Question 1

Other things the same, when the government spends more, the initial effect is that

Accepted Answer

A)  aggregate demand shifts right. 
B)  aggregate demand shifts left. 
C)  aggregate supply shifts right. 
D)  aggregate supply shifts left. 
A)  aggregate demand shifts right. 
B)  aggregate demand shifts left. 
C)  aggregate supply shifts right. 
D)  aggregate supply shifts left.

Question 2

Other things the same, as the price level falls, which of the following increases?

Accepted Answer

A)  lending and investment spending 
B)  lending, but not investment spending 
C)  investment spending, but not lending 
D)  neither investment spending nor lending 
A)  lending and investment spending 
B)  lending, but not investment spending 
C)  investment spending, but not lending 
D)  neither investment spending nor lending

Question 3

The initial impact of an increase in an investment tax credit is to shift

Accepted Answer

A)  aggregate demand right. 
B)  aggregate demand left. 
C)  aggregate supply right. 
D)  aggregate supply left. 
A)  aggregate demand right. 
B)  aggregate demand left. 
C)  aggregate supply right. 
D)  aggregate supply left.

Question 4

Suppose the economy is in long-run equilibrium. If there is an increase in government purchases at the same time there is a large increase in the price of oil, then in the short-run

Accepted Answer

A)  real GDP will rise and the price level might rise, fall, or stay the same. 
B)  real GDP will fall and the price level might rise, fall, or stay the same. 
C)  the price level will rise, and real GDP might rise, fall, or stay the same. 
D)  the price level will fall, and real GDP might rise, fall, or stay the same. 
A)  real GDP will rise and the price level might rise, fall, or stay the same. 
B)  real GDP will fall and the price level might rise, fall, or stay the same. 
C)  the price level will rise, and real GDP might rise, fall, or stay the same. 
D)  the price level will fall, and real GDP might rise, fall, or stay the same.

Question 5

The long-run effect of an increase in household consumption is to raise

Accepted Answer

A)  both real output and the price level. 
B)  real output and lower the price level. 
C)  real output and leave the price level unchanged. 
D)  the price level and leave real output unchanged. 
A)  both real output and the price level. 
B)  real output and lower the price level. 
C)  real output and leave the price level unchanged. 
D)  the price level and leave real output unchanged.

Question 6

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)  Congress reduces purchases of new weapons systems. 
B)  The Fed buys bonds in the open market. 
C)  The price level falls. 
D)  Net exports fall. 
A)  Congress reduces purchases of new weapons systems. 
B)  The Fed buys bonds in the open market. 
C)  The price level falls. 
D)  Net exports fall.

Question 7

Which of the following is correct concerning recessions?

Accepted Answer

A)  They come at fairly regular and predictable intervals. 
B)  They are associated with comparatively large increases in investment spending. 
C)  They are any period when real GDP growth is less than average. 
D)  They tend to be associated with rising unemployment rates. 
A)  They come at fairly regular and predictable intervals. 
B)  They are associated with comparatively large increases in investment spending. 
C)  They are any period when real GDP growth is less than average. 
D)  They tend to be associated with rising unemployment rates.

Question 8

Suppose that the economy is at long-run equilibrium. If there is a sharp rise in the stock market combined with a significant increase in the minimum wage, then in the short run

Accepted Answer

A)  real GDP will rise and the price level might rise, fall, or stay the same. 
B)  real GDP will fall and the price level might rise, fall, or stay the same. 
C)  the price level will rise, and real GDP might rise, fall, or stay the same. 
D)  the price level will fall, and real GDP might rise, fall, or stay the same. 
A)  real GDP will rise and the price level might rise, fall, or stay the same. 
B)  real GDP will fall and the price level might rise, fall, or stay the same. 
C)  the price level will rise, and real GDP might rise, fall, or stay the same. 
D)  the price level will fall, and real GDP might rise, fall, or stay the same.

Question 9

Which of the following effects provide incentives for consumers to spend less when the price level rises?

Accepted Answer

A)  the wealth effect and the interest-rate effect 
B)  the wealth effect but not the interest-rate effect 
C)  the interest-rate effect but not the wealth effect 
D)  neither the wealth-effect nor the interest rate effect 
A)  the wealth effect and the interest-rate effect 
B)  the wealth effect but not the interest-rate effect 
C)  the interest-rate effect but not the wealth effect 
D)  neither the wealth-effect nor the interest rate effect

Question 10

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 11

Which of the following rises when the U.S. price level falls?

Accepted Answer

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

Question 12

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U. S. Which pair of GDP growth rates and unemployment rates is realistic?

