Question 1

When the actual change in the price level differs from its expected change, which of the following can explain why firms might change their production?

Accepted Answer

A)  both menu costs and mistaking a price level change for a change in relative prices 
B)  menu costs but not mistaking a price level change for a change in relative prices 
C)  mistaking a price level change for a change in relative price but not menu costs 
D)  neither menu costs nor mistaking a price level change for a change in relative prices 
A)  both menu costs and mistaking a price level change for a change in relative prices 
B)  menu costs but not mistaking a price level change for a change in relative prices 
C)  mistaking a price level change for a change in relative price but not menu costs 
D)  neither menu costs nor mistaking a price level change for a change in relative prices

Question 2

Figure 33-5.  
-Refer to Figure 33-5. Starting from point B and assuming that aggregate demand is held constant, in the long run the economy is likely to experience

Accepted Answer

A)  a falling price level and a falling level of output, as the economy moves to point C. 
B)  a falling price level and a rising level of output, as the economy moves to point A. 
C)  a rising price level and a falling level of output, as the economy moves to point A. 
D)  a rising price level and a rising level of output, as the economy moves to point C. 
A)  a falling price level and a falling level of output, as the economy moves to point C. 
B)  a falling price level and a rising level of output, as the economy moves to point A. 
C)  a rising price level and a falling level of output, as the economy moves to point A. 
D)  a rising price level and a rising level of output, as the economy moves to point C.

Question 3

A change in the money supply changes only nominal variables in the long run.

Accepted Answer

A) True 
 B)False

Question 4

Figure 33-15.  
-Refer to Figure 33-15. Suppose the economy begins at point A. Decreases in what four variables could result in a movement to point D?

Accepted Answer

consumption, investm

Question 5

An increase in the money supply causes output to rise in the long run.

Accepted Answer

A) True 
 B)False

Question 6

A change in the expected price level is likely to cause which of the following?

Accepted Answer

A)  a shift in the short-run aggregate supply curve and long-run aggregate supply curve 
B)  a shift in the short run aggregate supply curve 
C)  a shift in the aggregate demand curve 
D)  a shift in the long-run aggregate supply curve 
A)  a shift in the short-run aggregate supply curve and long-run aggregate supply curve 
B)  a shift in the short run aggregate supply curve 
C)  a shift in the aggregate demand curve 
D)  a shift in the long-run aggregate supply curve

Question 7

The quantity of money has no real impact on things people really care about like whether or not they have a job. Most economists would agree that this statement is appropriate concerning

Accepted Answer

A)  both the short run and the long run. 
B)  the short run, but not the long run. 
C)  the long run, but not the short run. 
D)  neither the long run nor the short run. 
A)  both the short run and the long run. 
B)  the short run, but not the long run. 
C)  the long run, but not the short run. 
D)  neither the long run nor the short run.

Question 8

The long-run aggregate supply curve shifts left if

Accepted Answer

A)  the capital stock increases. 
B)  there is a natural disaster. 
C)  the government removes some environmental regulations that limit production methods. 
D)  None of the above is correct. 
A)  the capital stock increases. 
B)  there is a natural disaster. 
C)  the government removes some environmental regulations that limit production methods. 
D)  None of the above is correct.

Question 9

In the early 1930s in the United States, there was a

Accepted Answer

A)  large increase in output. In the early 1940s there was also a large increase in output. 
B)  large increase in output. In the early 1940s there was a large decrease in output. 
C)  large decrease in output. In the early 1940s there was a large increase in output. 
D)  large decrease in output. In the early 1940s there was also a large decrease in output. 
A)  large increase in output. In the early 1940s there was also a large increase in output. 
B)  large increase in output. In the early 1940s there was a large decrease in output. 
C)  large decrease in output. In the early 1940s there was a large increase in output. 
D)  large decrease in output. In the early 1940s there was also a large decrease in output.

Question 10

Which of the following adjust to bring aggregate supply and demand into balance?

Accepted Answer

A)  the price level and real output 
B)  the real rate of interest and the money supply 
C)  government expenditures and taxes 
D)  the saving rate and net exports 
A)  the price level and real output 
B)  the real rate of interest and the money supply 
C)  government expenditures and taxes 
D)  the saving rate and net exports

Question 11

Figure 33-6.  
-Refer to Figure 33-6. Which of the long-run aggregate-supply curves is consistent with a short-run economic expansion?

