Question 1

If a central bank is independent,

Accepted Answer

A)  it has the ability to alter taxes. 
B)  it allocates savings to firms. 
C)  it restricts trade to increase domestic employment. 
D)  it operations are not controlled by the political process. 
A)  it has the ability to alter taxes. 
B)  it allocates savings to firms. 
C)  it restricts trade to increase domestic employment. 
D)  it operations are not controlled by the political process.

Question 2

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

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)  a decrease 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)  a decrease in the money supply

Question 3

A change in the money supply changes only nominal variables in the long run.

Accepted Answer

A) True 
 B)False

Question 4

Illustrate the classical analysis of growth and inflation with aggregate demand and long-run aggregate supply curves.

Accepted Answer

See graph. @#IMG-DLM& Over time, technological adv

Question 5

An economic expansion caused by a shift in aggregate demand causes prices to

Accepted Answer

A)  rise in the short run, and rise even more in the long run. 
B)  rise in the short run, and fall back to their original level in the long run. 
C)  fall in the short run, and fall even more in the long run. 
D)  fall in the short run, and rise back to their original level in the long run. 
A)  rise in the short run, and rise even more in the long run. 
B)  rise in the short run, and fall back to their original level in the long run. 
C)  fall in the short run, and fall even more in the long run. 
D)  fall in the short run, and rise back to their original level in the long run.

Question 6

Historical evidence for the U.S. economy indicates that

Accepted Answer

A)  recessions have occurred roughly once every six years since the 1960s. 
B)  the unemployment rate usually decreases during a recession and increases shortly after the recession ends. 
C)  real GDP usually remains roughly constant during a recession and decreases shortly after the recession ends. 
D)  changes in real GDP over the business cycle are largely attributable to changes in investment over the business cycle. 
A)  recessions have occurred roughly once every six years since the 1960s. 
B)  the unemployment rate usually decreases during a recession and increases shortly after the recession ends. 
C)  real GDP usually remains roughly constant during a recession and decreases shortly after the recession ends. 
D)  changes in real GDP over the business cycle are largely attributable to changes in investment over the business cycle.

Question 7

Figure 33-5.  
-Refer to Figure 33-5. Starting from point B and assuming that aggregate demand is held constant, in the long run the economy is likely to experience

Accepted Answer

A)  a falling price level and a falling level of output, as the economy moves to point C. 
B)  a falling price level and a rising level of output, as the economy moves to point A. 
C)  a rising price level and a falling level of output, as the economy moves to point A. 
D)  a rising price level and a rising level of output, as the economy moves to point C. 
A)  a falling price level and a falling level of output, as the economy moves to point C. 
B)  a falling price level and a rising level of output, as the economy moves to point A. 
C)  a rising price level and a falling level of output, as the economy moves to point A. 
D)  a rising price level and a rising level of output, as the economy moves to point C.

Question 8

If speculators lost confidence in foreign economies and so wanted to buy more U.S. bonds

Accepted Answer

A)  the dollar would appreciate which would cause aggregate demand to shift right. 
B)  the dollar would appreciate which would cause aggregate demand to shift left. 
C)  the dollar would depreciate which would cause aggregate demand to shift right. 
D)  the dollar would depreciate which would cause aggregate demand to shift left. 
A)  the dollar would appreciate which would cause aggregate demand to shift right. 
B)  the dollar would appreciate which would cause aggregate demand to shift left. 
C)  the dollar would depreciate which would cause aggregate demand to shift right. 
D)  the dollar would depreciate which would cause aggregate demand to shift left.

Question 9

Using the aggregate demand and aggregate supply model, a decrease of what curve is by itself consistent with the changes in prices and output that occurred during the onset of the Great Depression?

Accepted Answer

The answer of Using the aggregate demand and aggregate supply...

Question 10

Which of the following is most commonly used to monitor short-run changes in economic activity?

Accepted Answer

A)  the inflation rate. 
B)  real GDP. 
C)  interest rates. 
D)  value of the U.S. dollar in the foreign exchange market. 
A)  the inflation rate. 
B)  real GDP. 
C)  interest rates. 
D)  value of the U.S. dollar in the foreign exchange market.

Question 11

The aggregate supply curve is

Accepted Answer

A)  vertical in the long run and slopes upward in the short run. 
B)  upward sloping in the long run and vertical in the short run. 
C)  vertical in the short run and in the long run. 
D)  upward sloping in the short run and in the long run. 
A)  vertical in the long run and slopes upward in the short run. 
B)  upward sloping in the long run and vertical in the short run. 
C)  vertical in the short run and in the long run. 
D)  upward sloping in the short run and in the long run.

Question 12

In 2009 Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right?

