Question 1

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

Accepted Answer

A)  an increase in either technology or the human capital stock. 
B)  an increase in human capital but not technology. 
C)  an increase in technology, but not the human capital stock. 
D)  neither an increase in technology nor the human capital stock. 
A)  an increase in either technology or the human capital stock. 
B)  an increase in human capital but not technology. 
C)  an increase in technology, but not the human capital stock. 
D)  neither an increase in technology nor the human capital stock.

Question 2

Refer to Stock Market Boom 2015. In the short run what happens to the price level and real GDP?

Accepted Answer

A)  both the price level and real GDP rise. 
B)  both the price level and real GDP fall. 
C)  the price level rises and real GDP falls. 
D)  the price level falls and real GDP rises. 
A)  both the price level and real GDP rise. 
B)  both the price level and real GDP fall. 
C)  the price level rises and real GDP falls. 
D)  the price level falls and real GDP rises.

Question 3

Illustrate the classical analysis of growth and inflation with aggregate demand and long-run aggregate supply curves.

Accepted Answer

See graph. @#IMG-DLM& Over time, technological adv

Question 4

The long-run aggregate supply curve

Accepted Answer

A)  is vertical. 
B)  is a graphical representation of the classical dichotomy. 
C)  indicates monetary neutrality in the long run. 
D)  All of the above are correct. 
A)  is vertical. 
B)  is a graphical representation of the classical dichotomy. 
C)  indicates monetary neutrality in the long run. 
D)  All of the above are correct.

Question 5

Imagine the U.S. economy is in long-run equilibrium. Then suppose the value of the U.S. dollar decreases. At the same time, people in the U.S. revise their expectations so that the expected price level rises. We would expect that 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 6

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

Accepted Answer

A)  rise, which means consumers will want to spend more on homebuilding. 
B)  rise, which means consumers will want to spend less on homebuilding. 
C)  fall, which means consumers will want to spend more on homebuilding. 
D)  fall, which means consumers will want to spend less on homebuilding. 
A)  rise, which means consumers will want to spend more on homebuilding. 
B)  rise, which means consumers will want to spend less on homebuilding. 
C)  fall, which means consumers will want to spend more on homebuilding. 
D)  fall, which means consumers will want to spend less on homebuilding.

Question 7

During World War II,

Accepted Answer

A)  government purchases of goods and services increased fivefold. 
B)  the economy's production increased about 25 percent. 
C)  unemployment fell to about 5%. 
D)  All of the above are correct. 
A)  government purchases of goods and services increased fivefold. 
B)  the economy's production increased about 25 percent. 
C)  unemployment fell to about 5%. 
D)  All of the above are correct.

Question 8

Keynes thought that the behavior of the economy in the short run was influenced by what he called "animal spirits." By this he meant that business people sometimes felt good about the economy, and carried out lots of investment, and at other times felt bad about the economy, and so cut back on their investment spending. Explain how such fluctuations in investment would lead to fluctuations in real GDP and prices.

Accepted Answer

Fluctuations in investment cause the agg

Question 9

When the price level falls the quantity of

Accepted Answer

A)  consumption goods demanded rises, while the quantity of net exports demanded falls. 
B)  consumption goods demanded and the quantity of net exports demanded both rise. 
C)  consumption goods demanded and the quantity of net exports demanded both fall. 
D)  consumption goods demanded falls, while the quantity of net exports demand rises. 
A)  consumption goods demanded rises, while the quantity of net exports demanded falls. 
B)  consumption goods demanded and the quantity of net exports demanded both rise. 
C)  consumption goods demanded and the quantity of net exports demanded both fall. 
D)  consumption goods demanded falls, while the quantity of net exports demand rises.

Question 10

A decrease in the money supply causes the interest rate to rise so that investment falls.

Accepted Answer

A) True 
 B)False

Question 11

When the price level changes, which of the following variables will change and thereby cause a change in the aggregate quantity of goods and services demanded?

Accepted Answer

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

Question 12

The recession of 2008-2009 was associated with a fall in housing prices which shifted aggregate demand to the left.

Accepted Answer

A) True 
 B)False

Question 13

Misperceptions theory helps explain what feature of the aggregate demand and aggregate supply model?

