Question 1

Business taxes fall.This raises __________,which raises __________ and the __________ curve shifts rightward.

Accepted Answer

A)  consumption;aggregate demand (A
D) ;AD 
B)  investment;government purchases;AD 
C)  investment;aggregate demand (A
D) ;AD 
D)  net exports;aggregate demand (A
D) ;AD 
E)  none of the above 
A)  consumption;aggregate demand (A
D) ;AD 
B)  investment;government purchases;AD 
C)  investment;aggregate demand (A
D) ;AD 
D)  net exports;aggregate demand (A
D) ;AD 
E)  none of the above C

Question 2

A decrease in the money supply may __________ total expenditures and thus __________ aggregate demand.

Accepted Answer

A)  raise;raise 
B)  raise;lower 
C)  lower;raise 
D)  lower;lower 
A)  raise;raise 
B)  raise;lower 
C)  lower;raise 
D)  lower;lower D

Question 3

If aggregate quantity demanded is greater than aggregate quantity supplied at a particular price level,then

Accepted Answer

A)  consumers will bid prices upward,and a greater quantity of output will be supplied. 
B)  the shortage will likely be eliminated. 
C)  a and b 
D)  none of the above 
A)  consumers will bid prices upward,and a greater quantity of output will be supplied. 
B)  the shortage will likely be eliminated. 
C)  a and b 
D)  none of the above C

Question 4

A falling interest rate affects the demand for consumer __________ and shifts the AD curve to the __________.

Accepted Answer

A)  nondurables;right 
B)  nondurables;left 
C)  durables;right 
D)  durables;left 
A)  nondurables;right 
B)  nondurables;left 
C)  durables;right 
D)  durables;left

Question 5

Suppose the real exchange rate of 105 Japanese yen to the dollar moves to 115 yen to the dollar.The dollar has _________________,making Japanese goods __________ expensive for Americans.

Accepted Answer

A)  appreciated;less 
B)  appreciated;more 
C)  depreciated;less 
D)  depreciated;more 
A)  appreciated;less 
B)  appreciated;more 
C)  depreciated;less 
D)  depreciated;more

Question 6

Exhibit 8-3  
-Refer to Exhibit 8-3.Which of the following could not have caused a shift in aggregate demand from AD1 to AD2?

Accepted Answer

A)  a change in the price level 
B)  an increase in wealth 
C)  an increase in foreign real national income 
D)  a decrease in personal income taxes 
E)  a decrease in business taxes 
A)  a change in the price level 
B)  an increase in wealth 
C)  an increase in foreign real national income 
D)  a decrease in personal income taxes 
E)  a decrease in business taxes

Question 7

The real balance effect helps to create "a change in

Accepted Answer

A)  aggregate demand." 
B)  the quantity demanded of Real GDP." 
C)  aggregate supply." 
D)  the quantity supplied of Real GDP." 
A)  aggregate demand." 
B)  the quantity demanded of Real GDP." 
C)  aggregate supply." 
D)  the quantity supplied of Real GDP."

Question 8

Which of the following will cause a movement from one point on an AD curve to another point on the same AD curve?

Accepted Answer

A)  a change in consumption 
B)  a change in government expenditures 
C)  a change in net exports 
D)  a change in the price level 
E)  all of the above 
A)  a change in consumption 
B)  a change in government expenditures 
C)  a change in net exports 
D)  a change in the price level 
E)  all of the above

Question 9

As the price level falls,ceteris paribus,people holding some of their wealth in monetary form become

Accepted Answer

A)  less wealthy and they buy less. 
B)  more wealthy and they buy more. 
C)  less wealthy and they buy more. 
D)  more wealthy and they buy less. 
A)  less wealthy and they buy less. 
B)  more wealthy and they buy more. 
C)  less wealthy and they buy more. 
D)  more wealthy and they buy less.

Question 10

Which of the following statements represents a correct and sequentially accurate economic explanation?

