Question 1

Assuming that a is positive, theories of short-run aggregate supply are expressed mathematically as

Accepted Answer

A)  quantity of output supplied = natural rate of output + a(actual price level - expected price level). 
B)  quantity of output supplied = natural rate of output + a(expected price level - actual price level). 
C)  quantity of output supplied = a(actual price level -expected price level) - natural rate of output. 
D)  quantity of output supplied = a(expected price level - actual price level) - natural rate of output. 
A)  quantity of output supplied = natural rate of output + a(actual price level - expected price level). 
B)  quantity of output supplied = natural rate of output + a(expected price level - actual price level). 
C)  quantity of output supplied = a(actual price level -expected price level) - natural rate of output. 
D)  quantity of output supplied = a(expected price level - actual price level) - natural rate of output.

Question 2

During a recession the economy experiences

Accepted Answer

A)  rising income and unemployment. 
B)  rising income and falling unemployment. 
C)  falling income and rising unemployment. 
D)  falling income and unemployment. 
A)  rising income and unemployment. 
B)  rising income and falling unemployment. 
C)  falling income and rising unemployment. 
D)  falling income and unemployment.

Question 3

Figure 33-10.  
-Refer to Figure 33-10. If the economy starts at point A, a short-run fall in output would be consistent with a movement to point

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 4

Microeconomic substitution is impossible for the economy as a whole because

Accepted Answer

A)  money is a veil. 
B)  real GDP measures the total quantity of goods and services produced by all firms in all markets. 
C)  the prices of some goods and services adjust sluggishly in response to changing economic conditions. 
D)  a lower price level increases real wealth, which stimulates spending by consumers and vice-versa. 
A)  money is a veil. 
B)  real GDP measures the total quantity of goods and services produced by all firms in all markets. 
C)  the prices of some goods and services adjust sluggishly in response to changing economic conditions. 
D)  a lower price level increases real wealth, which stimulates spending by consumers and vice-versa.

Question 5

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 6

Suppose the economy is in long-run equilibrium. In a short span of time, there is a large influx of skilled immigrants, a major new discovery of oil, and a major new technological advance in electricity production. In the short run, we would expect

Accepted Answer

A)  the price level to rise and real GDP to fall. 
B)  the price level to fall and real GDP to rise. 
C)  the price level and real GDP both to stay the same. 
D)  All of the above are possible. 
A)  the price level to rise and real GDP to fall. 
B)  the price level to fall and real GDP to rise. 
C)  the price level and real GDP both to stay the same. 
D)  All of the above are possible.

Question 7

Other things the same, as the price level falls,

Accepted Answer

A)  the money supply falls. 
B)  interest rates rise. 
C)  a dollar buys more domestic goods. 
D)  the aggregate-demand curve shifts right. 
A)  the money supply falls. 
B)  interest rates rise. 
C)  a dollar buys more domestic goods. 
D)  the aggregate-demand curve shifts right.

Question 8

According to the misperceptions theory of the short-run aggregate supply curve, if a firm thought that inflation was going to be 4 percent and actual inflation was 2 percent, then the firm would believe that the relative price of what it produces had

Accepted Answer

A)  increased, so it would increase production. 
B)  increased, so it would decrease production. 
C)  decreased, so it would increase production. 
D)  decreased, so it would decrease production. 
A)  increased, so it would increase production. 
B)  increased, so it would decrease production. 
C)  decreased, so it would increase production. 
D)  decreased, so it would decrease production.

Question 9

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 10

During the 2008-2009 recession real GDP fell by about

Accepted Answer

A)  2% 
B)  4% 
C)  6% 
D)  8% 
A)  2% 
B)  4% 
C)  6% 
D)  8%

Question 11

A candidate for political office announces the following policies which, he says, economics clearly demonstrates will lead to higher output in the long run: 1. increase immigration from abroad 2. make trade more open between the US and other countries.

Accepted Answer

A)  1 and 2 both shift long-run aggregate supply right. 
B)  1 and 2 both shift long-run aggregate supply left. 
C)  1 shifts long-run aggregate supply right, 2 shifts long-run aggregate supply left. 
D)  1 shifts long-run aggregate supply left, 2 shifts long-run aggregate supply right. 
A)  1 and 2 both shift long-run aggregate supply right. 
B)  1 and 2 both shift long-run aggregate supply left. 
C)  1 shifts long-run aggregate supply right, 2 shifts long-run aggregate supply left. 
D)  1 shifts long-run aggregate supply left, 2 shifts long-run aggregate supply right.

