Question 1

As the interest rate rises,the cost of a given investment project __________ and businesses invest __________.

Accepted Answer

A)  rises;more 
B)  rises;less 
C)  falls;more 
D)  falls;less 
A)  rises;more 
B)  rises;less 
C)  falls;more 
D)  falls;less

Question 2

A change in the money supply can affect one or more of the components of spending and therefore shift the short-run aggregate supply (SRAS)curve.

Accepted Answer

A) True 
 B)False

Question 3

If some of a person's wealth is in cash,it follows that

Accepted Answer

A)  this person's monetary wealth will change as the price level changes. 
B)  this person's monetary wealth will not change as the price level changes. 
C)  this person is wealthier than a person who holds all his wealth in nonmonetary form. 
D)  a and c 
E)  b and c 
A)  this person's monetary wealth will change as the price level changes. 
B)  this person's monetary wealth will not change as the price level changes. 
C)  this person is wealthier than a person who holds all his wealth in nonmonetary form. 
D)  a and c 
E)  b and c

Question 4

The real balance 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 5

A depreciation of the U.S.dollar tends to __________ U.S.net exports and shift the U.S.AD curve to the __________.

Accepted Answer

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

Question 6

Which of the following statements is true?

Accepted Answer

A)  A decrease in wage rates will shift the SRAS curve to the left. 
B)  An adverse supply shock will shift the SRAS curve to the left. 
C)  A fall in the prices of nonlabor inputs will shift the SRAS curve to the left. 
D)  An increase in labor productivity will shift the SRAS curve to the left. 
E)  c and d 
A)  A decrease in wage rates will shift the SRAS curve to the left. 
B)  An adverse supply shock will shift the SRAS curve to the left. 
C)  A fall in the prices of nonlabor inputs will shift the SRAS curve to the left. 
D)  An increase in labor productivity will shift the SRAS curve to the left. 
E)  c and d

Question 7

An increase in labor's productivity will cause the SRAS curve to shift __________ and the price level to __________.

Accepted Answer

A)  leftward;increase 
B)  rightward;decrease 
C)  rightward;increase 
D)  leftward;decrease 
A)  leftward;increase 
B)  rightward;decrease 
C)  rightward;increase 
D)  leftward;decrease

Question 8

If wage rates fall at the same time that labor productivity increases,what is the effect on short-run aggregate supply (SRAS)?

Accepted Answer

A)  SRAS falls. 
B)  SRAS remains constant. 
C)  SRAS rises. 
D)  SRAS may rise,fall,or remain constant. 
A)  SRAS falls. 
B)  SRAS remains constant. 
C)  SRAS rises. 
D)  SRAS may rise,fall,or remain constant.

Question 9

If velocity is rising,an increase in one spending component can occur without requiring other spending components to decline.

Accepted Answer

A) True 
 B)False

Question 10

The aggregate demand (AD)curve is the graphical representation of production in the short run.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)  Business taxes rise,investment falls,total expenditures on goods and services falls,AD rises,and the AD curve shifts rightward. 
B)  The dollar depreciates,net exports rise,total expenditures on goods and services rises,AD rises,and the AD curve shifts rightward. 
C)  The interest rate falls,consumption rises,total expenditures on goods and services rises,AD rises,and the AD curve shifts rightward. 
D)  b and c 
E)  a,b,and c 
A)  Business taxes rise,investment falls,total expenditures on goods and services falls,AD rises,and the AD curve shifts rightward. 
B)  The dollar depreciates,net exports rise,total expenditures on goods and services rises,AD rises,and the AD curve shifts rightward. 
C)  The interest rate falls,consumption rises,total expenditures on goods and services rises,AD rises,and the AD curve shifts rightward. 
D)  b and c 
E)  a,b,and c

Question 12

If the nominal wage is $12 per hour and the price level (as measured by a price index)is 2,it follows that the real wage is _________ per hour.

Accepted Answer

A)  $24.00 
B)  $6.00 
C)  $2.50 
D)  $14.00. 
E)  none of the above 
A)  $24.00 
B)  $6.00 
C)  $2.50 
D)  $14.00. 
E)  none of the above

Question 13

If total expenditures fall at a given price level,then the

Accepted Answer

A)  quantity demanded of Real GDP rises. 
B)  quantity demanded of Real GDP falls. 
C)  AD curves shifts to the right. 
D)  AD curve shifts to the left. 
E)  none of the above 
A)  quantity demanded of Real GDP rises. 
B)  quantity demanded of Real GDP falls. 
C)  AD curves shifts to the right. 
D)  AD curve shifts to the left. 
E)  none of the above

Question 14

Which of the following best describes how the real balance effect works?

