Question 1

Only a change in the price level can cause a movement from one point to another point along a given aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 8-1  
-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If foreign real national income rises,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 
E)  A change in foreign real national income would have no impact on the domestic economy. 
A)  A 
B)  B 
C)  C 
D)  D 
E)  A change in foreign real national income would have no impact on the domestic economy.

Question 3

Velocity is the average number of times a dollar is spent to buy

Accepted Answer

A)  final goods and services in a year. 
B)  final and intermediate goods and services in a year. 
C)  final goods,but not services,in a year. 
D)  services in a year. 
A)  final goods and services in a year. 
B)  final and intermediate goods and services in a year. 
C)  final goods,but not services,in a year. 
D)  services in a year.

Question 4

Exhibit 8-1  
-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If businesses become more optimistic about future sales,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

Question 5

Suppose the following: (1)the wage rate falls, (2)business taxes decline, (3)any change in SRAS is greater than any change in AD.Based on this information,in the short run Real GDP will __________ and the price level will __________.

Accepted Answer

A)  rise;rise 
B)  fall;rise 
C)  fall;fall 
D)  rise;fall 
E)  none of the above 
A)  rise;rise 
B)  fall;rise 
C)  fall;fall 
D)  rise;fall 
E)  none of the above

Question 6

A subprime loan is a term for a loan that poses less risk than the average loan.

Accepted Answer

A) True 
 B)False

Question 7

If consumption increases,

Accepted Answer

A)  the SRAS curve will shift rightward,which will push the price level up. 
B)  the SRAS curve will shift leftward,which will push the price level up. 
C)  the AD curve will shift leftward,which will push the price level down. 
D)  the AD curve will shift rightward,which will push the price level up. 
A)  the SRAS curve will shift rightward,which will push the price level up. 
B)  the SRAS curve will shift leftward,which will push the price level up. 
C)  the AD curve will shift leftward,which will push the price level down. 
D)  the AD curve will shift rightward,which will push the price level up.

Question 8

The interest rate effect occurs because a change in interest rates causes a change in the price level.

Accepted Answer

A) True 
 B)False

Question 9

The expectation of lower future prices is a

Accepted Answer

A)  rightward shifter of the AD curve. 
B)  leftward shifter of the AD curve. 
C)  reason for moving up along a given AD curve. 
D)  reason for moving down along a given AD curve. 
A)  rightward shifter of the AD curve. 
B)  leftward shifter of the AD curve. 
C)  reason for moving up along a given AD curve. 
D)  reason for moving down along a given AD curve.

Question 10

If consumption changes because of a change in the price level,then the

Accepted Answer

A)  economy moves from one point on an AD curve to another point on the same curve. 
B)  AD curve shifts. 
C)  economy moves from one point on a SRAS curve to another point on the same curve. 
D)  SRAS curve shifts. 
E)  none of the above 
A)  economy moves from one point on an AD curve to another point on the same curve. 
B)  AD curve shifts. 
C)  economy moves from one point on a SRAS curve to another point on the same curve. 
D)  SRAS curve shifts. 
E)  none of the above

Question 11

As interest rates drop,households tend to borrow more and businesses tend to borrow less.

Accepted Answer

A) True 
 B)False

Question 12

The real balance effect describes the change in

Accepted Answer

A)  checking account balances that occur when the money supply increases or decreases. 
B)  the value of physical assets (e.g. ,houses)that results from a change in the price level. 
C)  the output producers produce as they attempt to balance their production in response to changes in consumers' demand. 
D)  the value of cash holdings that results from a change in the price level. 
E)  the balance of cash holdings that results from a change in the amount of income earned. 
A)  checking account balances that occur when the money supply increases or decreases. 
B)  the value of physical assets (e.g. ,houses)that results from a change in the price level. 
C)  the output producers produce as they attempt to balance their production in response to changes in consumers' demand. 
D)  the value of cash holdings that results from a change in the price level. 
E)  the balance of cash holdings that results from a change in the amount of income earned.

Question 13

The aggregate demand (AD)curve shifts to the right.This is a result of

Accepted Answer

A)  total expenditures increasing at a given price level. 
B)  total expenditures decreasing at a given price level. 
C)  the real balance effect. 
D)  the interest rate effect 
E)  b and c 
A)  total expenditures increasing at a given price level. 
B)  total expenditures decreasing at a given price level. 
C)  the real balance effect. 
D)  the interest rate effect 
E)  b and c

Question 14

Suppose the real exchange rate of 10 Mexican pesos to the dollar moves to 9 pesos to the dollar.The dollar has ________________,making Mexican 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 15

A decrease in the price of electricity will cause

Accepted Answer

A)  a movement down the SRAS curve. 
B)  a movement up the SRAS curve. 
C)  a leftward shift in the SRAS curve. 
D)  a rightward shift in the SRAS curve. 
E)  no change regarding the SRAS curve. 
A)  a movement down the SRAS curve. 
B)  a movement up the SRAS curve. 
C)  a leftward shift in the SRAS curve. 
D)  a rightward shift in the SRAS curve. 
E)  no change regarding the SRAS curve.

