Question 1

Other things the same, a fall in an economy's overall level of prices tends to

Accepted Answer

A)   raise both the quantity demanded and supplied of goods and services.
B)   raise the quantity demanded of goods and services, but lower the quantity supplied.
C)   lower the quantity demanded of goods and services, but raise the quantity supplied.
D)   lower both the quantity demanded and the quantity supplied of goods and services.E) C) and D)
F) B) and D)

Question 2

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)   Congress reduces purchases of new weapons systems.
B)   The Fed buys bonds in the open market.
C)   The price level falls.
D)   Net exports fall.E) None of the above
F) B) and C)

Question 3

If the dollar depreciates because of speculation or government policy, U.S.

Accepted Answer

A)   aggregate demand shifts left. U.S. aggregate demand also shifts left if other countries experience an increase in real GDP.
B)   aggregate demand shifts left. U.S. aggregate demand shifts right if other countries experience an increase in real GDP.
C)   aggregate demand shifts right. U.S. aggregate demand also shifts right if other countries experience a decrease in real GDP.
D)   aggregate demand shifts right. U.S. aggregate demand shifts left if other countries experience a decrease in real GDP.E) A) and B)
F) A) and C)

Question 4

The aggregate demand and aggregate supply graph has

Accepted Answer

A)   the price level on the horizontal axis. The price level can be measured by the GDP deflator.
B)   the price level on the horizontal axis. The price level can be measured by real GDP.
C)   the price level on the vertical axis. The price level can be measured by the GDP deflator.
D)   the price level on the vertical axis. The price level can be measured by GDP.E) C) and D)
F) A) and B)

Question 5

Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in taxes, then in the short run, real GDP will

Accepted Answer

A)   rise and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be unaffected.
B)   fall and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be unaffected.
C)   rise and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be lower.
D)   fall and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be lower.E) B) and D)
F) A) and B)

Question 6

Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to

Accepted Answer

A)   rise. This rise in price expectations shifts the short-run aggregate supply curve to the right.
B)   rise. This rise in price expectations shifts the short-run aggregate supply curve to the left.
C)   fall. This fall in price expectations shifts the short-run aggregate supply curve to the right.
D)   fall. This fall in price expectations shifts the short-run aggregate supply curve to the left.E) C) and D)
F) All of the above

Question 7

Which of the following is a lesson concerning shifts in aggregate demand?

Accepted Answer

A)   they contribute to fluctuations in output.
B)   in the long-run they change real output, but not the price level.
C)   policymakers are unable to mitigate the severity of economic fluctuations.
D)   All of the above are correct.E) A) and D)
F) A) and B)

Question 8

An increase in the money supply

Accepted Answer

A)   and an investment tax credit both cause aggregate demand to shift right.
B)   and an investment tax credit both cause aggregate demand to shift left.
C)   causes aggregate demand to shift right, while an investment tax credit causes aggregate demand to shift left.
D)   causes aggregate demand to shift left, while an investment tax credit causes aggregate demand to shift right.E) A) and B)
F) C) and D)

Question 9

Figure 33-4 
-Refer to Figure 33-4. A decrease in taxes would move the economy from C to

Accepted Answer

A)   B in the short run and the long run.
B)   D in the short run and the long run.
C)   B in the short run and A in the long run.
D)   D in the short run and C in the long run.E) A) and B)
F) B) and D)

Question 10

When the price level rises more than expected, a firm with a sticky price will sell its output at a price that is

Accepted Answer

A)   less than it desires and increase its production.
B)   less than it desires and decrease its production.
C)   more than it desires and increase its production.
D)   less than it desires and decrease its productionE) A) and D)
F) B) and C)

Question 11

Other things the same, an increase in the price level induces people to hold

Accepted Answer

A)   less money, so they lend less, and the interest rate rises.
B)   less money, so they lend more, and the interest rate falls.
C)   more money, so they lend more, and the interest rate falls.
D)   more money, so they lend less, and the interest rate rises.E) C) and D)
F) A) and D)

Question 12

The wealth effect helps explain what feature in the aggregate demand and aggregate supply model?

Accepted Answer

why the ag...