Accepted Answer

A)  The (U.S. )dollar appreciates,net exports rise,total expenditures on goods and services rises,AD rises,and the AD curve shifts rightward. 
B)  The interest rate falls,investment rises,total expenditures on goods and services rises,AD falls,and the AD curve shifts leftward. 
C)  Wealth increases,consumption rises,total expenditures on goods and services rises,AD falls,and the AD curve shifts rightward. 
D)  (Business)expectations about future sales become more positive,investment rises,total expenditures on goods and services rises,AD rises,and the AD curve shifts rightward. 
E)  Foreign real national income rises,net exports rise,total expenditures on goods and services falls,AD rises,and the AD curve shifts rightward. 
A)  The (U.S. )dollar appreciates,net exports rise,total expenditures on goods and services rises,AD rises,and the AD curve shifts rightward. 
B)  The interest rate falls,investment rises,total expenditures on goods and services rises,AD falls,and the AD curve shifts leftward. 
C)  Wealth increases,consumption rises,total expenditures on goods and services rises,AD falls,and the AD curve shifts rightward. 
D)  (Business)expectations about future sales become more positive,investment rises,total expenditures on goods and services rises,AD rises,and the AD curve shifts rightward. 
E)  Foreign real national income rises,net exports rise,total expenditures on goods and services falls,AD rises,and the AD curve shifts rightward.

Question 11

As the interest rate rises,businesses invest __________ and the AD curve shifts to the __________.

Accepted Answer

A)  more;right 
B)  more;left 
C)  less;right 
D)  less;left 
A)  more;right 
B)  more;left 
C)  less;right 
D)  less;left

Question 12

Business optimism about future sales tends to __________ investment expenditures,shifting the AD curve to the __________.

Accepted Answer

A)  increase;left 
B)  increase;right 
C)  decrease;left 
D)  decrease;right 
A)  increase;left 
B)  increase;right 
C)  decrease;left 
D)  decrease;right

Question 13

__________ identifies the level of Real GDP the economy produces when all economywide adjustments have taken place and there are no misperceptions on the part of workers.

Accepted Answer

A)  Short-run equilibrium 
B)  Disequilibrium 
C)  Long-run equilibrium 
D)  Equilibrium 
E)  none of the above 
A)  Short-run equilibrium 
B)  Disequilibrium 
C)  Long-run equilibrium 
D)  Equilibrium 
E)  none of the above

Question 14

A rise in wage rates

Accepted Answer

A)  causes the AD curve to shift leftward. 
B)  causes the short-run aggregate supply (SRAS)curve to shift rightward. 
C)  does not affect the present position of the SRAS curve. 
D)  causes the AD curve to shift rightward. 
E)  causes the SRAS curve to shift leftward. 
A)  causes the AD curve to shift leftward. 
B)  causes the short-run aggregate supply (SRAS)curve to shift rightward. 
C)  does not affect the present position of the SRAS curve. 
D)  causes the AD curve to shift rightward. 
E)  causes the SRAS curve to shift leftward.

Question 15

The interest rate effect is one of the

Accepted Answer

A)  reasons why an AD curve is downward-sloping. 
B)  shifters of an AD curve. 
C)  reasons why a short-run aggregate supply curve can be derived. 
D)  shifters of a short-run aggregate supply curve. 
A)  reasons why an AD curve is downward-sloping. 
B)  shifters of an AD curve. 
C)  reasons why a short-run aggregate supply curve can be derived. 
D)  shifters of a short-run aggregate supply curve.

Question 16

Subprime loans

Accepted Answer

A)  involve elevated credit risk. 
B)  involve reduced credit risk. 
C)  typically have a higher loan-to-value ratio than do prime loans. 
D)  typically have a lower loan-to-value ratio than do prime loans. 
E)  a and c 
A)  involve elevated credit risk. 
B)  involve reduced credit risk. 
C)  typically have a higher loan-to-value ratio than do prime loans. 
D)  typically have a lower loan-to-value ratio than do prime loans. 
E)  a and c

Question 17

Which of the following statements represents a correct and sequentially accurate economic explanation?

Accepted Answer

A)  Wage rates rise,SRAS rises,and the SRAS curve shifts to the left. 
B)  The prices of nonlabor inputs rise,SRAS decreases,and the SRAS curve shifts to the right. 
C)  Labor productivity rises,SRAS increases,and the SRAS curve shifts to the right. 
D)  An adverse supply shock hits,SRAS decreases,and the SRAS curve shifts to the right. 
E)  a and c 
A)  Wage rates rise,SRAS rises,and the SRAS curve shifts to the left. 
B)  The prices of nonlabor inputs rise,SRAS decreases,and the SRAS curve shifts to the right. 
C)  Labor productivity rises,SRAS increases,and the SRAS curve shifts to the right. 
D)  An adverse supply shock hits,SRAS decreases,and the SRAS curve shifts to the right. 
E)  a and c

Question 18

Exhibit 8-3  
-Refer to Exhibit 8-3.A shift in aggregate demand from AD1 to AD2 would have been the result of

Accepted Answer

A)  a decrease in the price level. 
B)  an increase in the price level. 
C)  an increase in foreign real national income. 
D)  a decrease in foreign real national income. 
A)  a decrease in the price level. 
B)  an increase in the price level. 
C)  an increase in foreign real national income. 
D)  a decrease in foreign real national income.

