Question 1

The long-run output of an economy depends on:

Accepted Answer

A)  the level of spending. 
B)  the level of unemployment. 
C)  the level of inflation. 
D)  the level of aggregate demand. 
E)  resources, technology, and institutions. 
A)  the level of spending. 
B)  the level of unemployment. 
C)  the level of inflation. 
D)  the level of aggregate demand. 
E)  resources, technology, and institutions.

Question 2

An increase in the general price level will lead to:

Accepted Answer

A)  an upward movement along the short-run aggregate supply curve as firms increase output. 
B)  a rightward shift of the short-run aggregate supply curve as firms increase output. 
C)  a downward movement along the short-run aggregate supply curve as firms decrease output. 
D)  a leftward shift of the short-run aggregate supply curve as firms decrease output. 
E)  no change in output because input prices are sticky. 
A)  an upward movement along the short-run aggregate supply curve as firms increase output. 
B)  a rightward shift of the short-run aggregate supply curve as firms increase output. 
C)  a downward movement along the short-run aggregate supply curve as firms decrease output. 
D)  a leftward shift of the short-run aggregate supply curve as firms decrease output. 
E)  no change in output because input prices are sticky.

Question 3

When a change in the price level leads to a change in the quantity of net exports demanded, it is called the:

Accepted Answer

A)  international trade effect. 
B)  export effect. 
C)  import effect. 
D)  net export effect. 
E)  interest rate effect. 
A)  international trade effect. 
B)  export effect. 
C)  import effect. 
D)  net export effect. 
E)  interest rate effect.

Question 4

Which of the following would cause an increase in long-run aggregate supply?

Accepted Answer

A)  The price level increases. 
B)  The price level decreases. 
C)  Firms and workers expect the price level to fall. 
D)  Firms and workers expect the price level to rise. 
E)  The stock of capital increases. 
A)  The price level increases. 
B)  The price level decreases. 
C)  Firms and workers expect the price level to fall. 
D)  Firms and workers expect the price level to rise. 
E)  The stock of capital increases.

Question 5

Suppose advances in computer technology lead to a surge in worker productivity. In the long run, output will _________ and the price level will _________.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  increase; remain unchanged 
D)  decrease; decrease 
E)  remain unchanged; remain unchanged 
A)  increase; increase 
B)  increase; decrease 
C)  increase; remain unchanged 
D)  decrease; decrease 
E)  remain unchanged; remain unchanged

Question 6

New computer technologies can be expected to:

Accepted Answer

A)  increase long-run aggregate supply. 
B)  increase the price level. 
C)  increase the unemployment rate. 
D)  decrease aggregate demand. 
E)  decrease aggregate supply. 
A)  increase long-run aggregate supply. 
B)  increase the price level. 
C)  increase the unemployment rate. 
D)  decrease aggregate demand. 
E)  decrease aggregate supply.

Question 7

An increase in the value of the dollar will __________ exports and __________ imports.

Accepted Answer

A)  increase; increase 
B)  decrease; decrease 
C)  have no effect on; have no effect on 
D)  decrease; increase 
E)  increase; decrease 
A)  increase; increase 
B)  decrease; decrease 
C)  have no effect on; have no effect on 
D)  decrease; increase 
E)  increase; decrease

Question 8

Which of the following would cause a downward movement along the aggregate demand curve?

Accepted Answer

A)  A rise in the price level makes U.S. goods relatively more expensive than foreign goods. 
B)  The value of real wealth rises. 
C)  There is a decline in the expected price level. 
D)  A fall in the price level increases savings and lowers interest rates. 
E)  The value of the dollar decreases. 
A)  A rise in the price level makes U.S. goods relatively more expensive than foreign goods. 
B)  The value of real wealth rises. 
C)  There is a decline in the expected price level. 
D)  A fall in the price level increases savings and lowers interest rates. 
E)  The value of the dollar decreases.

Question 9

Refer to the following figure to answer the next  questions.  
-Based on the figure, if the economy is currently at point B, then in the long run, we can expect we will move to:

Accepted Answer

A)  point C. 
B)  point A. 
C)  point D. 
D)  point C and then point D. 
E)  point A and then point C. 
A)  point C. 
B)  point A. 
C)  point D. 
D)  point C and then point D. 
E)  point A and then point C.

Question 10

Refer to the following figure to answer the next  questions.  
-Based on the figure, if the economy is currently at point B, then in the long run, we can expect the economy to be at point __________.

