Question 1

During recessions employment typically

Accepted Answer

A)  falls substantially. As the recession ends, employment rises rapidly. 
B)  rises substantially. As the recession ends, employment declines gradually. 
C)  falls substantially. As the recession ends, employment rises gradually. 
D)  rises substantially. As the recession ends, employment declines rapidly. 
A)  falls substantially. As the recession ends, employment rises rapidly. 
B)  rises substantially. As the recession ends, employment declines gradually. 
C)  falls substantially. As the recession ends, employment rises gradually. 
D)  rises substantially. As the recession ends, employment declines rapidly.

Question 2

Suppose a recession overseas reduces a country's exports. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

Accepted Answer

The aggregate-demand

Question 3

Consider the exhibit below for the following questions.
Figure 33-4  
-Refer to Figure 33-4. In the short run, a favorable shift in aggregate supply would move the economy from

Accepted Answer

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

Question 4

Which of the following can explain the upward slope of the short-run aggregate supply curve?

Accepted Answer

A)  nominal wages are slow to adjust to changing economic conditions 
B)  as the price level falls, the exchange rate falls 
C)  an increase in the money supply lowers the interest rate 
D)  an increase in the interest rate increases investment spending 
A)  nominal wages are slow to adjust to changing economic conditions 
B)  as the price level falls, the exchange rate falls 
C)  an increase in the money supply lowers the interest rate 
D)  an increase in the interest rate increases investment spending

Question 5

Other things the same, continued increases in the money supply lead to

Accepted Answer

A)  continued increases in the price level and real GDP. 
B)  continued increases in the price level but not continued increases in real GDP. 
C)  continued increases in real GDP but not continued increases in the price level. 
D)  a one-time permanent increase in both prices and real GDP. 
A)  continued increases in the price level and real GDP. 
B)  continued increases in the price level but not continued increases in real GDP. 
C)  continued increases in real GDP but not continued increases in the price level. 
D)  a one-time permanent increase in both prices and real GDP.

Question 6

Which of the following shifts short-run aggregate supply right?

Accepted Answer

A)  an increase in the price level 
B)  an increase in the minimum wage 
C)  a decrease in the price of oil 
D)  more people migrate abroad than immigrate from abroad 
A)  an increase in the price level 
B)  an increase in the minimum wage 
C)  a decrease in the price of oil 
D)  more people migrate abroad than immigrate from abroad

Question 7

As the price level rises, the exchange rate

Accepted Answer

A)  falls, so exports rise and imports fall. 
B)  falls, so exports fall and imports rise. 
C)  rises, so exports rise and imports fall. 
D)  rises, so exports fall and imports rise. 
A)  falls, so exports rise and imports fall. 
B)  falls, so exports fall and imports rise. 
C)  rises, so exports rise and imports fall. 
D)  rises, so exports fall and imports rise.

Question 8

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

Accepted Answer

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

Question 9

Other things the same, when the price level rises, interest rates

Accepted Answer

A)  rise, so firms increase investment. 
B)  rise, so firms decrease investment. 
C)  fall, so firms increase investment. 
D)  fall, so firms decrease investment. 
A)  rise, so firms increase investment. 
B)  rise, so firms decrease investment. 
C)  fall, so firms increase investment. 
D)  fall, so firms decrease investment.

Question 10

According to classical macroeconomic theory, changes in the money supply affect

Accepted Answer

A)  unemployment and the price level. 
B)  unemployment but not the price level. 
C)  the price level, but not unemployment. 
D)  neither the price level nor unemployment. 
A)  unemployment and the price level. 
B)  unemployment but not the price level. 
C)  the price level, but not unemployment. 
D)  neither the price level nor unemployment.

Question 11

Other things the same, the aggregate quantity of goods demanded decreases if

Accepted Answer

A)  real wealth falls. 
B)  the interest rate rises. 
C)  the dollar appreciates. 
D)  All of the above are correct. 
A)  real wealth falls. 
B)  the interest rate rises. 
C)  the dollar appreciates. 
D)  All of the above are correct.

Question 12

Suppose a country experiences an increase in its capital stock. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

Accepted Answer

The short-run and lo

Question 13

During the last half of 2012, the U.S. unemployment rate was just under 8 percent. Historical experience suggests that this is

Accepted Answer

A)  above the natural rate, so real GDP growth was likely low. 
B)  above the natural rate, so real GDP growth was likely high. 
C)  below the natural rate, so real GDP growth was likely low. 
D)  below the natural rate, so real GDP growth was likely high. 
A)  above the natural rate, so real GDP growth was likely low. 
B)  above the natural rate, so real GDP growth was likely high. 
C)  below the natural rate, so real GDP growth was likely low. 
D)  below the natural rate, so real GDP growth was likely high.

