
C)  1 shifts long-run aggregate supply right, 2 shifts long-run aggregate supply left. 
D)  1 shifts long-run aggregate supply left, 2 shifts long-run aggregate supply right.

Question 8

As the price level rises, the interest rate

Accepted Answer

A)  falls, so the supply of dollars in the market for foreign currency exchange shifts left. 
B)  falls, so the supply of dollars in the market for foreign currency exchange shifts right. 
C)  rises, so the supply of dollars in the market for foreign currency exchange shifts left. 
D)  rises, so the supply of dollars in the market for foreign currency exchange shifts right. 
A)  falls, so the supply of dollars in the market for foreign currency exchange shifts left. 
B)  falls, so the supply of dollars in the market for foreign currency exchange shifts right. 
C)  rises, so the supply of dollars in the market for foreign currency exchange shifts left. 
D)  rises, so the supply of dollars in the market for foreign currency exchange shifts right.

Question 9

Figure 33-7.  
-Refer to Optimism. What happens to the expected price level and what's the result for wage bargaining?

Accepted Answer

A)  The expected price level falls. Bargains are struck for higher wages. 
B)  The expected price level falls. Bargains are struck for lower wages. 
C)  The expected price level rises. Bargains are struck for higher wages. 
D)  The expected price level rises. Bargains are struck for lower wages. 
A)  The expected price level falls. Bargains are struck for higher wages. 
B)  The expected price level falls. Bargains are struck for lower wages. 
C)  The expected price level rises. Bargains are struck for higher wages. 
D)  The expected price level rises. Bargains are struck for lower wages.

Question 10

Identify the variables that could cause shifts in both the short-run and long-run aggregate-supply curves.

Accepted Answer

labor, cap

Question 11

Suppose a country experiences a change in weather patterns that makes farming more difficult. 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 and lo

Question 12

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

Accepted Answer

A)  a decrease in the actual price level 
B)  an increase in the actual price level 
C)  a decrease in the expected price level 
D)  an increase in the expected price level 
A)  a decrease in the actual price level 
B)  an increase in the actual price level 
C)  a decrease in the expected price level 
D)  an increase in the expected price level

Question 13

People had been expecting the price level to be 120 but it turns out to be 122. In response Robinson Tire Company 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 14

Figure 33-1.  
-Refer to Figure 33-1. Line A is

Accepted Answer

A)  investment spending. 
B)  real GDP. 
C)  unemployment rate. 
D)  CPI. 
A)  investment spending. 
B)  real GDP. 
C)  unemployment rate. 
D)  CPI.

Question 15

At a given price level, an increase in which of the following shifts aggregate demand to the right?

Accepted Answer

A)  consumption 
B)  investment 
C)  government expenditures 
D)  All of the above are correct. 
A)  consumption 
B)  investment 
C)  government expenditures 
D)  All of the above are correct.

Question 16

Other things the same, an increase in the price level makes the dollars people hold worth

Accepted Answer

A)  more, so they can buy more. 
B)  more, so they can buy less. 
C)  less, so they can buy more. 
D)  less, so they can buy less. 
A)  more, so they can buy more. 
B)  more, so they can buy less. 
C)  less, so they can buy more. 
D)  less, so they can buy less.

Question 17

During recessions investment

Accepted Answer

A)  falls by a larger percentage than GDP. 
B)  falls by about the same percentage as GDP. 
C)  falls by a smaller percentage than GDP. 
D)  falls but the percentage change is sometimes much larger and sometimes much smaller. 
A)  falls by a larger percentage than GDP. 
B)  falls by about the same percentage as GDP. 
C)  falls by a smaller percentage than GDP. 
D)  falls but the percentage change is sometimes much larger and sometimes much smaller.

Question 18

The sticky-price theory helps explain what feature of the aggregate demand and aggregate supply model?

Accepted Answer

why the short run ag

Question 19

What variables besides real GDP tend to decline during recessions? Given the definition of real GDP, argue that declines in these variables are to be expected.

Accepted Answer

Variables that fall along with real GDP

Question 20

When the price level falls

Accepted Answer

A)  households want to lend less. 
B)  the interest rate rises. 
C)  firms want to spend less on investment goods. 
D)  None of the above are correct. 
A)  households want to lend less. 
B)  the interest rate rises. 
C)  firms want to spend less on investment goods. 
D)  None of the above are correct.

Exam 20: Aggregate Demand and Aggregate Supply

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

The long-run aggregate supply curve shifts right if

Historically, the change in real GDP during recessions has been

The model of aggregate demand and aggregate supply

Refer to U.S. Financial Crisis. What would happen in the market for foreign-currency exchange?

Which of the following both shift aggregate demand left?

A candidate for political office announces the following policies which, he says, economics clearly demonstrates will lead to higher output in the long run: 1. increase immigration from abroad 2. make trade more open between the US and other countries.

As the price level rises, the interest rate

Figure 33-7. -Refer to Optimism. What happens to the expected price level and what's the result for wage bargaining?

Identify the variables that could cause shifts in both the short-run and long-run aggregate-supply curves.

Suppose a country experiences a change in weather patterns that makes farming more difficult. Which curves) in the aggregate demand and aggregate supply model would be affected, and which way would it they) shift?

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

People had been expecting the price level to be 120 but it turns out to be 122. In response Robinson Tire Company increases the number of workers it employs. What could explain this?

Figure 33-1. -Refer to Figure 33-1. Line A is

At a given price level, an increase in which of the following shifts aggregate demand to the right?

Other things the same, an increase in the price level makes the dollars people hold worth

During recessions investment

The sticky-price theory helps explain what feature of the aggregate demand and aggregate supply model?

What variables besides real GDP tend to decline during recessions? Given the definition of real GDP, argue that declines in these variables are to be expected.

When the price level falls

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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