Question 1

An increase in investment at a given price level

Accepted Answer

A)  shifts the AD curve to the right. 
B)  shifts the AD curve to the left. 
C)  causes an upward movement along the existing AD curve. 
D)  causes a downward movement along the existing AD curve. 
E)  none of the above 
A)  shifts the AD curve to the right. 
B)  shifts the AD curve to the left. 
C)  causes an upward movement along the existing AD curve. 
D)  causes a downward movement along the existing AD curve. 
E)  none of the above

Question 2

Exhibit 8-4  
-Refer to Exhibit 8-4.Which of the following could not have caused a shift in aggregate supply from SRAS1 to SRAS2?

Accepted Answer

A)  an increase in productivity 
B)  a beneficial supply shock 
C)  a decrease in the price of a nonlabor input 
D)  a change in the price level 
E)  a decrease in wage rates 
A)  an increase in productivity 
B)  a beneficial supply shock 
C)  a decrease in the price of a nonlabor input 
D)  a change in the price level 
E)  a decrease in wage rates

Question 3

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)  a decrease in interest rates (which was not prompted by a change in the price level). 
D)  an increase in interest rates (which was not prompted by a change in the price level). 
A)  a decrease in the price level. 
B)  an increase in the price level. 
C)  a decrease in interest rates (which was not prompted by a change in the price level). 
D)  an increase in interest rates (which was not prompted by a change in the price level).

Question 4

When wage rates rise the short-run aggregate supply curve shifts to the right.

Accepted Answer

A) True 
 B)False

Question 5

The purchases made by the foreign sector are called __________;the purchases made by the household sector are called __________;the purchases made by the government sector are called __________;and the purchases made by the business sector are called investment.

Accepted Answer

A)  net exports;consumption;net interest 
B)  net exports;domestic spending;government purchases 
C)  net exports;consumption;government purchases 
D)  exports;domestic spending;government product 
E)  imports;consumption;government expenditures 
A)  net exports;consumption;net interest 
B)  net exports;domestic spending;government purchases 
C)  net exports;consumption;government purchases 
D)  exports;domestic spending;government product 
E)  imports;consumption;government expenditures

Question 6

If businesses are optimistic about future sales,the short-run aggregate supply curve will shift leftward.

Accepted Answer

A) True 
 B)False

Question 7

Aggregate demand curves are

Accepted Answer

A)  downward sloping. 
B)  upward sloping. 
C)  horizontal. 
D)  vertical. 
A)  downward sloping. 
B)  upward sloping. 
C)  horizontal. 
D)  vertical.

Question 8

The short-run aggregate supply curve is

Accepted Answer

A)  downward sloping. 
B)  upward sloping. 
C)  vertical. 
D)  horizontal. 
A)  downward sloping. 
B)  upward sloping. 
C)  vertical. 
D)  horizontal.

Question 9

When the dollar appreciates,U.S.net exports fall and aggregate demand decreases.

Accepted Answer

A) True 
 B)False

Question 10

A rise in foreign real national income tends to raise U.S.__________,shifting the U.S.AD curve to the __________.

Accepted Answer

A)  exports;left 
B)  exports;right 
C)  imports;left 
D)  imports;right 
A)  exports;left 
B)  exports;right 
C)  imports;left 
D)  imports;right

Question 11

As the dollar depreciates,foreign goods become more expensive for Americans.

Accepted Answer

A) True 
 B)False

Question 12

Assume that the economy is currently in short-run equilibrium,then personal income taxes decline.Describe the correct sequence of events that happen as the economy adjusts to a new short-run equilibrium (be sure to state what the impact would be on the price level and Real GDP).

Accepted Answer

As personal income taxes decline,househo

Question 13

If velocity and the money supply are __________________,then when one component of spending rises another component of spending ________________.

Accepted Answer

A)  constant;must fall 
B)  constant;must rise 
C)  rising;may not necessarily fall 
D)  rising;must rise 
A)  constant;must fall 
B)  constant;must rise 
C)  rising;may not necessarily fall 
D)  rising;must rise

Question 14

Suppose Americans buy inputs from foreigners.When the price of foreign inputs falls,the U.S.SRAS curve __________,which tends to __________the U.S.price level.

Accepted Answer

A)  shifts rightward;reduce 
B)  shifts leftward;increase 
C)  shifts leftward;reduce 
D)  remains constant;increase 
A)  shifts rightward;reduce 
B)  shifts leftward;increase 
C)  shifts leftward;reduce 
D)  remains constant;increase

Question 15

Which set of changes is definitely predicted to lower Real GDP in the short run?