Question 19

If businesses buy fewer capital goods,and nothing else changes,then total expenditures on U.S.goods and services will decrease.And if total expenditures decrease,then __________ will decrease;consequently,the __________ curve will shift __________.

Accepted Answer

A)  aggregate demand (A
D) ;AD;rightward 
B)  short-run aggregate supply (SRAS);SRAS;leftward 
C)  aggregate demand (A
D) ;AD;leftward 
D)  interest rates;AD;leftward 
E)  prices;AD;rightward 
A)  aggregate demand (A
D) ;AD;rightward 
B)  short-run aggregate supply (SRAS);SRAS;leftward 
C)  aggregate demand (A
D) ;AD;leftward 
D)  interest rates;AD;leftward 
E)  prices;AD;rightward

Question 20

Suppose a drop in stock prices makes people feel less wealthy.This would cause __________ the economy's AD curve.

Accepted Answer

A)  movement down along 
B)  movement up along 
C)  a rightward shift of 
D)  a leftward shift of 
A)  movement down along 
B)  movement up along 
C)  a rightward shift of 
D)  a leftward shift of

Exam 8: Aggregate Demand and Aggregate Supply

Business taxes fall.This raises __________,which raises __________ and the __________ curve shifts rightward.

A decrease in the money supply may __________ total expenditures and thus __________ aggregate demand.

If aggregate quantity demanded is greater than aggregate quantity supplied at a particular price level,then

A falling interest rate affects the demand for consumer __________ and shifts the AD curve to the __________.

Suppose the real exchange rate of 105 Japanese yen to the dollar moves to 115 yen to the dollar.The dollar has _________________,making Japanese goods __________ expensive for Americans.

Exhibit 8-3 -Refer to Exhibit 8-3.Which of the following could not have caused a shift in aggregate demand from AD1 to AD2?

The real balance effect helps to create "a change in

Which of the following will cause a movement from one point on an AD curve to another point on the same AD curve?

As the price level falls,ceteris paribus,people holding some of their wealth in monetary form become

Which of the following statements represents a correct and sequentially accurate economic explanation?

As the interest rate rises,businesses invest __________ and the AD curve shifts to the __________.

Business optimism about future sales tends to __________ investment expenditures,shifting the AD curve to the __________.

__________ identifies the level of Real GDP the economy produces when all economywide adjustments have taken place and there are no misperceptions on the part of workers.

A rise in wage rates

The interest rate effect is one of the

Subprime loans

Which of the following statements represents a correct and sequentially accurate economic explanation?

Exhibit 8-3 -Refer to Exhibit 8-3.A shift in aggregate demand from AD1 to AD2 would have been the result of

If businesses buy fewer capital goods,and nothing else changes,then total expenditures on U.S.goods and services will decrease.And if total expenditures decrease,then __________ will decrease;consequently,the __________ curve will shift __________.

Suppose a drop in stock prices makes people feel less wealthy.This would cause __________ the economy's AD curve.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, controlled, and Relative

Supply,demand,and Price: Applications

Macroeconomic Measurements, Prices and Unemployment

Macroeconomic Measurements, Gdp and Real Gdp

Classical Macroeconomics and the Self-Regulating Economy

Keynesian Macroeconomics and Economic Instability: a Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money,banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, technology, ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case for and Against Government: Five Topics Considered

Stocks, bonds, futures, and Options

Agriculture: Problems, policies, and Unintended Effects

Filters

Business taxes fall.This raises ,which raises and the __ curve shifts rightward.

A decrease in the money supply may total expenditures and thus aggregate demand.

A falling interest rate affects the demand for consumer and shifts the AD curve to the .

Suppose the real exchange rate of 105 Japanese yen to the dollar moves to 115 yen to the dollar.The dollar has _______,making Japanese goods expensive for Americans.

Exhibit 8-3 -Refer to Exhibit 8-3.Which of the following could not have caused a shift in aggregate demand from AD₁ to AD₂?

As the interest rate rises,businesses invest and the AD curve shifts to the .

Business optimism about future sales tends to investment expenditures,shifting the AD curve to the .

Exhibit 8-3 -Refer to Exhibit 8-3.A shift in aggregate demand from AD₁ to AD₂ would have been the result of

If businesses buy fewer capital goods,and nothing else changes,then total expenditures on U.S.goods and services will decrease.And if total expenditures decrease,then will decrease;consequently,the curve will shift __.