Question 1

Figure 33-7.  
-Refer to Optimism. In the long run, the change in price expectations created by optimism 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 2

An increase in the price level and a reduction in output would result from

Accepted Answer

A)  an increase in the money supply. 
B)  an increase in government expenditures. 
C)  a fall in stock prices. 
D)  bad weather in farm states. 
A)  an increase in the money supply. 
B)  an increase in government expenditures. 
C)  a fall in stock prices. 
D)  bad weather in farm states.

Question 3

Most economist agree that money changes real GDP in both the short and long run.

Accepted Answer

A) True 
 B)False

Question 4

Other things the same, continued increases in technology lead to

Accepted Answer

A)  continued increases in the price level and real GDP. 
B)  continued decreases in the price level and real GDP. 
C)  continued increases in real GDP and continued increases in the price level. 
D)  continued increases in real GDP and continued decreases in the price level. 
A)  continued increases in the price level and real GDP. 
B)  continued decreases in the price level and real GDP. 
C)  continued increases in real GDP and continued increases in the price level. 
D)  continued increases in real GDP and continued decreases in the price level.

Question 5

Other things the same, continued technological progress and continued increases in the money supply would unambiguously lead to

Accepted Answer

A)  rising prices only. 
B)  rising real GDP only. 
C)  rising prices and rising real GDP. 
D)  neither rising prices nor rising real GDP. 
A)  rising prices only. 
B)  rising real GDP only. 
C)  rising prices and rising real GDP. 
D)  neither rising prices nor rising real GDP.

Question 6

Compare changes in the price level for a recession resulting from a shift in aggregate demand to that of a recession resulting from a shift in short run aggregate supply.

Accepted Answer

the price level decreases when

Question 7

Which of the following lists includes only changes that shift aggregate demand to the right?

Accepted Answer

A)  repeal of an investment tax credit, an increase in the money supply 
B)  repeal of an investment tax credit, a decrease in the money supply 
C)  passing of an investment tax credit, an increase in the money supply 
D)  passing of an investment tax credit, a decrease in the money supply 
A)  repeal of an investment tax credit, an increase in the money supply 
B)  repeal of an investment tax credit, a decrease in the money supply 
C)  passing of an investment tax credit, an increase in the money supply 
D)  passing of an investment tax credit, a decrease in the money supply

Question 8

In which case can we be sure real GDP rises in the short run?

Accepted Answer

A)  government purchases increase and taxes rise. 
B)  government purchases increase and taxes fall. 
C)  government purchases decrease and taxes rise. 
D)  government purchases decrease and taxes fall. 
A)  government purchases increase and taxes rise. 
B)  government purchases increase and taxes fall. 
C)  government purchases decrease and taxes rise. 
D)  government purchases decrease and taxes fall.

Question 9

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Accepted Answer

A) True 
 B)False

Question 10

Make a list of things that would shift the aggregate demand curve to the right.

Accepted Answer

Examples and variations on examples) in

Question 11

The exchange-rate effect helps explain what feature in the aggregate demand and aggregate supply model?

Accepted Answer

why the ag

Question 12

Which of the following shifts aggregate demand to the left?

Accepted Answer

A)  an increase in the price level. 
B)  households decide to save a larger fraction of their income. 
C)  an increase in net exports. 
D)  Congress passes a new investment tax credit. 
A)  an increase in the price level. 
B)  households decide to save a larger fraction of their income. 
C)  an increase in net exports. 
D)  Congress passes a new investment tax credit.

Question 13

Most economists believe that in the long run, changes in the money supply

Accepted Answer

A)  affect nominal but not real variables. This view that money is ultimately neutral is consistent with classical theory. 
B)  affect nominal but not real variables. This view that money is ultimately neutral is inconsistent with classical theory. 
C)  affect real but not nominal variables. This view that money is ultimately neutral is consistent with classical theory. 
D)  affect real but not nominal variables. This view that money is ultimately neutral is inconsistent with classical theory. 
A)  affect nominal but not real variables. This view that money is ultimately neutral is consistent with classical theory. 
B)  affect nominal but not real variables. This view that money is ultimately neutral is inconsistent with classical theory. 
C)  affect real but not nominal variables. This view that money is ultimately neutral is consistent with classical theory. 
D)  affect real but not nominal variables. This view that money is ultimately neutral is inconsistent with classical theory.