Question 13

Other things the same, a decrease in the price level makes the dollars people hold worth

Accepted Answer

A)   more, so they can buy more.
B)   more, so they can buy less.
C)   less, so they can buy more.
D)   less, so they can buy less.E) B) and C)
F) A) and B)

Question 14

Most economists believe that in the short run

Accepted Answer

A)   real and nominal variables are determined independently and that money cannot move real GDP away from its long-run trend.
B)   real and nominal variables are determined independently but that money can temporarily move real GDP away from its long-run trend.
C)   real and nominal variables are highly intertwined but that money cannot move real GDP away from its long- run trend.
D)   real and nominal variables are highly intertwined and that money can temporarily move real GDP away from its long-run trend.E) B) and C)
F) A) and C)

Question 15

The recession of 2008-2009 was in many ways the worst macroeconomic event in more than half a century.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following shifts both short-run and long-run aggregate supply left?

Accepted Answer

A)   a decrease in the actual price level
B)   a decrease in the expected price level
C)   a decrease in the capital stock
D)   a decrease in the money supplyE) C) and D)
F) None of the above

Question 17

Figure 33-6. 
-Refer to Figure 33-6. Which of the long-run aggregate-supply curves is consistent with a short-run economic expansion?

Accepted Answer

A)   LRAS1
B)   LRAS2
C)   LRAS3
D)   Both LRAS1 and LRAS3E) B) and C)
F) A) and B)

Question 18

Other things the same, what happens to the price level and quantity of output when an adverse shift in the short run aggregate supply curve occurs?

Accepted Answer

Price leve...

Question 19

Other things the same, as the price level falls, a country's exchange rate

Accepted Answer

A)   and interest rates rise.
B)   and interest rates fall.
C)   falls and interest rates rise.
D)   rises and interest rates fall.E) A) and B)
F) None of the above

Question 20

Identify the variables that could cause shifts in both the short-run and long-run aggregate-supply curves.

Accepted Answer

labor, cap...

Exam 15: Aggregate Demand and Aggregate Supply

When the price level rises more than expected, a firm with a sticky price will sell its output at a price that is

Correct AnswerverifiedShow Answer

The recession of 2008-2009 was in many ways the worst macroeconomic event in more than half a century.

Correct AnswerverifiedShow Answer

Other things the same, an increase in the price level induces people to hold

Correct AnswerverifiedShow Answer

If the dollar depreciates because of speculation or government policy, U.S.

Correct AnswerverifiedShow Answer

Which of the following shifts both short-run and long-run aggregate supply left?

Correct AnswerverifiedShow Answer

Other things the same, a fall in an economy's overall level of prices tends to

Correct AnswerverifiedShow Answer

Other things the same, what happens to the price level and quantity of output when an adverse shift in the short run aggregate supply curve occurs?

Correct AnswerverifiedPrice leve...View AnswerShow Answer

Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to

Correct AnswerverifiedShow Answer

Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in taxes, then in the short run, real GDP will

Correct AnswerverifiedShow Answer

Which of the following is a lesson concerning shifts in aggregate demand?

Correct AnswerverifiedShow Answer

Other things the same, a decrease in the price level makes the dollars people hold worth

Correct AnswerverifiedShow Answer

Figure 33-4 -Refer to Figure 33-4. A decrease in taxes would move the economy from C to

Correct AnswerverifiedShow Answer

The aggregate demand and aggregate supply graph has

Correct AnswerverifiedShow Answer

Most economists believe that in the short run

Correct AnswerverifiedShow Answer

Figure 33-6. -Refer to Figure 33-6. Which of the long-run aggregate-supply curves is consistent with a short-run economic expansion?

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The wealth effect helps explain what feature in the aggregate demand and aggregate supply model?

Correct Answerverifiedwhy the ag...View AnswerShow Answer

Which of the following shifts aggregate demand to the right?

Correct AnswerverifiedShow Answer

Other things the same, as the price level falls, a country's exchange rate

Correct AnswerverifiedShow Answer

Identify the variables that could cause shifts in both the short-run and long-run aggregate-supply curves.

Correct Answerverifiedlabor, cap...View AnswerShow Answer

An increase in the money supply

Correct AnswerverifiedShow Answer

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Price leve...
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why the ag...
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Correct Answer
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labor, cap...
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Correct Answer
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