Accepted Answer

A)  A 
B)  C 
C)  D 
D)  E 
E)  B 
A)  A 
B)  C 
C)  D 
D)  E 
E)  B

Question 11

Supply shocks cause short-run aggregate supply to:

Accepted Answer

A)  remain unchanged in both the short run and the long run. 
B)  decrease in both the short run and the long run. 
C)  decrease in the short run and increase in the long run. 
D)  increase in both the short run and the long run. 
E)  return to its original position in the long run. 
A)  remain unchanged in both the short run and the long run. 
B)  decrease in both the short run and the long run. 
C)  decrease in the short run and increase in the long run. 
D)  increase in both the short run and the long run. 
E)  return to its original position in the long run.

Question 12

A supply shock causes a shift in:

Accepted Answer

A)  short-run aggregate supply. 
B)  aggregate demand. 
C)  aggregate demand and short-run aggregate supply. 
D)  long-run aggregate supply. 
E)  short-run and long-run aggregate supply. 
A)  short-run aggregate supply. 
B)  aggregate demand. 
C)  aggregate demand and short-run aggregate supply. 
D)  long-run aggregate supply. 
E)  short-run and long-run aggregate supply.

Question 13

Suppose there is a surge in stock market values. In the short run, we would expect the price level to __________ and the unemployment rate to __________.

Accepted Answer

A)  increase; decrease 
B)  increase; increase 
C)  decrease; increase 
D)  decrease; decrease 
E)  remain unchanged; decrease 
A)  increase; decrease 
B)  increase; increase 
C)  decrease; increase 
D)  decrease; decrease 
E)  remain unchanged; decrease

Question 14

Suppose an economy has a law that requires all wages to be adjusted quarterly to reflect changes in the general price level. This means wages either increase or decrease depending on the percent change in the general price level. In this economy:

Accepted Answer

A)  there are recessions but no expansions. 
B)  output is always at the full employment level. 
C)  business cycles are less severe. 
D)  the price level will remain fixed. 
E)  workers are worse off in real terms than if wages were not indexed. 
A)  there are recessions but no expansions. 
B)  output is always at the full employment level. 
C)  business cycles are less severe. 
D)  the price level will remain fixed. 
E)  workers are worse off in real terms than if wages were not indexed.

Question 15

Refer to the following figure to answer the next  questions.  
-Based on the figure, if the economy starts at point A and ends up at point E, then in the short run, there was:

Accepted Answer

A)  a decrease in aggregate demand. 
B)  an increase in aggregate demand. 
C)  a decrease in short-run aggregate supply. 
D)  an increase in short-run aggregate supply. 
E)  an increase in long-run aggregate supply. 
A)  a decrease in aggregate demand. 
B)  an increase in aggregate demand. 
C)  a decrease in short-run aggregate supply. 
D)  an increase in short-run aggregate supply. 
E)  an increase in long-run aggregate supply.

Question 16

Which of the following would shift aggregate demand to the left?

Accepted Answer

A)  A study predicts that the recent drought will increase food prices this winter. 
B)  There is a rise in the median price of houses. 
C)  A rise in the price level reduces saving and increases interest rates. 
D)  The value of the dollar increases. 
E)  The European Union emerges from recession. 
A)  A study predicts that the recent drought will increase food prices this winter. 
B)  There is a rise in the median price of houses. 
C)  A rise in the price level reduces saving and increases interest rates. 
D)  The value of the dollar increases. 
E)  The European Union emerges from recession.

Question 17

The long-run aggregate supply curve is:

Accepted Answer

A)  vertical at the level of full employment output. 
B)  horizontal at the going-price level. 
C)  illustrating a positive relationship between price and output. 
D)  illustrating a negative relationship between price and output. 
E)  the same as the short-run aggregate supply curve. 
A)  vertical at the level of full employment output. 
B)  horizontal at the going-price level. 
C)  illustrating a positive relationship between price and output. 
D)  illustrating a negative relationship between price and output. 
E)  the same as the short-run aggregate supply curve.

Question 18

Refer to the following figure to answer the next  questions.  
-Based on the figure, which points represent long-run equilibrium?

Accepted Answer

A)  A and B 
B)  A and C 
C)  A and D 
D)  B and D 
E)  A, B, C, and D 
A)  A and B 
B)  A and C 
C)  A and D 
D)  B and D 
E)  A, B, C, and D

Question 19

When an economy has a more stable and well-developed financial system, it is reasonable to expect:

Accepted Answer

A)  an upward movement along the long-run aggregate supply curve. 
B)  a downward movement along the long-run aggregate supply curve. 
C)  a leftward shift of the long-run aggregate supply curve. 
D)  a rightward shift of the long-run aggregate supply curve. 
E)  no change in the long-run aggregate supply curve. 
A)  an upward movement along the long-run aggregate supply curve. 
B)  a downward movement along the long-run aggregate supply curve. 
C)  a leftward shift of the long-run aggregate supply curve. 
D)  a rightward shift of the long-run aggregate supply curve. 
E)  no change in the long-run aggregate supply curve.

