Question 1

The product of ____________________ and _________________ is equal to the total amount of spending in an economy.

Accepted Answer

A)  the money supply;the price level 
B)  velocity;the price level 
C)  the money supply;velocity 
D)  velocity;the level of output 
A)  the money supply;the price level 
B)  velocity;the price level 
C)  the money supply;velocity 
D)  velocity;the level of output

Question 2

A rise in the price level prompts an increase in the demand for credit.This is relevant to the __________ effect.

Accepted Answer

A)  international trade 
B)  real balance 
C)  aggregate demand 
D)  interest rate 
E)  b and c 
A)  international trade 
B)  real balance 
C)  aggregate demand 
D)  interest rate 
E)  b and c

Question 3

A short-run aggregate supply curve shows the

Accepted Answer

A)  amount of a particular good producers are willing and able to buy at a particular price,ceteris paribus. 
B)  real output (Real GDP)producers are willing and able to sell at different price levels,ceteris paribus. 
C)  real output (Real GDP)people are willing and able to buy and to sell at different price levels,ceteris paribus. 
D)  real output (Real GDP)people are willing and able to buy at different price levels,ceteris paribus. 
A)  amount of a particular good producers are willing and able to buy at a particular price,ceteris paribus. 
B)  real output (Real GDP)producers are willing and able to sell at different price levels,ceteris paribus. 
C)  real output (Real GDP)people are willing and able to buy and to sell at different price levels,ceteris paribus. 
D)  real output (Real GDP)people are willing and able to buy at different price levels,ceteris paribus.

Question 4

Generally,an increase in aggregate supply is

Accepted Answer

A)  the result of an increase in the price level. 
B)  represented by a movement up along the SRAS curve. 
C)  represented by a rightward shift in the SRAS curve. 
D)  both a and b 
E)  both a and C 
A)  the result of an increase in the price level. 
B)  represented by a movement up along the SRAS curve. 
C)  represented by a rightward shift in the SRAS curve. 
D)  both a and b 
E)  both a and C

Question 5

An increase in the interest rate __________ purchases of consumer __________.

Accepted Answer

A)  increases;durables 
B)  increases;nondurables 
C)  reduces;durables 
D)  reduces;nondurables 
A)  increases;durables 
B)  increases;nondurables 
C)  reduces;durables 
D)  reduces;nondurables

Question 6

Which of the following statements is false?

Accepted Answer

A)  If the SRAS curve shifts rightward,the price level falls in the short run. 
B)  If AD rises and SRAS is constant,the price level rises in the short run. 
C)  If both SRAS and AD decline,Real GDP falls in the short run. 
D)  If both SRAS and AD increase,the price level necessarily rises in the short run. 
E)  none of the above 
A)  If the SRAS curve shifts rightward,the price level falls in the short run. 
B)  If AD rises and SRAS is constant,the price level rises in the short run. 
C)  If both SRAS and AD decline,Real GDP falls in the short run. 
D)  If both SRAS and AD increase,the price level necessarily rises in the short run. 
E)  none of the above

Question 7

The AD curve shows that,as the price level falls,the quantity of

Accepted Answer

A)  GDP demanded increases. 
B)  GDP demand decreases. 
C)  Real GDP demanded increases. 
D)  Real GDP demanded decreases. 
E)  none of the above 
A)  GDP demanded increases. 
B)  GDP demand decreases. 
C)  Real GDP demanded increases. 
D)  Real GDP demanded decreases. 
E)  none of the above

Question 8

As the price level falls,

Accepted Answer

A)  the purchasing power of cash holdings rises. 
B)  the purchasing power of cash holdings falls. 
C)  the purchasing power of cash holdings remains constant. 
D)  cash holdings turn into dollar-denominated assets. 
E)  none of the above 
A)  the purchasing power of cash holdings rises. 
B)  the purchasing power of cash holdings falls. 
C)  the purchasing power of cash holdings remains constant. 
D)  cash holdings turn into dollar-denominated assets. 
E)  none of the above

Question 9

The AD curve shows the various amounts of real output that people are willing and able to

Accepted Answer

A)  buy at different income levels. 
B)  buy at different price levels. 
C)  sell at different profit levels. 
D)  sell at different price levels. 
E)  none of the above 
A)  buy at different income levels. 
B)  buy at different price levels. 
C)  sell at different profit levels. 
D)  sell at different price levels. 
E)  none of the above

Question 10

Foreign real national income rises.This raises U.S.___________ which ________ aggregate demand (AD).The AD curve shifts ___________.

Accepted Answer

A)  net exports;raises;rightward 
B)  imports;raises;rightward 
C)  prices;reduces;leftward 
D)  investment;reduces;leftward 
E)  none of the above 
A)  net exports;raises;rightward 
B)  imports;raises;rightward 
C)  prices;reduces;leftward 
D)  investment;reduces;leftward 
E)  none of the above

Question 11

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

Accepted Answer

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

Question 12

Explain how aggregate demand and aggregate supply may affect your job prospects after you leave college.Support your answer with an appropriate example.

Accepted Answer

The ability to find a job depe

Question 13

The short-run aggregate supply curve is ________ and the long-run aggregate supply curve is _________.

Accepted Answer

A)  upward sloping;horizontal 
B)  vertical;upward sloping 
C)  vertical;horizontal 
D)  upward sloping;vertical 
E)  none of the above 
A)  upward sloping;horizontal 
B)  vertical;upward sloping 
C)  vertical;horizontal 
D)  upward sloping;vertical 
E)  none of the above

Question 14

Which of the following is not a factor that can shift the short-run aggregate supply curve?

