Question 1

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 2

Other things the same, if the long-run aggregate supply curve shifts left, prices

Accepted Answer

A)  and output both increase. 
B)  and output both decrease. 
C)  increase and output decreases. 
D)  decrease and output increases. 
A)  and output both increase. 
B)  and output both decrease. 
C)  increase and output decreases. 
D)  decrease and output increases.

Question 3

Suppose the economy is in long-run equilibrium. If there is a sharp decline in government purchases combined with a significant increase in immigration of skilled workers, then in the short run,

Accepted Answer

A)  real GDP will rise and the price level might rise, fall, or stay the same. In the long-run, real GDP will rise and the price level might rise, fall, or stay the same. 
B)  the price level will fall, and real GDP might rise, fall, or stay the same. In the long-run, real GDP and the price level will be unaffected. 
C)  the price level will rise, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise and the price level will fall. 
D)  the price level will fall, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise and the price level will fall. 
A)  real GDP will rise and the price level might rise, fall, or stay the same. In the long-run, real GDP will rise and the price level might rise, fall, or stay the same. 
B)  the price level will fall, and real GDP might rise, fall, or stay the same. In the long-run, real GDP and the price level will be unaffected. 
C)  the price level will rise, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise and the price level will fall. 
D)  the price level will fall, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise and the price level will fall.

Question 4

Other things the same, an unexpected fall in the price level results in some firms having

Accepted Answer

A)  lower than desired prices, which increases their sales. 
B)  lower than desired prices, which depresses their sales. 
C)  higher than desired prices, which increases their sales. 
D)  higher than desired prices, which depresses their sales. 
A)  lower than desired prices, which increases their sales. 
B)  lower than desired prices, which depresses their sales. 
C)  higher than desired prices, which increases their sales. 
D)  higher than desired prices, which depresses their sales.

Question 5

Other things the same, if the long-run aggregate supply curve shifts right, prices

Accepted Answer

A)  and output both increase. 
B)  and output both decrease. 
C)  increase and output decreases. 
D)  decrease and output increases. 
A)  and output both increase. 
B)  and output both decrease. 
C)  increase and output decreases. 
D)  decrease and output increases.

Question 6

An increase in the expected price level shifts the short-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 7

The initial impact of the repeal of 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 8

When we say that economic fluctuations are "irregular and unpredictable," we mean that

Accepted Answer

A)  the relationship between output and unemployment is erratic and difficult to characterize. 
B)  when one macroeconomic variable that measures income or spending is falling, other macroeconomic variables that measure income or spending are likely to be rising. 
C)  recessions do not occur at regular intervals. 
D)  All of the above are correct. 
A)  the relationship between output and unemployment is erratic and difficult to characterize. 
B)  when one macroeconomic variable that measures income or spending is falling, other macroeconomic variables that measure income or spending are likely to be rising. 
C)  recessions do not occur at regular intervals. 
D)  All of the above are correct.

Question 9

Figure 33-17.  
-Refer to Figure 33-17. Suppose the economy starts at P3 and Y2. Explain how government purchases would need to change to move the economy to P2 and Y1. What about taxes?

Accepted Answer

decrease in governme

Question 10

Suppose the economy is in long-run equilibrium. Concerns about pollution cause the government to significantly restrict the production of electricity. At the same time, taxes fall. 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 11

Other things the same, as the price level falls,

Accepted Answer

A)  the dollar depreciates. 
B)  the interest rate rises. 
C)  people feel less wealthy. 
D)  All of the above are correct. 
A)  the dollar depreciates. 
B)  the interest rate rises. 
C)  people feel less wealthy. 
D)  All of the above are correct.

Question 12

Other things the same, if workers and firms expected prices to rise by 2 percent but instead they rise by 3 percent, then

Accepted Answer

A)  employment and production rise. 
B)  employment rises and production falls. 
C)  employment falls and production rises. 
D)  employment and production fall. 
A)  employment and production rise. 
B)  employment rises and production falls. 
C)  employment falls and production rises. 
D)  employment and production fall.