Accepted Answer

why the short run ag

Question 14

If aggregate demand shifts right then in the short run

Accepted Answer

A)  firms will increase production. In the long run increased price expectations shift the short-run aggregate supply curve to the right. 
B)  firms will increase production. In the long run increased price expectations shift the short-run aggregate supply curve to the left. 
C)  firms will decrease production. In the long run increased price expectations shift the short-run aggregate supply curve to the right. 
D)  firms will decrease production. In the long run increased price expectations shift the short-run aggregate supply curve to the left. 
A)  firms will increase production. In the long run increased price expectations shift the short-run aggregate supply curve to the right. 
B)  firms will increase production. In the long run increased price expectations shift the short-run aggregate supply curve to the left. 
C)  firms will decrease production. In the long run increased price expectations shift the short-run aggregate supply curve to the right. 
D)  firms will decrease production. In the long run increased price expectations shift the short-run aggregate supply curve to the left.

Question 15

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

Accepted Answer

A)  rise, which means consumers will want to spend more on homebuilding. 
B)  rise, which means consumers will want to spend less on homebuilding. 
C)  fall, which means consumers will want to spend more on homebuilding. 
D)  fall, which means consumers will want to spend less on homebuilding. 
A)  rise, which means consumers will want to spend more on homebuilding. 
B)  rise, which means consumers will want to spend less on homebuilding. 
C)  fall, which means consumers will want to spend more on homebuilding. 
D)  fall, which means consumers will want to spend less on homebuilding.

Question 16

Other things the same, continued increases in technology lead to

Accepted Answer

A)  continued increases in the price level and real GDP. 
B)  continued decreases in the price level and real GDP. 
C)  continued increases in real GDP and continued increases in the price level. 
D)  continued increases in real GDP and continued decreases in the price level. 
A)  continued increases in the price level and real GDP. 
B)  continued decreases in the price level and real GDP. 
C)  continued increases in real GDP and continued increases in the price level. 
D)  continued increases in real GDP and continued decreases in the price level.

Question 17

Which of the following statements concerning the aggregate demand and aggregate supply model is correct?

Accepted Answer

A)  The aggregate demand and aggregate supply model is nothing more than a large version of the model of market demand and supply. 
B)  The price level and quantity of output adjust to bring aggregate demand and supply into balance. 
C)  The aggregate supply curve shows the quantity of goods and services that households, firms, and the government want to buy at each price. 
D)  All of the above are correct. 
A)  The aggregate demand and aggregate supply model is nothing more than a large version of the model of market demand and supply. 
B)  The price level and quantity of output adjust to bring aggregate demand and supply into balance. 
C)  The aggregate supply curve shows the quantity of goods and services that households, firms, and the government want to buy at each price. 
D)  All of the above are correct.

Question 18

The effect of a change in the value of the dollar in the foreign exchange market due to a change in the price level helps explain the slope of aggregate demand, but does not shift it. The effects of a change in the value of the dollar in the foreign exchange market due to speculation is shown by shifting the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)  the Federal Reserve buys bonds. 
B)  a decrease in net exports due to something other than a change in domestic prices. 
C)  an increase in household saving. 
D)  All of the above are correct. 
A)  the Federal Reserve buys bonds. 
B)  a decrease in net exports due to something other than a change in domestic prices. 
C)  an increase in household saving. 
D)  All of the above are correct.

Question 20

A decrease in the availability of an important major resource such as oil shifts

Accepted Answer

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

Exam 33: Aggregate Demand and Aggregate Supply

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

Refer to Stock Market Boom 2015. In the short run what happens to the price level and real GDP?

Illustrate the classical analysis of growth and inflation with aggregate demand and long-run aggregate supply curves.

The long-run aggregate supply curve

Imagine the U.S. economy is in long-run equilibrium. Then suppose the value of the U.S. dollar decreases. At the same time, people in the U.S. revise their expectations so that the expected price level rises. We would expect that in the short-run

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

During World War II,

When the price level falls the quantity of

A decrease in the money supply causes the interest rate to rise so that investment falls.

When the price level changes, which of the following variables will change and thereby cause a change in the aggregate quantity of goods and services demanded?

The recession of 2008-2009 was associated with a fall in housing prices which shifted aggregate demand to the left.

Misperceptions theory helps explain what feature of the aggregate demand and aggregate supply model?

If aggregate demand shifts right then in the short run

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

Other things the same, continued increases in technology lead to

Which of the following statements concerning the aggregate demand and aggregate supply model is correct?

Which of the following shifts aggregate demand to the right?

A decrease in the availability of an important major resource such as oil 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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