Question 20

Refer to the following figure to answer the next  questions.  
-Based on the figure, starting at point A, if there is an increase in the price of oil, then in the short run we move to point __________ and in the long run to point __________.

Accepted Answer

A)  F; E 
B)  F; A 
C)  D; C 
D)  D; A 
E)  B; E 
A)  F; E 
B)  F; A 
C)  D; C 
D)  D; A 
E)  B; E

The long-run output of an economy depends on:

An increase in the general price level will lead to:

When a change in the price level leads to a change in the quantity of net exports demanded, it is called the:

Which of the following would cause an increase in long-run aggregate supply?

Suppose advances in computer technology lead to a surge in worker productivity. In the long run, output will _ and the price level will _.

New computer technologies can be expected to:

An increase in the value of the dollar will exports and imports.

Which of the following would cause a downward movement along the aggregate demand curve?

Refer to the following figure to answer the next questions. -Based on the figure, if the economy is currently at point B, then in the long run, we can expect we will move to:

Refer to the following figure to answer the next questions. -Based on the figure, if the economy is currently at point B, then in the long run, we can expect the economy to be at point __________.

Supply shocks cause short-run aggregate supply to:

A supply shock causes a shift in:

Suppose there is a surge in stock market values. In the short run, we would expect the price level to and the unemployment rate to .

Suppose an economy has a law that requires all wages to be adjusted quarterly to reflect changes in the general price level. This means wages either increase or decrease depending on the percent change in the general price level. In this economy:

Refer to the following figure to answer the next questions. -Based on the figure, if the economy starts at point A and ends up at point E, then in the short run, there was:

Which of the following would shift aggregate demand to the left?

The long-run aggregate supply curve is:

Refer to the following figure to answer the next questions. -Based on the figure, which points represent long-run equilibrium?

When an economy has a more stable and well-developed financial system, it is reasonable to expect:

Refer to the following figure to answer the next questions. -Based on the figure, starting at point A, if there is an increase in the price of oil, then in the short run we move to point and in the long run to point .

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, Interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

Exam 13: The Aggregate Demandaggregate Supply Model

The long-run output of an economy depends on:

An increase in the general price level will lead to:

When a change in the price level leads to a change in the quantity of net exports demanded, it is called the:

Which of the following would cause an increase in long-run aggregate supply?

Suppose advances in computer technology lead to a surge in worker productivity. In the long run, output will _________ and the price level will _________.

New computer technologies can be expected to:

An increase in the value of the dollar will __________ exports and __________ imports.

Which of the following would cause a downward movement along the aggregate demand curve?

Refer to the following figure to answer the next questions. -Based on the figure, if the economy is currently at point B, then in the long run, we can expect we will move to:

Refer to the following figure to answer the next questions. -Based on the figure, if the economy is currently at point B, then in the long run, we can expect the economy to be at point __________.

Supply shocks cause short-run aggregate supply to:

A supply shock causes a shift in:

Suppose there is a surge in stock market values. In the short run, we would expect the price level to __________ and the unemployment rate to __________.

Suppose an economy has a law that requires all wages to be adjusted quarterly to reflect changes in the general price level. This means wages either increase or decrease depending on the percent change in the general price level. In this economy:

Refer to the following figure to answer the next questions. -Based on the figure, if the economy starts at point A and ends up at point E, then in the short run, there was:

Which of the following would shift aggregate demand to the left?

The long-run aggregate supply curve is:

Refer to the following figure to answer the next questions. -Based on the figure, which points represent long-run equilibrium?

When an economy has a more stable and well-developed financial system, it is reasonable to expect:

Refer to the following figure to answer the next questions. -Based on the figure, starting at point A, if there is an increase in the price of oil, then in the short run we move to point __________ and in the long run to point __________.

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, Interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

Suppose advances in computer technology lead to a surge in worker productivity. In the long run, output will _ and the price level will _.

An increase in the value of the dollar will exports and imports.

Suppose there is a surge in stock market values. In the short run, we would expect the price level to and the unemployment rate to .

Refer to the following figure to answer the next questions. -Based on the figure, starting at point A, if there is an increase in the price of oil, then in the short run we move to point and in the long run to point .