Question 1

In the first few years of the Great Depression, unemployment rose to about

Accepted Answer

A)  10 percent, and prices rose about 14 percent. 
B)  15 percent, and prices rose about 22 percent. 
C)  20 percent, and prices fell about 14 percent. 
D)  25 percent, and prices fell about 22 percent.

Question 2

If speculators lost confidence in foreign economies and so wanted to buy more U.S. bonds

Accepted Answer

A)  the dollar would appreciate which would cause aggregate demand to shift right. 
B)  the dollar would appreciate which would cause aggregate demand to shift left. 
C)  the dollar would depreciate which would cause aggregate demand to shift right. 
D)  the dollar would depreciate which would cause aggregate demand to shift left.

Question 3

Misperceptions theory helps explain what feature of the aggregate demand and aggregate supply model?

Accepted Answer

The answer of Misperceptions theory helps explain what feature of...

Question 4

When the money supply decreases

Accepted Answer

A)  interest rates fall and so aggregate demand shifts right. 
B)  interest rates fall and so aggregate demand shifts left. 
C)  interest rates rise and so aggregate demand shifts right. 
D)  interest rates rise and so aggregate demand shifts left.

Question 5

In 1986, OPEC countries increased their production of oil. This caused

Accepted Answer

A)  the price level to rise. 
B)  aggregate supply to shift right. 
C)  unemployment to rise. 
D)  None of the above is correct.

Question 6

Other things the same, an unexpected fall in the price level results in some firms having

Accepted Answer

A)  lower than desired prices, which increases their sales. 
B)  lower than desired prices, which depresses their sales. 
C)  higher than desired prices, which increases their sales. 
D)  higher than desired prices, which depresses their sales.

Question 7

Which of the following did not happen during the onset of the Great Depression?

Accepted Answer

A)  The money supply fell as households took money out of bank deposits. 
B)  The Fed conducted expansionary monetary policy. 
C)  Stock prices fell about 90 percent. 
D)  Disruption of the banking system made it difficult for some firms to obtain funds for investment.

Question 8

During World War II,

Accepted Answer

A)  government purchases of goods and services increased fivefold. 
B)  the economy's production increased about 25 percent. 
C)  unemployment fell to about 5%. 
D)  All of the above are correct.

Question 9

A decrease in what variable will raise the quantity of goods and services supplied, and shift only the short run aggregate supply curve to the right?

Accepted Answer

The answer of A decrease in what variable will raise...

Question 10

The logic of the exchange-rate effect begins with a change in the price level changing the interest rate.

Accepted Answer

A) True 
 B)False

Question 11

The equation: quantity of output supplied = natural rate of output + aactual price level - expected price level), where
A is a positive number, represents

Accepted Answer

A)  an upward-sloping short-run aggregate supply curve 
B)  a vertical short-run aggregate supply curve 
C)  a downward-sloping aggregate demand curve 
D)  None of the above is correct.

Question 12

As the price level falls,

Accepted Answer

A)  the exchange rate falls, so net exports fall. 
B)  the exchange rate falls, so net exports rise. 
C)  the exchange rate rises, so net exports fall. 
D)  the exchange rate rises, so net exports rise.

Question 13

If aggregate demand shifts left, then in the short run

Accepted Answer

A)  the price level and real GDP both rise. 
B)  the price level rises and real GDP falls. 
C)  the price level falls and real GDP rises. 
D)  the price and real GDP both fall.

Question 14

Figure 33-11. 
Refer to Figure 33-11. A movement from P1 and Y2, to P2 and Y1 would be consistent with

Accepted Answer

A)  a decrease in consumption expenditures. 
B)  stagflation. 
C)  sticky-wages. 
D)  an increase in net exports.

Question 15

Figure 33-7. 
-Refer to Figure 33-7. Suppose the economy starts at Y. If aggregate demand increases from AD2 to AD3, then the economy moves to

Accepted Answer

A)  V. 
B)  W. 
C)  X. 
D)  Z.

Question 16

Suppose technology advances within a nation. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?

Accepted Answer

The answer of Suppose technology advances within a nation. Which...

Question 17

Make a list of things that would shift the aggregate demand curve to the right.

Accepted Answer

The answer of Make a list of things that would...

Question 18

All explanations for the upward slope of the short-run aggregate supply curve suppose that the quantity of output supplied increases when the actual price level exceeds the expected price level.

Accepted Answer

A) True 
 B)False

Question 19

Other things the same, what happens to the price level and the quantity of output when the short run aggregate supply curve shifts to the right?

Accepted Answer

The answer of Other things the same, what happens to...

Question 20

Aggregate demand shifts right when the government

Accepted Answer

A)  decreases taxes. 
B)  cuts military expenditures. 
C)  repeals an investment tax credit. 
D)  None of the above is correct.

Exam 15: Aggregate Demand and Aggregate Supply