Question 1

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

Accepted Answer

A)  both an increase in the capital stock and technological improvements 
B)  an increase in the capital stock but not technological improvements 
C)  an increase in the capital stock but not technological improvements 
D)  neither an increase in the capital stock nor an technological improvements 
A)  both an increase in the capital stock and technological improvements 
B)  an increase in the capital stock but not technological improvements 
C)  an increase in the capital stock but not technological improvements 
D)  neither an increase in the capital stock nor an technological improvements

Question 2

The sticky-price theory helps explain what feature of the aggregate demand and aggregate supply model?

Accepted Answer

why the short run ag

Question 3

Which of the following would not be included in aggregate demand?

Accepted Answer

A)  an increase in firms' inventories. 
B)  purchases of goods by households. 
C)  firms' purchases of newly produced machinery. 
D)  government's tax collections. 
A)  an increase in firms' inventories. 
B)  purchases of goods by households. 
C)  firms' purchases of newly produced machinery. 
D)  government's tax collections.

Question 4

Suppose the economy is in long-run equilibrium. In a short span of time, there is an increase in the money supply, a tax decrease, a pessimistic revision of expectations about future business conditions, and a rise in the value of the dollar. In the short run, we would expect

Accepted Answer

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

Question 5

Refer to Optimism. In the long run, the change in price expectations created by optimism 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.

Question 6

Which of the following would help explain why the aggregate demand curve slopes downward?

Accepted Answer

A)  An unexpectedly low price level raises the real wage, which causes firms to hire fewer workers and produce a smaller quantity of goods and services. 
B)  A lower price level causes domestic interest rates to rise and the real exchange rate to appreciate, which stimulates spending on net exports. 
C)  A higher price level increases real wealth, which stimulates spending on consumption. 
D)  A lower price level reduces the interest rate, which encourages greater spending on investment goods. 
A)  An unexpectedly low price level raises the real wage, which causes firms to hire fewer workers and produce a smaller quantity of goods and services. 
B)  A lower price level causes domestic interest rates to rise and the real exchange rate to appreciate, which stimulates spending on net exports. 
C)  A higher price level increases real wealth, which stimulates spending on consumption. 
D)  A lower price level reduces the interest rate, which encourages greater spending on investment goods.

Question 7

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

Accepted Answer

A) True 
 B)False

Question 8

Other things the same, a decrease in the price level makes the dollars people hold worth

Accepted Answer

A)  more, so they can buy more. 
B)  more, so they can buy less. 
C)  less, so they can buy more. 
D)  less, so they can buy less. 
A)  more, so they can buy more. 
B)  more, so they can buy less. 
C)  less, so they can buy more. 
D)  less, so they can buy less.

Question 9

The model of short-run economic fluctuations focuses on

Accepted Answer

A)  the price level and real GDP. 
B)  productivity and economic growth. 
C)  the neutrality of money and inflation. 
D)  None of the above is correct. 
A)  the price level and real GDP. 
B)  productivity and economic growth. 
C)  the neutrality of money and inflation. 
D)  None of the above is correct.

Question 10

Other things the same, if technology increases, then in the long run

Accepted Answer

A)  both output and prices are higher. 
B)  output is higher and prices are lower. 
C)  output is lower and prices are higher. 
D)  both output and prices are lower. 
A)  both output and prices are higher. 
B)  output is higher and prices are lower. 
C)  output is lower and prices are higher. 
D)  both output and prices are lower.

Question 11

According to classical macroeconomic theory, changes in the money supply change nominal but not real variables.

Accepted Answer

A) True 
 B)False

Question 12

In the first few years of the Great Depression, unemployment rose to about

Accepted Answer

A)  10 percent, and prices rose about 14 percent. 
B)  15 percent, and prices rose about 22 percent. 
C)  20 percent, and prices fell about 14 percent. 
D)  25 percent, and prices fell about 22 percent. 
A)  10 percent, and prices rose about 14 percent. 
B)  15 percent, and prices rose about 22 percent. 
C)  20 percent, and prices fell about 14 percent. 
D)  25 percent, and prices fell about 22 percent.

Question 13

Which of the following is correct?