Question 13

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 14

Other things the same, if the U.S. price level rises, then

Accepted Answer

A)  the supply of dollars in the market for foreign-currency exchange increases, so the exchange rate rises. 
B)  the supply of dollars in the market for foreign-currency exchange increases, so the exchange rate falls. 
C)  the supply of dollars in the market for foreign-currency exchange decreases, so the exchange rate rises. 
D)  the supply of dollars in the market for foreign-currency exchange decreases, so the exchange rate falls. 
A)  the supply of dollars in the market for foreign-currency exchange increases, so the exchange rate rises. 
B)  the supply of dollars in the market for foreign-currency exchange increases, so the exchange rate falls. 
C)  the supply of dollars in the market for foreign-currency exchange decreases, so the exchange rate rises. 
D)  the supply of dollars in the market for foreign-currency exchange decreases, so the exchange rate falls.

Question 15

Increased optimism about the future leads to rising prices and falling unemployment in the short run.

Accepted Answer

A) True 
 B)False

Question 16

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Accepted Answer

A) True 
 B)False

Question 17

Aggregate demand shifts left if

Accepted Answer

A)  government purchases increase and shifts left if stock prices rise. 
B)  government purchases increase and shifts left if stock prices fall. 
C)  government purchases decrease and shifts left if stock prices rise. 
D)  government purchases decrease and shifts left is stock prices fall. 
A)  government purchases increase and shifts left if stock prices rise. 
B)  government purchases increase and shifts left if stock prices fall. 
C)  government purchases decrease and shifts left if stock prices rise. 
D)  government purchases decrease and shifts left is stock prices fall.

Question 18

Which of the following, other things the same, would make the price level decrease and real GDP increase?

Accepted Answer

A)  long-run aggregate supply shifts right 
B)  long-run aggregate supply shifts left 
C)  aggregate demand shifts right 
D)  aggregate demand shifts left 
A)  long-run aggregate supply shifts right 
B)  long-run aggregate supply shifts left 
C)  aggregate demand shifts right 
D)  aggregate demand shifts left

Question 19

From 1995 to 1999 there was a dramatic rise in stock prices. If this rise made people feel wealthier, then it would have shifted

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 20

Refer to Pessimism. In the long run, the change in price expectations created by pessimism shifts

Accepted Answer

A)  long-run aggregate supply right. 
B)  long-run aggregate supply left. 
C)  short-run aggregate supply right. 
D)  short-run aggregate supply left. 
A)  long-run aggregate supply right. 
B)  long-run aggregate supply left. 
C)  short-run aggregate supply right. 
D)  short-run aggregate supply left.

Exam 33: Aggregate Demand and Aggregate Supply

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

Other things the same, if the long-run aggregate supply curve shifts left, prices

Suppose the economy is in long-run equilibrium. If there is a sharp decline in government purchases combined with a significant increase in immigration of skilled workers, then in the short run,

Other things the same, an unexpected fall in the price level results in some firms having

Other things the same, if the long-run aggregate supply curve shifts right, prices

An increase in the expected price level shifts the short-run aggregate supply curve to the right.

The initial impact of the repeal of an investment tax credit is to shift

When we say that economic fluctuations are "irregular and unpredictable," we mean that

Figure 33-17. -Refer to Figure 33-17. Suppose the economy starts at P3 and Y2. Explain how government purchases would need to change to move the economy to P2 and Y1. What about taxes?

Suppose the economy is in long-run equilibrium. Concerns about pollution cause the government to significantly restrict the production of electricity. At the same time, taxes fall. In the short-run

Other things the same, as the price level falls,

Other things the same, if workers and firms expected prices to rise by 2 percent but instead they rise by 3 percent, then

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?

Other things the same, if the U.S. price level rises, then

Increased optimism about the future leads to rising prices and falling unemployment in the short run.

Like real GDP, investment fluctuates, but it fluctuates much less than real GDP.

Aggregate demand shifts left if

Which of the following, other things the same, would make the price level decrease and real GDP increase?

From 1995 to 1999 there was a dramatic rise in stock prices. If this rise made people feel wealthier, then it would have shifted

Refer to Pessimism. In the long run, the change in price expectations created by pessimism shifts

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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