Question 16

Exhibit 8-1  
-Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If the price of oil rises,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

Question 17

The wage rate rises.As a result,in the short run Real GDP will __________ and the price level will __________.

Accepted Answer

A)  rise;rise 
B)  fall;fall 
C)  remain constant;fall 
D)  fall;rise 
E)  rise;fall 
A)  rise;rise 
B)  fall;fall 
C)  remain constant;fall 
D)  fall;rise 
E)  rise;fall

Question 18

A change in labor productivity affects __________ and a change in the exchange rate affects __________.

Accepted Answer

A)  SRAS;SRAS 
B)  AD;AD 
C)  SRAS;AD 
D)  AD;SRAS 
E)  none of the above 
A)  SRAS;SRAS 
B)  AD;AD 
C)  SRAS;AD 
D)  AD;SRAS 
E)  none of the above

Question 19

Which of the following would cause a rightward shift in the AD curve?

Accepted Answer

A)  an increase in the price level 
B)  a decrease in the price level 
C)  an increase in imports 
D)  a decrease in the quantity of money available in the economy 
E)  an increase in government purchases of goods and services 
A)  an increase in the price level 
B)  a decrease in the price level 
C)  an increase in imports 
D)  a decrease in the quantity of money available in the economy 
E)  an increase in government purchases of goods and services

Question 20

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

Accepted Answer

A)  If government purchases rise,total expenditures on goods and services rises,and the AD curve shifts leftward. 
B)  If government purchases rise,total expenditures on goods and services rises,and the AD curve shifts rightward. 
C)  If consumption rises,total expenditures on goods and services rises,and the AD curve shifts rightward. 
D)  If consumption rises,total expenditures on goods and services rises,and the quantity demanded of Real GDP rises. 
E)  b and c 
A)  If government purchases rise,total expenditures on goods and services rises,and the AD curve shifts leftward. 
B)  If government purchases rise,total expenditures on goods and services rises,and the AD curve shifts rightward. 
C)  If consumption rises,total expenditures on goods and services rises,and the AD curve shifts rightward. 
D)  If consumption rises,total expenditures on goods and services rises,and the quantity demanded of Real GDP rises. 
E)  b and c

Exam 8: Aggregate Demand and Aggregate Supply

Only a change in the price level can cause a movement from one point to another point along a given aggregate demand curve.

Exhibit 8-1 -Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If foreign real national income rises,at which point is the economy most likely to end up in the short run?

Velocity is the average number of times a dollar is spent to buy

Exhibit 8-1 -Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If businesses become more optimistic about future sales,at which point is the economy most likely to end up in the short run?

Suppose the following: (1)the wage rate falls, (2)business taxes decline, (3)any change in SRAS is greater than any change in AD.Based on this information,in the short run Real GDP will __________ and the price level will __________.

A subprime loan is a term for a loan that poses less risk than the average loan.

If consumption increases,

The interest rate effect occurs because a change in interest rates causes a change in the price level.

The expectation of lower future prices is a

If consumption changes because of a change in the price level,then the

As interest rates drop,households tend to borrow more and businesses tend to borrow less.

The real balance effect describes the change in

The aggregate demand (AD)curve shifts to the right.This is a result of

Suppose the real exchange rate of 10 Mexican pesos to the dollar moves to 9 pesos to the dollar.The dollar has ________________,making Mexican goods __________ expensive for Americans.

A decrease in the price of electricity will cause

Exhibit 8-1 -Refer to Exhibit 8-1.Assume the economy is originally in equilibrium at point A.If the price of oil rises,at which point is the economy most likely to end up in the short run?

The wage rate rises.As a result,in the short run Real GDP will __________ and the price level will __________.

A change in labor productivity affects __________ and a change in the exchange rate affects __________.

Which of the following would cause a rightward shift in the AD curve?

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

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

Suppose the following: (1)the wage rate falls, (2)business taxes decline, (3)any change in SRAS is greater than any change in AD.Based on this information,in the short run Real GDP will and the price level will .

Suppose the real exchange rate of 10 Mexican pesos to the dollar moves to 9 pesos to the dollar.The dollar has ______,making Mexican goods expensive for Americans.

The wage rate rises.As a result,in the short run Real GDP will and the price level will .

A change in labor productivity affects and a change in the exchange rate affects .