Question 1

Other things the same, if prices fell when firms and workers were expecting them to rise, then

Accepted Answer

A)  employment and production would rise. 
B)  employment would rise and production would fall. 
C)  employment would fall and production would rise. 
D)  employment and production would fall. 
A)  employment and production would rise. 
B)  employment would rise and production would fall. 
C)  employment would fall and production would rise. 
D)  employment and production would fall.

Question 2

When the price level changes, which of the following variables will change and thereby cause a change in the aggregate quantity of goods and services demanded?

Accepted Answer

A)  the real value of wealth 
B)  the interest rate 
C)  the value of currency in the market for foreign exchange 
D)  All of the above are correct. 
A)  the real value of wealth 
B)  the interest rate 
C)  the value of currency in the market for foreign exchange 
D)  All of the above are correct.

Question 3

According to the "In the News" article, macroprudential tools

Accepted Answer

A)  allow a central bank to alter lending for specific industries. 
B)  allow a central bank to alter taxes. 
C)  limit a central bank's power to act independently of the political process. 
D)  limit the policy tools available to a central bank. 
A)  allow a central bank to alter lending for specific industries. 
B)  allow a central bank to alter taxes. 
C)  limit a central bank's power to act independently of the political process. 
D)  limit the policy tools available to a central bank.

Question 4

The model of aggregate demand and aggregate supply explains the relationship between

Accepted Answer

A)  the price and quantity of a particular good. 
B)  unemployment and output. 
C)  wages and employment. 
D)  real GDP and the price level. 
A)  the price and quantity of a particular good. 
B)  unemployment and output. 
C)  wages and employment. 
D)  real GDP and the price level.

Question 5

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

Accepted Answer

A)  an increase in the actual price level 
B)  an increase in the expected price level 
C)  an increase in the capital stock 
D)  None of the above is correct. 
A)  an increase in the actual price level 
B)  an increase in the expected price level 
C)  an increase in the capital stock 
D)  None of the above is correct.

Question 6

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

Accepted Answer

A)  an increase in the price level 
B)  an increase in the minimum wage 
C)  a decrease in the price of oil 
D)  more people migrate abroad than immigrate from abroad 
A)  an increase in the price level 
B)  an increase in the minimum wage 
C)  a decrease in the price of oil 
D)  more people migrate abroad than immigrate from abroad

Question 7

Which of the following shifts short-run, but not long-run aggregate supply right?

Accepted Answer

A)  a decrease in the actual price level 
B)  a decrease in the expected price level 
C)  a decrease in the capital stock 
D)  an increase in the money supply 
A)  a decrease in the actual price level 
B)  a decrease in the expected price level 
C)  a decrease in the capital stock 
D)  an increase in the money supply

Question 8

Figure 33-7.  
-Refer to Stock Market Boom 2015. How is the new long-run equilibrium different from the original one?

Accepted Answer

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

Question 9

Figure 33-13.  
-Refer to Figure 33-13. Identify the price and output levels consistent with long-run equilibrium.

Accepted Answer

The answer of Figure 33-13.  
-Refer to Figure 33-13....

Question 10

The aggregate-demand curve shows that a decrease in the price level

Accepted Answer

A)  decreases the dollar value of goods and services demanded in the economy. 
B)  decreases the real value of goods and services demanded in the economy. 
C)  increases the dollar value of goods and services demanded in the economy. 
D)  increases the real value of goods and services demanded in the economy. 
A)  decreases the dollar value of goods and services demanded in the economy. 
B)  decreases the real value of goods and services demanded in the economy. 
C)  increases the dollar value of goods and services demanded in the economy. 
D)  increases the real value of goods and services demanded in the economy.

Question 11

Other things the same, what happens to the price level and the quantity of output when the short run aggregate supply curve shifts to the right?

Accepted Answer

The price

Question 12

If there are sticky wages, and the price level is greater than what was expected, then

Accepted Answer

A)  the quantity of aggregate goods and services supplied falls, which is shown by a shift of the short-run aggregate supply curve to the left. 
B)  the quantity of aggregate goods and services supplied falls, as shown by a movement to the left along the short-run aggregate supply curve. 
C)  the quantity of aggregate goods and services supplied rises, as shown by a shift of the short-run aggregate supply curve to the right. 
D)  the quantity of aggregate goods and services supplied rises, as shown by a movement to the right along the short-run aggregate supply curve. 
A)  the quantity of aggregate goods and services supplied falls, which is shown by a shift of the short-run aggregate supply curve to the left. 
B)  the quantity of aggregate goods and services supplied falls, as shown by a movement to the left along the short-run aggregate supply curve. 
C)  the quantity of aggregate goods and services supplied rises, as shown by a shift of the short-run aggregate supply curve to the right. 
D)  the quantity of aggregate goods and services supplied rises, as shown by a movement to the right along the short-run aggregate supply curve.

Question 13

The long-run aggregate supply curve shifts right if

Accepted Answer

A)  immigration from abroad increases. 
B)  the capital stock increases. 
C)  technology advances. 
D)  All of the above are correct. 
A)  immigration from abroad increases. 
B)  the capital stock increases. 
C)  technology advances. 
D)  All of the above are correct.

