Question 1

Refer to Financial Crisis. What happens to the price level and real GDP in the short run?

Accepted Answer

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

Question 2

When looking at a graph of aggregate demand, which of the following is correct?

Accepted Answer

A)  There are nominal variables on both the vertical and the horizontal axes. 
B)  There are real variables on both the vertical and horizontal axes. 
C)  The variable on the vertical axis is nominal; the variable on the horizontal axis is real 
D)  The variable on the vertical axis is real; the variable on the horizontal axis is nominal 
A)  There are nominal variables on both the vertical and the horizontal axes. 
B)  There are real variables on both the vertical and horizontal axes. 
C)  The variable on the vertical axis is nominal; the variable on the horizontal axis is real 
D)  The variable on the vertical axis is real; the variable on the horizontal axis is nominal

Question 3

The price level rises in the short run if

Accepted Answer

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

Question 4

Which of the following shifts aggregate demand to the left?

Accepted Answer

A)  The price level rises. 
B)  Interest rates fall. 
C)  The dollar depreciates for some reason other than a change in the price level. 
D)  Stock prices fall for some reason other than a change in the price level. 
A)  The price level rises. 
B)  Interest rates fall. 
C)  The dollar depreciates for some reason other than a change in the price level. 
D)  Stock prices fall for some reason other than a change in the price level.

Question 5

Tax cuts shift aggregate demand

Accepted Answer

A)  right as do increases in government spending. 
B)  right while increases in government spending shift aggregate demand left. 
C)  left as do increases in government spending. 
D)  left while increases in government spending shift aggregate demand right. 
A)  right as do increases in government spending. 
B)  right while increases in government spending shift aggregate demand left. 
C)  left as do increases in government spending. 
D)  left while increases in government spending shift aggregate demand right.

Question 6

The model of aggregate demand and aggregate supply

Accepted Answer

A)  is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution of resources between markets to explain aggregate relationships. 
B)  is different from the model of supply and demand for a particular market, in that we have to separate real and nominal variables in the aggregate model. 
C)  is a straightforward extension of the model of supply and demand for a particular market, in which substitution of resources between markets is highlighted. 
D)  is a straightforward extension of the model of supply and demand for a particular market, in which the interaction between real and nominal variables is highlighted. 
A)  is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution of resources between markets to explain aggregate relationships. 
B)  is different from the model of supply and demand for a particular market, in that we have to separate real and nominal variables in the aggregate model. 
C)  is a straightforward extension of the model of supply and demand for a particular market, in which substitution of resources between markets is highlighted. 
D)  is a straightforward extension of the model of supply and demand for a particular market, in which the interaction between real and nominal variables is highlighted.

Question 7

Other things the same, as the price level falls, the real value of a dollar

Accepted Answer

A)  rises, and interest rates rise. 
B)  rises, and interest rates fall. 
C)  falls, and interest rates rise. 
D)  falls, and interest rates fall. 
A)  rises, and interest rates rise. 
B)  rises, and interest rates fall. 
C)  falls, and interest rates rise. 
D)  falls, and interest rates fall.

Question 8

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

Accepted Answer

A)  a decrease in the actual price level 
B)  an increase in the actual price level 
C)  a decrease in the expected price level 
D)  an increase in the expected price level 
A)  a decrease in the actual price level 
B)  an increase in the actual price level 
C)  a decrease in the expected price level 
D)  an increase in the expected price level

Question 9

Imagine two economies that are identical except that for a long time, economy A has had a money supply of $1,000 billion while economy B has had a money supply of $500 billion. It follows that

Accepted Answer

A)  real GDP and the price level are lower in country B. 
B)  real GDP, but not the price level, is lower in country B. 
C)  the price level, but not real GDP is lower in country B. 
D)  neither the price level or real GDP is lower in country B. 
A)  real GDP and the price level are lower in country B. 
B)  real GDP, but not the price level, is lower in country B. 
C)  the price level, but not real GDP is lower in country B. 
D)  neither the price level or real GDP is lower in country B.

Question 10

In 1986, OPEC countries increased their production of oil. This caused

Accepted Answer

A)  the price level to rise. 
B)  aggregate supply to shift right. 
C)  unemployment to rise. 
D)  None of the above is correct. 
A)  the price level to rise. 
B)  aggregate supply to shift right. 
C)  unemployment to rise. 
D)  None of the above is correct.