Accepted Answer

A)  Interest rates rise and wage rates fall. 
B)  Interest rates rise and there is a beneficial supply shock. 
C)  Interest rates rise and labor productivity increases. 
D)  Interest rates rise and individuals expect lower (future)incomes. 
E)  c and d 
A)  Interest rates rise and wage rates fall. 
B)  Interest rates rise and there is a beneficial supply shock. 
C)  Interest rates rise and labor productivity increases. 
D)  Interest rates rise and individuals expect lower (future)incomes. 
E)  c and d

Question 16

Exhibit 8-2
  
-Refer to Exhibit 8-2.Based on the given change,what word (rises or falls)should go in blank (9)and blank (10),respectively,to summarize the resulting impact on short run equilibrium?

Accepted Answer

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

Question 17

A change in Real GDP in the short run can be brought about by a change in

Accepted Answer

A)  the exchange rate. 
B)  labor productivity. 
C)  expectations of future sales. 
D)  wealth. 
E)  all of the above 
A)  the exchange rate. 
B)  labor productivity. 
C)  expectations of future sales. 
D)  wealth. 
E)  all of the above

Question 18

In short-run equilibrium,the quantities supplied and demanded of Real GDP can be less than or greater than Natural Real GDP.

Accepted Answer

A) True 
 B)False

Question 19

Suppose consumption increases at each price level.As a result,aggregate demand __________,and the AD curve shifts __________.

Accepted Answer

A)  increases;leftward 
B)  decreases;leftward 
C)  increases;rightward 
D)  decreases;rightward 
A)  increases;leftward 
B)  decreases;leftward 
C)  increases;rightward 
D)  decreases;rightward

Question 20

If wages are "sticky",a decline in the price level will

Accepted Answer

A)  raise the real wage and lower the quantity demanded of labor. 
B)  lower the real wage and lower the quantity supplied of labor. 
C)  raise the real wage and lower the quantity supplied of labor. 
D)  a and b 
E)  none of the above 
A)  raise the real wage and lower the quantity demanded of labor. 
B)  lower the real wage and lower the quantity supplied of labor. 
C)  raise the real wage and lower the quantity supplied of labor. 
D)  a and b 
E)  none of the above

Exam 8: Aggregate Demand and Aggregate Supply

An increase in investment at a given price level

Exhibit 8-4 -Refer to Exhibit 8-4.Which of the following could not have caused a shift in aggregate supply from SRAS1 to SRAS2?

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

When wage rates rise the short-run aggregate supply curve shifts to the right.

The purchases made by the foreign sector are called __________;the purchases made by the household sector are called __________;the purchases made by the government sector are called __________;and the purchases made by the business sector are called investment.

If businesses are optimistic about future sales,the short-run aggregate supply curve will shift leftward.

Aggregate demand curves are

The short-run aggregate supply curve is

When the dollar appreciates,U.S.net exports fall and aggregate demand decreases.

A rise in foreign real national income tends to raise U.S.__________,shifting the U.S.AD curve to the __________.

As the dollar depreciates,foreign goods become more expensive for Americans.

Assume that the economy is currently in short-run equilibrium,then personal income taxes decline.Describe the correct sequence of events that happen as the economy adjusts to a new short-run equilibrium (be sure to state what the impact would be on the price level and Real GDP).

If velocity and the money supply are __________________,then when one component of spending rises another component of spending ________________.

Suppose Americans buy inputs from foreigners.When the price of foreign inputs falls,the U.S.SRAS curve __________,which tends to __________the U.S.price level.

Which set of changes is definitely predicted to lower Real GDP in the short run?

Exhibit 8-2 -Refer to Exhibit 8-2.Based on the given change,what word (rises or falls)should go in blank (9)and blank (10),respectively,to summarize the resulting impact on short run equilibrium?

A change in Real GDP in the short run can be brought about by a change in

In short-run equilibrium,the quantities supplied and demanded of Real GDP can be less than or greater than Natural Real GDP.

Suppose consumption increases at each price level.As a result,aggregate demand __________,and the AD curve shifts __________.

If wages are "sticky",a decline in the price level will

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

Exhibit 8-4 -Refer to Exhibit 8-4.Which of the following could not have caused a shift in aggregate supply from SRAS₁ to SRAS₂?

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

The purchases made by the foreign sector are called ;the purchases made by the household sector are called ;the purchases made by the government sector are called __;and the purchases made by the business sector are called investment.

A rise in foreign real national income tends to raise U.S.,shifting the U.S.AD curve to the .

If velocity and the money supply are __,then when one component of spending rises another component of spending .

Suppose Americans buy inputs from foreigners.When the price of foreign inputs falls,the U.S.SRAS curve ,which tends to the U.S.price level.

Suppose consumption increases at each price level.As a result,aggregate demand ,and the AD curve shifts .