Accepted Answer

A)  5 percent, 1 percent 
B)  3 percent, 5 percent 
C)  -1 percent, 3 percent 
D)  -2 percent, 4 percent 
A)  5 percent, 1 percent 
B)  3 percent, 5 percent 
C)  -1 percent, 3 percent 
D)  -2 percent, 4 percent

Question 13

As the price level rises,

Accepted Answer

A)  the exchange rate falls, so net exports fall. 
B)  the exchange rate falls, so net exports rise. 
C)  the exchange rate rises, so net exports fall. 
D)  the exchange rate rises, so net exports rise. 
A)  the exchange rate falls, so net exports fall. 
B)  the exchange rate falls, so net exports rise. 
C)  the exchange rate rises, so net exports fall. 
D)  the exchange rate rises, so net exports rise.

Question 14

When the Fed buys bonds

Accepted Answer

A)  the supply of money increases and so aggregate demand shifts right. 
B)  the supply of money decreases and so aggregate demand shifts left. 
C)  the supply of money decreases and so aggregate demand shifts right. 
D)  the supply of money increases and so aggregate demand shifts left. 
A)  the supply of money increases and so aggregate demand shifts right. 
B)  the supply of money decreases and so aggregate demand shifts left. 
C)  the supply of money decreases and so aggregate demand shifts right. 
D)  the supply of money increases and so aggregate demand shifts left.

Question 15

Other things the same, if the price level rises, people

Accepted Answer

A)  increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. 
B)  increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. 
C)  decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. 
D)  decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. 
A)  increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. 
B)  increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. 
C)  decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. 
D)  decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases.

Question 16

Figure 33-7.  
-Refer to Figure 33-7. Suppose the economy starts at Y. If there is a fall in aggregate demand, then the economy moves to

Accepted Answer

A)  V in the long run. 
B)  W in the long run. 
C)  X in the long run. 
D)  Z in the long run. 
A)  V in the long run. 
B)  W in the long run. 
C)  X in the long run. 
D)  Z in the long run.

Question 17

When the price level falls

Accepted Answer

A)  The interest rate falls because people will want to hold more money and so sell bonds. 
B)  Firms will want to spend more on new business buildings and business equipment and households will want to spend more building new homes. 
C)  Both A and B are correct. 
D)  None of the above are correct. 
A)  The interest rate falls because people will want to hold more money and so sell bonds. 
B)  Firms will want to spend more on new business buildings and business equipment and households will want to spend more building new homes. 
C)  Both A and B are correct. 
D)  None of the above are correct.

Question 18

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 19

A decrease in the expected price level shifts short-run aggregate supply to the

Accepted Answer

A)  right, and an increase in the actual price level shifts short-run aggregate supply to the right. 
B)  right, and an increase in the actual price level does not shift short-run aggregate supply. 
C)  left, and an increase in the actual price level shifts short-run aggregate supply to the left. 
D)  left, and an increase in the actual price level does not shift short-run aggregate supply. 
A)  right, and an increase in the actual price level shifts short-run aggregate supply to the right. 
B)  right, and an increase in the actual price level does not shift short-run aggregate supply. 
C)  left, and an increase in the actual price level shifts short-run aggregate supply to the left. 
D)  left, and an increase in the actual price level does not shift short-run aggregate supply.

Question 20

A decrease in the price level

Accepted Answer

A)  increases the quantity of goods and services supplied in the short run. 
B)  decreases the quantity of goods and services supplied in the long run. 
C)  decreases the quantity of goods and services demanded. 
D)  increases the quantity of goods and services demanded. 
A)  increases the quantity of goods and services supplied in the short run. 
B)  decreases the quantity of goods and services supplied in the long run. 
C)  decreases the quantity of goods and services demanded. 
D)  increases the quantity of goods and services demanded.

Exam 33: Aggregate Demand and Aggregate Supply

Other things the same, when the government spends more, the initial effect is that

Other things the same, as the price level falls, which of the following increases?

The initial impact of an increase in an investment tax credit is to shift

Suppose the economy is in long-run equilibrium. If there is an increase in government purchases at the same time there is a large increase in the price of oil, then in the short-run

The long-run effect of an increase in household consumption is to raise

Which of the following shifts aggregate demand to the right?

Which of the following is correct concerning recessions?

Suppose that the economy is at long-run equilibrium. If there is a sharp rise in the stock market combined with a significant increase in the minimum wage, then in the short run

Which of the following effects provide incentives for consumers to spend less when the price level rises?

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?

Which of the following rises when the U.S. price level falls?

Below are pairs of GDP growth rates and unemployment rates. Economists would be shocked to see most of these pairs in the U. S. Which pair of GDP growth rates and unemployment rates is realistic?

As the price level rises,

When the Fed buys bonds

Other things the same, if the price level rises, people

Figure 33-7. -Refer to Figure 33-7. Suppose the economy starts at Y. If there is a fall in aggregate demand, then the economy moves to

When the price level falls

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

A decrease in the expected price level shifts short-run aggregate supply to the

A decrease in the price level

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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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