Question 12

Which of the following effects helps to explain the slope of the aggregate-demand curve?

Accepted Answer

A)  the exchange-rate effect 
B)  the wealth effect 
C)  the interest-rate effect 
D)  All of the above are correct. 
A)  the exchange-rate effect 
B)  the wealth effect 
C)  the interest-rate effect 
D)  All of the above are correct.

Question 13

If output is above its natural rate, then according to sticky-wage theory

Accepted Answer

A)  workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve right. 
B)  workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve left. 
C)  workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve right. 
D)  workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve left. 
A)  workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve right. 
B)  workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve left. 
C)  workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve right. 
D)  workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve left.

Question 14

During recessions

Accepted Answer

A)  workers are laid off. 
B)  factories are idle. 
C)  firms may find they are unable to sell all they produce. 
D)  All of the above are correct. 
A)  workers are laid off. 
B)  factories are idle. 
C)  firms may find they are unable to sell all they produce. 
D)  All of the above are correct.

Question 15

Economic variables we are most interested in are

Accepted Answer

A)  real variables, but we usually observe nominal variables. 
B)  nominal variables, but we usually observe real variables. 
C)  real variables, which we usually observe. 
D)  nominal variables, which we usually observe. 
A)  real variables, but we usually observe nominal variables. 
B)  nominal variables, but we usually observe real variables. 
C)  real variables, which we usually observe. 
D)  nominal variables, which we usually observe.

Question 16

Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp rise in the stock market, an increase in government purchases, an increase in the money supply and a decline in the value of the dollar. In the short run

Accepted Answer

A)  the price level and real GDP will both rise. 
B)  the price level and real GDP will both fall. 
C)  neither the price leave nor real GDP will change. 
D)  All of the above are possible. 
A)  the price level and real GDP will both rise. 
B)  the price level and real GDP will both fall. 
C)  neither the price leave nor real GDP will change. 
D)  All of the above are possible.

Question 17

Refer to Stock Market Boom 2015. Which curve shifts and in which direction?

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 18

Suppose technology advances within a nation. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Accepted Answer

The short run and lo

Question 19

Suppose the government raises taxes. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Accepted Answer

The aggreg

Question 20

Which of the following is correct?

Accepted Answer

A)  Over the business cycle investment fluctuates more than consumption. 
B)  Economic fluctuations are easy to predict. 
C)  During recessions employment rises. 
D)  Because of government policy the U.S. had zero recessions in the last 25 years. 
A)  Over the business cycle investment fluctuates more than consumption. 
B)  Economic fluctuations are easy to predict. 
C)  During recessions employment rises. 
D)  Because of government policy the U.S. had zero recessions in the last 25 years.

Exam 33: Aggregate Demand and Aggregate Supply

Assuming that a is positive, theories of short-run aggregate supply are expressed mathematically as

During a recession the economy experiences

Figure 33-10. -Refer to Figure 33-10. If the economy starts at point A, a short-run fall in output would be consistent with a movement to point

Microeconomic substitution is impossible for the economy as a whole because

As the price level rises

Suppose the economy is in long-run equilibrium. In a short span of time, there is a large influx of skilled immigrants, a major new discovery of oil, and a major new technological advance in electricity production. In the short run, we would expect

Other things the same, as the price level falls,

According to the misperceptions theory of the short-run aggregate supply curve, if a firm thought that inflation was going to be 4 percent and actual inflation was 2 percent, then the firm would believe that the relative price of what it produces had

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

During the 2008-2009 recession real GDP fell by about

A candidate for political office announces the following policies which, he says, economics clearly demonstrates will lead to higher output in the long run: 1. increase immigration from abroad 2. make trade more open between the US and other countries.

Which of the following effects helps to explain the slope of the aggregate-demand curve?

If output is above its natural rate, then according to sticky-wage theory

During recessions

Economic variables we are most interested in are

Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp rise in the stock market, an increase in government purchases, an increase in the money supply and a decline in the value of the dollar. In the short run

Refer to Stock Market Boom 2015. Which curve shifts and in which direction?

Suppose technology advances within a nation. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Suppose the government raises taxes. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Which of the following is correct?

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

Filters