Question 14

An increase in the expected price level shifts the short-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 15

The sticky-price theory implies that

Accepted Answer

A)  the short-run aggregate-supply curve is upward-sloping. 
B)  an unexpected fall in the price level induces firms to reduce the quantity of goods and services they produce. 
C)  menu costs influence the speed of adjustment of prices. 
D)  All of the above are correct. 
A)  the short-run aggregate-supply curve is upward-sloping. 
B)  an unexpected fall in the price level induces firms to reduce the quantity of goods and services they produce. 
C)  menu costs influence the speed of adjustment of prices. 
D)  All of the above are correct.

Question 16

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)  the Federal Reserve buys bonds. 
B)  a decrease in net exports due to something other than a change in domestic prices. 
C)  an increase in household saving. 
D)  All of the above are correct. 
A)  the Federal Reserve buys bonds. 
B)  a decrease in net exports due to something other than a change in domestic prices. 
C)  an increase in household saving. 
D)  All of the above are correct.

Question 17

Which of the following correctly expresses why the short-run aggregate-supply curve slopes upward?

Accepted Answer

The answer of Which of the following correctly expresses why...

Question 18

Which of the following would cause prices to rise and real GDP to fall in the short run?

Accepted Answer

A)  an increase in the expected price level. 
B)  an increase in the capital stock. 
C)  an increase in the money supply. 
D)  an increase in taxes. 
A)  an increase in the expected price level. 
B)  an increase in the capital stock. 
C)  an increase in the money supply. 
D)  an increase in taxes.

Question 19

Suppose a fall in stock prices makes people feel poorer. The decrease in wealth would induce people to

Accepted Answer

A)  decrease consumption, shown as a movement to the left along a given aggregate-demand curve. 
B)  increase consumption, shown as a movement to the right along a given aggregate-demand curve. 
C)  decrease consumption, shown by shifting the aggregate-demand curve to the left. 
D)  increase consumption, shown by shifting the aggregate-demand curve to the right. 
A)  decrease consumption, shown as a movement to the left along a given aggregate-demand curve. 
B)  increase consumption, shown as a movement to the right along a given aggregate-demand curve. 
C)  decrease consumption, shown by shifting the aggregate-demand curve to the left. 
D)  increase consumption, shown by shifting the aggregate-demand curve to the right.

Question 20

According to the classical model, which of the following would double if the quantity of money doubled?

Accepted Answer

A)  prices but not nominal income 
B)  nominal income but not prices 
C)  both prices and nominal income 
D)  neither prices nor nominal income 
A)  prices but not nominal income 
B)  nominal income but not prices 
C)  both prices and nominal income 
D)  neither prices nor nominal income

Exam 20: Aggregate Demand and Aggregate Supply

Figure 33-7. -Refer to Optimism. In the long run, the change in price expectations created by optimism shifts

An increase in the price level and a reduction in output would result from

Most economist agree that money changes real GDP in both the short and long run.

Other things the same, continued increases in technology lead to

Other things the same, continued technological progress and continued increases in the money supply would unambiguously lead to

Compare changes in the price level for a recession resulting from a shift in aggregate demand to that of a recession resulting from a shift in short run aggregate supply.

Which of the following lists includes only changes that shift aggregate demand to the right?

In which case can we be sure real GDP rises in the short run?

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Make a list of things that would shift the aggregate demand curve to the right.

The exchange-rate effect helps explain what feature in the aggregate demand and aggregate supply model?

Which of the following shifts aggregate demand to the left?

Most economists believe that in the long run, changes in the money supply

An increase in the expected price level shifts the short-run aggregate supply curve to the right.

The sticky-price theory implies that

Which of the following shifts aggregate demand to the right?

Which of the following correctly expresses why the short-run aggregate-supply curve slopes upward?

Which of the following would cause prices to rise and real GDP to fall in the short run?

Suppose a fall in stock prices makes people feel poorer. The decrease in wealth would induce people to

According to the classical model, which of the following would double if the quantity of money doubled?

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

Filters