Accepted Answer

A)  LRAS1 
B)  LRAS2 
C)  LRAS3 
D)  Both LRAS1 and LRAS3 
A)  LRAS1 
B)  LRAS2 
C)  LRAS3 
D)  Both LRAS1 and LRAS3

Question 12

Wages tend to be sticky

Accepted Answer

A)  because of contracts, social norms, and notions of fairness. 
B)  because of contracts, but not social norms or notions of fairness. 
C)  because of social norms and notions of fairness, but not contracts. 
D)  None of the above are correct. 
A)  because of contracts, social norms, and notions of fairness. 
B)  because of contracts, but not social norms or notions of fairness. 
C)  because of social norms and notions of fairness, but not contracts. 
D)  None of the above are correct.

Question 13

The aggregate-demand curve shows the

Accepted Answer

A)  quantity of labor and other inputs that firms want to buy at each price level. 
B)  quantity of labor and other inputs that firms want to buy at each inflation rate. 
C)  quantity of domestically produced goods and services that households want to buy at each price level. 
D)  quantity of domestically produced goods and services that households, firms, the government, and customers abroad want to buy at each price level. 
A)  quantity of labor and other inputs that firms want to buy at each price level. 
B)  quantity of labor and other inputs that firms want to buy at each inflation rate. 
C)  quantity of domestically produced goods and services that households want to buy at each price level. 
D)  quantity of domestically produced goods and services that households, firms, the government, and customers abroad want to buy at each price level.

Question 14

When the dollar depreciates, U.S.

Accepted Answer

A)  exports and imports increase. 
B)  exports increase, while imports decrease. 
C)  exports decrease, while imports increase. 
D)  exports and imports decrease. 
A)  exports and imports increase. 
B)  exports increase, while imports decrease. 
C)  exports decrease, while imports increase. 
D)  exports and imports decrease.

Question 15

Figure 33-10.  
-Refer to Figure 33-10. If the economy starts at point C, stagflation would be consistent with point

Accepted Answer

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

Question 16

Other things the same, a decrease in the price level motivates people to hold

Accepted Answer

A)  less money, so they lend less, and the interest rate rises. 
B)  less money, so they lend more, and the interest rate falls. 
C)  more money, so they lend more, and the interest rate rises. 
D)  more money, so they lend less, and the interest rate falls. 
A)  less money, so they lend less, and the interest rate rises. 
B)  less money, so they lend more, and the interest rate falls. 
C)  more money, so they lend more, and the interest rate rises. 
D)  more money, so they lend less, and the interest rate falls.

Question 17

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

Accepted Answer

A) True 
 B)False

Question 18

When output rises, unemployment falls.

Accepted Answer

A) True 
 B)False

Question 19

Consider the exhibit below for the following questions.
Figure 33-4  
-Refer to Figure 33-4. If the economy starts at A, a decrease in the money supply moves the economy

Accepted Answer

A)  to A in the long run. 
B)  to C in the long run. 
C)  back to A in the long run. 
D)  to D in the long run. 
A)  to A in the long run. 
B)  to C in the long run. 
C)  back to A in the long run. 
D)  to D in the long run.

Question 20

The only way to rationalize an upward slope for the short-run aggregate-supply curve is to argue that wages are sticky in the short run.

Accepted Answer

A) True 
 B)False

Exam 33: Aggregate Demand and Aggregate Supply

When the actual change in the price level differs from its expected change, which of the following can explain why firms might change their production?

Figure 33-5. -Refer to Figure 33-5. Starting from point B and assuming that aggregate demand is held constant, in the long run the economy is likely to experience

A change in the money supply changes only nominal variables in the long run.

Figure 33-15. -Refer to Figure 33-15. Suppose the economy begins at point A. Decreases in what four variables could result in a movement to point D?

An increase in the money supply causes output to rise in the long run.

A change in the expected price level is likely to cause which of the following?

The quantity of money has no real impact on things people really care about like whether or not they have a job. Most economists would agree that this statement is appropriate concerning

The long-run aggregate supply curve shifts left if

In the early 1930s in the United States, there was a

Which of the following adjust to bring aggregate supply and demand into balance?

Figure 33-6. -Refer to Figure 33-6. Which of the long-run aggregate-supply curves is consistent with a short-run economic expansion?

Wages tend to be sticky

The aggregate-demand curve shows the

When the dollar depreciates, U.S.

Figure 33-10. -Refer to Figure 33-10. If the economy starts at point C, stagflation would be consistent with point

Other things the same, a decrease in the price level motivates people to hold

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

When output rises, unemployment falls.

Consider the exhibit below for the following questions. Figure 33-4 -Refer to Figure 33-4. If the economy starts at A, a decrease in the money supply moves the economy

The only way to rationalize an upward slope for the short-run aggregate-supply curve is to argue that wages are sticky in the short run.

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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