Question 11

The effects of a higher than expected price level are shown by

Accepted Answer

A)  shifting the short-run aggregate supply curve right. 
B)  shifting the short-run aggregate supply curve left. 
C)  moving to the right along a given aggregate supply curve. 
D)  moving to the left along a given aggregate supply curve. 
A)  shifting the short-run aggregate supply curve right. 
B)  shifting the short-run aggregate supply curve left. 
C)  moving to the right along a given aggregate supply curve. 
D)  moving to the left along a given aggregate supply curve.

Question 12

An increase in the money supply shifts the long-run aggregate supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 13

Identify the variables that could cause shifts in both the short-run and long-run aggregate-supply curves.

Accepted Answer

labor, cap

Question 14

Figure 33-1.  
-Refer to Figure 33-1. Line A is

Accepted Answer

A)  investment spending. 
B)  real GDP. 
C)  unemployment rate. 
D)  CPI. 
A)  investment spending. 
B)  real GDP. 
C)  unemployment rate. 
D)  CPI.

Question 15

Other things the same, if the price level falls, people

Accepted Answer

A)  increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. 
B)  increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. 
C)  decrease foreign bond purchases, so the supply of dollars in market for foreign-currency exchange increases. 
D)  decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. 
A)  increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. 
B)  increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. 
C)  decrease foreign bond purchases, so the supply of dollars in market for foreign-currency exchange increases. 
D)  decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases.

Question 16

Historically, the change in real GDP during recessions has been

Accepted Answer

A)  mostly a change in investment spending. 
B)  mostly a change in consumption spending. 
C)  about equally divided between consumption and investment spending. 
D)  sometimes mostly a change in consumption and sometimes mostly a change in investment. 
A)  mostly a change in investment spending. 
B)  mostly a change in consumption spending. 
C)  about equally divided between consumption and investment spending. 
D)  sometimes mostly a change in consumption and sometimes mostly a change in investment.

Question 17

The downward slope of the aggregate demand curve is based on logic that as the price level rises, consumption, investment, and net exports all fall.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is a lesson concerning shifts in aggregate demand?

Accepted Answer

A)  they contribute to fluctuations in output. 
B)  in the long-run they change real output, but not the price level. 
C)  policymakers are unable to mitigate the severity of economic fluctuations. 
D)  All of the above are correct. 
A)  they contribute to fluctuations in output. 
B)  in the long-run they change real output, but not the price level. 
C)  policymakers are unable to mitigate the severity of economic fluctuations. 
D)  All of the above are correct.

Question 19

Other things the same, when the price level rises more than expected, some firms will have

Accepted Answer

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

Question 20

As the price level rises, the interest rate

Accepted Answer

A)  falls, so the supply of dollars in the market for foreign currency exchange shifts left. 
B)  falls, so the supply of dollars in the market for foreign currency exchange shifts right. 
C)  rises, so the supply of dollars in the market for foreign currency exchange shifts left. 
D)  rises, so the supply of dollars in the market for foreign currency exchange shifts right. 
A)  falls, so the supply of dollars in the market for foreign currency exchange shifts left. 
B)  falls, so the supply of dollars in the market for foreign currency exchange shifts right. 
C)  rises, so the supply of dollars in the market for foreign currency exchange shifts left. 
D)  rises, so the supply of dollars in the market for foreign currency exchange shifts right.

Exam 33: Aggregate Demand and Aggregate Supply

Refer to Financial Crisis. What happens to the price level and real GDP in the short run?

When looking at a graph of aggregate demand, which of the following is correct?

The price level rises in the short run if

Which of the following shifts aggregate demand to the left?

Tax cuts shift aggregate demand

The model of aggregate demand and aggregate supply

Other things the same, as the price level falls, the real value of a dollar

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

Imagine two economies that are identical except that for a long time, economy A has had a money supply of $1,000 billion while economy B has had a money supply of $500 billion. It follows that

In 1986, OPEC countries increased their production of oil. This caused

The effects of a higher than expected price level are shown by

An increase in the money supply shifts the long-run aggregate supply curve to the right.

Identify the variables that could cause shifts in both the short-run and long-run aggregate-supply curves.

Figure 33-1. -Refer to Figure 33-1. Line A is

Other things the same, if the price level falls, people

Historically, the change in real GDP during recessions has been

The downward slope of the aggregate demand curve is based on logic that as the price level rises, consumption, investment, and net exports all fall.

Which of the following is a lesson concerning shifts in aggregate demand?

Other things the same, when the price level rises more than expected, some firms will have

As the price level rises, the interest rate

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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