Question 14

Figure 33-5.  
-Refer to Figure 33-5. In Figure 33-5,

Accepted Answer

A)  Point B represents a short-run equilibrium and a long-run equilibrium. 
B)  Point B represents a short-run equilibrium, and Point A represents a long-run equilibrium. 
C)  Point B represents a long-run equilibrium, and Point A represents a short-run equilibrium. 
D)  Point B represents a long-run equilibrium, and Point C represents a short-run equilibrium. 
A)  Point B represents a short-run equilibrium and a long-run equilibrium. 
B)  Point B represents a short-run equilibrium, and Point A represents a long-run equilibrium. 
C)  Point B represents a long-run equilibrium, and Point A represents a short-run equilibrium. 
D)  Point B represents a long-run equilibrium, and Point C represents a short-run equilibrium.

Question 15

Explain the short-run effects on output and the price level from a decrease in the aggregate-demand curve.

Accepted Answer

The price

Question 16

The long-run aggregate supply curve shifts right if

Accepted Answer

A)  either immigration from abroad increases or technology improves. 
B)  immigration from abroad increases, but not if technology improves. 
C)  technology improves, but not if immigration from abroad increases. 
D)  None of the above are correct. 
A)  either immigration from abroad increases or technology improves. 
B)  immigration from abroad increases, but not if technology improves. 
C)  technology improves, but not if immigration from abroad increases. 
D)  None of the above are correct.

Question 17

When the money supply decreases

Accepted Answer

A)  interest rates fall and so aggregate demand shifts right. 
B)  interest rates fall and so aggregate demand shifts left. 
C)  interest rates rise and so aggregate demand shifts right. 
D)  interest rates rise and so aggregate demand shifts left. 
A)  interest rates fall and so aggregate demand shifts right. 
B)  interest rates fall and so aggregate demand shifts left. 
C)  interest rates rise and so aggregate demand shifts right. 
D)  interest rates rise and so aggregate demand shifts left.

Question 18

Recessions in Canada and Mexico would cause

Accepted Answer

A)  the U.S. price level and real GDP to rise. 
B)  the U.S. price level and real GDP to fall. 
C)  the U.S. price level to rise and real GDP to fall. 
D)  the U.S. price level to fall and real GDP to rise. 
A)  the U.S. price level and real GDP to rise. 
B)  the U.S. price level and real GDP to fall. 
C)  the U.S. price level to rise and real GDP to fall. 
D)  the U.S. price level to fall and real GDP to rise.

Question 19

An increase in the money supply

Accepted Answer

A)  and an investment tax credit both cause aggregate demand to shift right. 
B)  and an investment tax credit both cause aggregate demand to shift left. 
C)  causes aggregate demand to shift right, while an investment tax credit causes aggregate demand to shift left. 
D)  causes aggregate demand to shift left, while an investment tax credit causes aggregate demand to shift right. 
A)  and an investment tax credit both cause aggregate demand to shift right. 
B)  and an investment tax credit both cause aggregate demand to shift left. 
C)  causes aggregate demand to shift right, while an investment tax credit causes aggregate demand to shift left. 
D)  causes aggregate demand to shift left, while an investment tax credit causes aggregate demand to shift right.

Question 20

In the last half of 1999, the U.S. unemployment rate was about 4 percent. Historical experience suggests that this is

Accepted Answer

A)  above the natural rate, so real GDP growth was likely low. 
B)  above the natural rate, so real GDP growth was likely high. 
C)  below the natural rate, so real GDP growth was likely low. 
D)  below the natural rate, so real GDP growth was likely high. 
A)  above the natural rate, so real GDP growth was likely low. 
B)  above the natural rate, so real GDP growth was likely high. 
C)  below the natural rate, so real GDP growth was likely low. 
D)  below the natural rate, so real GDP growth was likely high.

Exam 33: Aggregate Demand and Aggregate Supply

During recessions employment typically

Suppose a recession overseas reduces a country's exports. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4. In the short run, a favorable shift in aggregate supply would move the economy from

Which of the following can explain the upward slope of the short-run aggregate supply curve?

Other things the same, continued increases in the money supply lead to

Which of the following shifts short-run aggregate supply right?

As the price level rises, the exchange rate

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

Other things the same, when the price level rises, interest rates

According to classical macroeconomic theory, changes in the money supply affect

Other things the same, the aggregate quantity of goods demanded decreases if

Suppose a country experiences an increase in its capital stock. Which curve(s) in the aggregate demand and aggregate supply model would be affected, and which way would it (they) shift?

During the last half of 2012, the U.S. unemployment rate was just under 8 percent. Historical experience suggests that this is

Figure 33-5. -Refer to Figure 33-5. In Figure 33-5,

Explain the short-run effects on output and the price level from a decrease in the aggregate-demand curve.

The long-run aggregate supply curve shifts right if

When the money supply decreases

Recessions in Canada and Mexico would cause

An increase in the money supply

In the last half of 1999, the U.S. unemployment rate was about 4 percent. Historical experience suggests that this is

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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