Accepted Answer

A)  The price level falls,purchasing power rises,a person's monetary wealth rises,and the person buys fewer goods and services. 
B)  The price level rises,purchasing power rises,a person's monetary wealth decreases,and the person buys more goods and services. 
C)  The price level rises,purchasing power falls,a person's monetary wealth falls,and the person buys fewer goods and services. 
D)  The price level falls,purchasing power rises,a person's monetary wealth falls,and the person buys fewer goods and services. 
E)  none of the above 
A)  The price level falls,purchasing power rises,a person's monetary wealth rises,and the person buys fewer goods and services. 
B)  The price level rises,purchasing power rises,a person's monetary wealth decreases,and the person buys more goods and services. 
C)  The price level rises,purchasing power falls,a person's monetary wealth falls,and the person buys fewer goods and services. 
D)  The price level falls,purchasing power rises,a person's monetary wealth falls,and the person buys fewer goods and services. 
E)  none of the above

Question 15

An adverse supply shock results in an increase in the price level and an increase in Real GDP.

Accepted Answer

A) True 
 B)False

Question 16

The level of Real GDP that the economy produces in long-run equilibrium is Natural Real GDP.

Accepted Answer

A) True 
 B)False

Question 17

As the price level rises,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 18

As interest rates rise,the ____________ curve shifts _____________ resulting in a(n)_________________ in the U.S.price level and a(n)________________ in Real GDP.

Accepted Answer

A)  AD;leftward;decrease;decrease 
B)  AD;rightward;increase;increase 
C)  SRAS;rightward;decrease;increase 
D)  SRAS;leftward;increase;decrease 
A)  AD;leftward;decrease;decrease 
B)  AD;rightward;increase;increase 
C)  SRAS;rightward;decrease;increase 
D)  SRAS;leftward;increase;decrease

Question 19

Starting from short-run equilibrium,wage rates rise.What is the effect on the price level and Real GDP in the short run?

Accepted Answer

A)  The price level rises and Real GDP falls. 
B)  The price level falls and Real GDP rises. 
C)  The price level rises and Real GDP rises. 
D)  The price level falls Real GDP falls. 
A)  The price level rises and Real GDP falls. 
B)  The price level falls and Real GDP rises. 
C)  The price level rises and Real GDP rises. 
D)  The price level falls Real GDP falls.

Question 20

Exhibit 8-1  
-Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If wage rates rise,at which point is the economy most likely to end up in the short run?

Accepted Answer

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

Exam 8: Aggregate Demand and Aggregate Supply

As the interest rate rises,the cost of a given investment project __________ and businesses invest __________.

A change in the money supply can affect one or more of the components of spending and therefore shift the short-run aggregate supply (SRAS)curve.

If some of a person's wealth is in cash,it follows that

The real balance effect is one of the

A depreciation of the U.S.dollar tends to __________ U.S.net exports and shift the U.S.AD curve to the __________.

Which of the following statements is true?

An increase in labor's productivity will cause the SRAS curve to shift __________ and the price level to __________.

If wage rates fall at the same time that labor productivity increases,what is the effect on short-run aggregate supply (SRAS)?

If velocity is rising,an increase in one spending component can occur without requiring other spending components to decline.

The aggregate demand (AD)curve is the graphical representation of production in the short run.

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

If the nominal wage is $12 per hour and the price level (as measured by a price index)is 2,it follows that the real wage is _________ per hour.

If total expenditures fall at a given price level,then the

Which of the following best describes how the real balance effect works?

An adverse supply shock results in an increase in the price level and an increase in Real GDP.

The level of Real GDP that the economy produces in long-run equilibrium is Natural Real GDP.

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

As interest rates rise,the ____________ curve shifts _____________ resulting in a(n)_________________ in the U.S.price level and a(n)________________ in Real GDP.

Starting from short-run equilibrium,wage rates rise.What is the effect on the price level and Real GDP in the short run?

Exhibit 8-1 -Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If wage rates rise,at which point is the economy most likely to end up in the short run?

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

As the interest rate rises,the cost of a given investment project and businesses invest .

A depreciation of the U.S.dollar tends to U.S.net exports and shift the U.S.AD curve to the .

An increase in labor's productivity will cause the SRAS curve to shift and the price level to .

As interest rates rise,the ______ curve shifts _ resulting in a(n)_ in the U.S.price level and a(n)______ in Real GDP.