Accepted Answer

A)  Short run fluctuations in economic activity happen only in developing countries. 
B)  During economic contractions most firms experience rising profits. 
C)  Recessions come at irregular intervals and are easy to predict. 
D)  When real GDP falls, the rate of unemployment rises. 
A)  Short run fluctuations in economic activity happen only in developing countries. 
B)  During economic contractions most firms experience rising profits. 
C)  Recessions come at irregular intervals and are easy to predict. 
D)  When real GDP falls, the rate of unemployment rises.

Question 14

If aggregate demand shifts right, then eventually price level expectations rise. This increase in price level expectations causes the aggregate demand curve to shift to the left back to its original position.

Accepted Answer

A) True 
 B)False

Question 15

When production costs rise,

Accepted Answer

A)  the short-run aggregate supply curve shifts to the right. 
B)  the short-run aggregate supply curve shifts to the left. 
C)  the aggregate demand curve shifts to the right. 
D)  the aggregate demand curve shifts to the left. 
A)  the short-run aggregate supply curve shifts to the right. 
B)  the short-run aggregate supply curve shifts to the left. 
C)  the aggregate demand curve shifts to the right. 
D)  the aggregate demand curve shifts to the left.

Question 16

The aggregate supply curve is upward sloping in

Accepted Answer

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

Question 17

If aggregate demand shifts right, then eventually price level expectations rise. The increase in price level expectations causes the short-run aggregate-supply curve to shift to the left.

Accepted Answer

A) True 
 B)False

Question 18

Suppose a stock market crash makes people feel poorer. This decrease in wealth would induce people to

Accepted Answer

A)  decrease consumption, which shifts aggregate supply left. 
B)  decrease consumption, which shifts aggregate demand left. 
C)  increase consumption, which shifts aggregate supply right. 
D)  increase consumption, which shifts aggregate demand right. 
A)  decrease consumption, which shifts aggregate supply left. 
B)  decrease consumption, which shifts aggregate demand left. 
C)  increase consumption, which shifts aggregate supply right. 
D)  increase consumption, which shifts aggregate demand right.

Question 19

The long-run aggregate supply curve shifts right if

Accepted Answer

A)  immigration from abroad increases. 
B)  the capital stock increases. 
C)  technology advances. 
D)  All of the above are correct. 
A)  immigration from abroad increases. 
B)  the capital stock increases. 
C)  technology advances. 
D)  All of the above are correct.

Question 20

What curve shows the quantity of goods and services that households, firms, the government, and customers abroad want to buy at each price level?

Accepted Answer

The aggreg

Exam 33: Aggregate Demand and Aggregate Supply

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

The sticky-price theory helps explain what feature of the aggregate demand and aggregate supply model?

Which of the following would not be included in aggregate demand?

Suppose the economy is in long-run equilibrium. In a short span of time, there is an increase in the money supply, a tax decrease, a pessimistic revision of expectations about future business conditions, and a rise in the value of the dollar. In the short run, we would expect

Refer to Optimism. In the long run, the change in price expectations created by optimism shifts

Which of the following would help explain why the aggregate demand curve slopes downward?

John Maynard Keynes advocated policies that would increase aggregate demand as a way to decrease unemployment caused by recessions.

Other things the same, a decrease in the price level makes the dollars people hold worth

The model of short-run economic fluctuations focuses on

Other things the same, if technology increases, then in the long run

According to classical macroeconomic theory, changes in the money supply change nominal but not real variables.

In the first few years of the Great Depression, unemployment rose to about

Which of the following is correct?

If aggregate demand shifts right, then eventually price level expectations rise. This increase in price level expectations causes the aggregate demand curve to shift to the left back to its original position.

When production costs rise,

The aggregate supply curve is upward sloping in

If aggregate demand shifts right, then eventually price level expectations rise. The increase in price level expectations causes the short-run aggregate-supply curve to shift to the left.

Suppose a stock market crash makes people feel poorer. This decrease in wealth would induce people to

The long-run aggregate supply curve shifts right if

What curve shows the quantity of goods and services that households, firms, the government, and customers abroad want to buy at each price level?

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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