Accepted Answer

A)  only the increased funding for states 
B)  only the tax cuts 
C)  both the increased funding for states and the tax cuts 
D)  neither the increased funding for states nor the tax cuts 
A)  only the increased funding for states 
B)  only the tax cuts 
C)  both the increased funding for states and the tax cuts 
D)  neither the increased funding for states nor the tax cuts

Question 13

As the price level rises

Accepted Answer

A)  people are more willing to lend, so interest rates rise. 
B)  people are more willing to lend, so interest rates fall. 
C)  people are less willing to lend, so interest rates fall. 
D)  people are less willing to lend, so interest rates rise. 
A)  people are more willing to lend, so interest rates rise. 
B)  people are more willing to lend, so interest rates fall. 
C)  people are less willing to lend, so interest rates fall. 
D)  people are less willing to lend, so interest rates rise.

Question 14

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,

Accepted Answer

A)  production is more profitable and employment rises. 
B)  production is more profitable and employment falls. 
C)  production is less profitable and employment rises. 
D)  production is less profitable and employment falls. 
A)  production is more profitable and employment rises. 
B)  production is more profitable and employment falls. 
C)  production is less profitable and employment rises. 
D)  production is less profitable and employment falls.

Question 15

In 2008, the United States was in recession. Which of the following things would you not expect to have happened?

Accepted Answer

A)  increased layoffs and firings. 
B)  a higher rate of bankruptcy. 
C)  increased claims for unemployment insurance. 
D)  increased real GDP. 
A)  increased layoffs and firings. 
B)  a higher rate of bankruptcy. 
C)  increased claims for unemployment insurance. 
D)  increased real GDP.

Question 16

During recessions which type of spending falls?

Accepted Answer

A)  consumption and investment 
B)  investment but not consumption 
C)  consumption but not investment 
D)  neither consumption nor investment 
A)  consumption and investment 
B)  investment but not consumption 
C)  consumption but not investment 
D)  neither consumption nor investment

Question 17

Figure 33-5.  
-Refer to Figure 33-5. The appearance of the long-run aggregate-supply LRAS) curve

Accepted Answer

A)  is consistent with the concept of monetary neutrality. 
B)  is consistent with the idea that point A represents a long-run equilibrium and a short-run equilibrium when the relevant short-run aggregate-supply curve is SRAS1. 
C)  indicates that Y1 is the natural rate of output. 
D)  All of the above are correct. 
A)  is consistent with the concept of monetary neutrality. 
B)  is consistent with the idea that point A represents a long-run equilibrium and a short-run equilibrium when the relevant short-run aggregate-supply curve is SRAS1. 
C)  indicates that Y1 is the natural rate of output. 
D)  All of the above are correct.

Question 18

According to the classical model, an increase in the money supply causes

Accepted Answer

A)  output to increase in the long run. 
B)  the unemployment rate to fall in the long run. 
C)  prices to rise in the long run. 
D)  interest rates to fall in the long run. 
A)  output to increase in the long run. 
B)  the unemployment rate to fall in the long run. 
C)  prices to rise in the long run. 
D)  interest rates to fall in the long run.

Question 19

Changes in the price level affect which components of aggregate demand?

Accepted Answer

A)  only consumption and investment 
B)  only consumption and net exports 
C)  only investment 
D)  consumption, investment, and net exports 
A)  only consumption and investment 
B)  only consumption and net exports 
C)  only investment 
D)  consumption, investment, and net exports

Question 20

The long-run aggregate supply curve

Accepted Answer

A)  is vertical. 
B)  is a graphical representation of the classical dichotomy. 
C)  indicates monetary neutrality in the long run. 
D)  All of the above are correct. 
A)  is vertical. 
B)  is a graphical representation of the classical dichotomy. 
C)  indicates monetary neutrality in the long run. 
D)  All of the above are correct.

Exam 20: Aggregate Demand and Aggregate Supply

If a central bank is independent,

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

A change in the money supply changes only nominal variables in the long run.

Illustrate the classical analysis of growth and inflation with aggregate demand and long-run aggregate supply curves.

An economic expansion caused by a shift in aggregate demand causes prices to

Historical evidence for the U.S. economy indicates that

Figure 33-5. -Refer to Figure 33-5. Starting from point B and assuming that aggregate demand is held constant, in the long run the economy is likely to experience

If speculators lost confidence in foreign economies and so wanted to buy more U.S. bonds

Using the aggregate demand and aggregate supply model, a decrease of what curve is by itself consistent with the changes in prices and output that occurred during the onset of the Great Depression?

Which of the following is most commonly used to monitor short-run changes in economic activity?

The aggregate supply curve is

In 2009 Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right?

As the price level rises

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,

In 2008, the United States was in recession. Which of the following things would you not expect to have happened?

During recessions which type of spending falls?

Figure 33-5. -Refer to Figure 33-5. The appearance of the long-run aggregate-supply LRAS) curve

According to the classical model, an increase in the money supply causes

Changes in the price level affect which components of aggregate demand?

The long-run aggregate supply curve

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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