Accepted Answer

A)  changes in the wage rate 
B)  changes in the price of energy 
C)  changes in the stock of capital goods 
D)  improvements in management techniques 
E)  none of the above 
A)  changes in the wage rate 
B)  changes in the price of energy 
C)  changes in the stock of capital goods 
D)  improvements in management techniques 
E)  none of the above

Question 15

Suppose consumption decreases 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 16

Can a change in the price level change aggregate demand?

Accepted Answer

A)  Yes,as the price level rises,aggregate demand falls. 
B)  Yes,but only under the condition that the real balance effect is operational. 
C)  No,only a change in a nonprice factor can change aggregate demand. 
D)  No,a change in the price level can only change aggregate supply. 
E)  none of the above 
A)  Yes,as the price level rises,aggregate demand falls. 
B)  Yes,but only under the condition that the real balance effect is operational. 
C)  No,only a change in a nonprice factor can change aggregate demand. 
D)  No,a change in the price level can only change aggregate supply. 
E)  none of the above

Question 17

Which of the following statements is false?

Accepted Answer

A)  The exchange rate is the price of one (country's)currency in terms of another (country's)currency. 
B)  A currency has appreciated in value if more of a foreign currency is needed to buy it. 
C)  A change in the money supply can change aggregate demand. 
D)  A change in business taxes can change investment,which can change aggregate demand. 
E)  none of the above 
A)  The exchange rate is the price of one (country's)currency in terms of another (country's)currency. 
B)  A currency has appreciated in value if more of a foreign currency is needed to buy it. 
C)  A change in the money supply can change aggregate demand. 
D)  A change in business taxes can change investment,which can change aggregate demand. 
E)  none of the above

Question 18

The dollar appreciates in value.This makes foreign-produced goods __________ for Americans and U.S.-produced goods __________ for foreigners.As a result,U.S.__________ fall and U.S.__________ rise.

Accepted Answer

A)  more expensive;cheaper;imports;exports 
B)  cheaper;more expensive;exports;imports 
C)  cheaper;more expensive;imports;exports 
D)  more expensive;cheaper;exports;imports 
A)  more expensive;cheaper;imports;exports 
B)  cheaper;more expensive;exports;imports 
C)  cheaper;more expensive;imports;exports 
D)  more expensive;cheaper;exports;imports

Question 19

Starting from short-run equilibrium,the following occurs: personal income taxes are cut,business taxes are cut,and labor productivity rises.What is the effect on the price level and Real GDP in the short run?

Accepted Answer

A)  Real GDP rises and the price level necessarily falls. 
B)  Real GDP rises and the price level necessarily rises. 
C)  Real GDP falls and the price level necessarily remains the same. 
D)  Real GDP rises and the effect on the price level cannot be determined. 
E)  Real GDP rises and the price level necessarily remains the same. 
A)  Real GDP rises and the price level necessarily falls. 
B)  Real GDP rises and the price level necessarily rises. 
C)  Real GDP falls and the price level necessarily remains the same. 
D)  Real GDP rises and the effect on the price level cannot be determined. 
E)  Real GDP rises and the price level necessarily remains the same.

Question 20

As the U.S.dollar appreciates,the U.S.____________ curve shifts _____________ resulting in a(n)_________________ in the U.S.price level and a(n)_________________ in Real GDP in the United States.

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

Exam 8: Aggregate Demand and Aggregate Supply

The product of ____________________ and _________________ is equal to the total amount of spending in an economy.

A rise in the price level prompts an increase in the demand for credit.This is relevant to the __________ effect.

A short-run aggregate supply curve shows the

Generally,an increase in aggregate supply is

An increase in the interest rate __________ purchases of consumer __________.

Which of the following statements is false?

The AD curve shows that,as the price level falls,the quantity of

As the price level falls,

The AD curve shows the various amounts of real output that people are willing and able to

Foreign real national income rises.This raises U.S.___________ which ________ aggregate demand (AD).The AD curve shifts ___________.

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

Explain how aggregate demand and aggregate supply may affect your job prospects after you leave college.Support your answer with an appropriate example.

The short-run aggregate supply curve is ________ and the long-run aggregate supply curve is _________.

Which of the following is not a factor that can shift the short-run aggregate supply curve?

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

Can a change in the price level change aggregate demand?

Which of the following statements is false?

The dollar appreciates in value.This makes foreign-produced goods __________ for Americans and U.S.-produced goods __________ for foreigners.As a result,U.S.__________ fall and U.S.__________ rise.

Starting from short-run equilibrium,the following occurs: personal income taxes are cut,business taxes are cut,and labor productivity rises.What is the effect on the price level and Real GDP in the short run?

As the U.S.dollar appreciates,the U.S.____________ curve shifts _____________ resulting in a(n)_________________ in the U.S.price level and a(n)_________________ in Real GDP in the United States.

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

The product of ____ and _ is equal to the total amount of spending in an economy.

An increase in the interest rate purchases of consumer .

Foreign real national income rises.This raises U.S._ which aggregate demand (AD).The AD curve shifts _.

The short-run aggregate supply curve is and the long-run aggregate supply curve is _.

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

The dollar appreciates in value.This makes foreign-produced goods for Americans and U.S.-produced goods for foreigners.As a result,U.S. fall and U.S. rise.

As the U.S.dollar appreciates,the U.S.______ curve shifts _ resulting in a(n)_ in the U.S.price level and a(n)_______ in Real GDP in the United States.