Question 14

Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to

Accepted Answer

A)  rise. This rise in price expectations shifts the short-run aggregate supply curve to the right. 
B)  rise. This rise in price expectations shifts the short-run aggregate supply curve to the left. 
C)  fall. This fall in price expectations shifts the short-run aggregate supply curve to the right. 
D)  fall. This fall in price expectations shifts the short-run aggregate supply curve to the left. 
A)  rise. This rise in price expectations shifts the short-run aggregate supply curve to the right. 
B)  rise. This rise in price expectations shifts the short-run aggregate supply curve to the left. 
C)  fall. This fall in price expectations shifts the short-run aggregate supply curve to the right. 
D)  fall. This fall in price expectations shifts the short-run aggregate supply curve to the left.

Question 15

Figure 33-7.  
-Refer to Financial Crisis. 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 lower. 
D)  the price level is lower 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 lower. 
D)  the price level is lower and real GDP is the same.

Question 16

Historically, as recessions have ended the unemployment rate declined

Accepted Answer

A)  gradually to near zero. 
B)  rapidly to near zero. 
C)  gradually to a rate of about 5%-6%. 
D)  rapidly to a rate of about 5%-6%. 
A)  gradually to near zero. 
B)  rapidly to near zero. 
C)  gradually to a rate of about 5%-6%. 
D)  rapidly to a rate of about 5%-6%.

Question 17

When the price level falls, people want to

Accepted Answer

A)  hold more money and the quantity of aggregate goods and services demanded increases. 
B)  hold more money and the quantity of aggregate goods and services demanded decreases. 
C)  hold less money and the quantity of aggregate goods and services demanded increases. 
D)  hold less money and the quantity of aggregate goods and services demanded decreases. 
A)  hold more money and the quantity of aggregate goods and services demanded increases. 
B)  hold more money and the quantity of aggregate goods and services demanded decreases. 
C)  hold less money and the quantity of aggregate goods and services demanded increases. 
D)  hold less money and the quantity of aggregate goods and services demanded decreases.

Question 18

If the actual price level is 165, but people had been expecting it to be 160, then

Accepted Answer

A)  the quantity of output supplied rises, but only in the short run. 
B)  the quantity of output supplied rises in the short run and the long run. 
C)  the quantity of output supplied falls, but only in the short run. 
D)  the quantity of output supplied falls in the short run and the long run. 
A)  the quantity of output supplied rises, but only in the short run. 
B)  the quantity of output supplied rises in the short run and the long run. 
C)  the quantity of output supplied falls, but only in the short run. 
D)  the quantity of output supplied falls in the short run and the long run.

Question 19

When the actual change in the price level differs from its expected change, which of the following can explain why firms might change their production?

Accepted Answer

A)  both menu costs and mistaking a price level change for a change in relative prices 
B)  menu costs but not mistaking a price level change for a change in relative prices 
C)  mistaking a price level change for a change in relative price but not menu costs 
D)  neither menu costs nor mistaking a price level change for a change in relative prices 
A)  both menu costs and mistaking a price level change for a change in relative prices 
B)  menu costs but not mistaking a price level change for a change in relative prices 
C)  mistaking a price level change for a change in relative price but not menu costs 
D)  neither menu costs nor mistaking a price level change for a change in relative prices

Question 20

The wealth effect, interest-rate effect, and exchange-rate effect are all explanations for

Accepted Answer

A)  the slope of short-run aggregate supply. 
B)  the slope of long-run aggregate supply. 
C)  the slope of the aggregate-demand curve. 
D)  everything that makes the aggregate-demand curve shift. 
A)  the slope of short-run aggregate supply. 
B)  the slope of long-run aggregate supply. 
C)  the slope of the aggregate-demand curve. 
D)  everything that makes the aggregate-demand curve shift.

Exam 20: Aggregate Demand and Aggregate Supply

Other things the same, if prices fell when firms and workers were expecting them to rise, then

When the price level changes, which of the following variables will change and thereby cause a change in the aggregate quantity of goods and services demanded?

According to the "In the News" article, macroprudential tools

The model of aggregate demand and aggregate supply explains the relationship between

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

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

Which of the following shifts short-run, but not long-run aggregate supply right?

Figure 33-7. -Refer to Stock Market Boom 2015. How is the new long-run equilibrium different from the original one?

Figure 33-13. -Refer to Figure 33-13. Identify the price and output levels consistent with long-run equilibrium.

The aggregate-demand curve shows that a decrease in the price level

Other things the same, what happens to the price level and the quantity of output when the short run aggregate supply curve shifts to the right?

If there are sticky wages, and the price level is greater than what was expected, then

The long-run aggregate supply curve shifts right if

Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to

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

Historically, as recessions have ended the unemployment rate declined

When the price level falls, people want to

If the actual price level is 165, but people had been expecting it to be 160, then

When the actual change in the price level differs from its expected change, which of the following can explain why firms might change their production?

The wealth effect, interest-rate effect, and exchange-rate effect are all explanations for

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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