Question 1

Which of the following would cause prices to fall and output to rise in the short run?

Accepted Answer

A)   short-run aggregate supply shifts right
B)   short-run aggregate supply shifts left
C)   aggregate demand shifts right
D)   aggregate demand shifts leftE) A) and D)
F) A) and C)

Question 2

A relatively mild period of falling incomes and rising unemployment is called an)

Accepted Answer

A)   depression.
B)   recession.
C)   expansion.
D)   business cycle.E) All of the above
F) C) and D)

Question 3

What curve shows the quantity of goods and services that households, firms, the government, and customers abroad want to buy at each price level?

Accepted Answer

The aggreg...

Question 4

Figure 33-15. 
-Refer to Figure 33-15. Suppose the economy begins at point A. Decreases in what four variables could result in a movement to point D?

Accepted Answer

consumption, investm...

Question 5

As the price level falls

Accepted Answer

A)   people will want to buy more bonds, so the interest rate rises.
B)   people will want to buy fewer bonds, so the interest rate falls.
C)   people will want to buy more bonds, so the interest rate falls.
D)   people will want to buy fewer bonds, so the interest rate rises.E) C) and D)
F) B) and D)

Question 6

We depart from the assumptions of classical economics when we focus on the relationship between

Accepted Answer

A)   the quantity of output and the price level.
B)   the quantity of output and the unemployment rate.
C)   the price level and the inflation rate.
D)   inflation and the nominal interest rate.E) A) and C)
F) B) and C)

Question 7

When the price level increases, the real value of people's money holdings

Accepted Answer

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

Question 8

The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,

Accepted Answer

A)   production is more profitable and employment rises.
B)   production is more profitable and employment falls.
C)   production is less profitable and employment rises.
D)   production is less profitable and employment falls.E) B) and D)
F) All of the above

Question 9

When the dollar depreciates, each dollar buys

Accepted Answer

A)   more foreign currency, and so buys more foreign goods.
B)   more foreign currency, and so buys fewer foreign goods.
C)   less foreign currency, and so buys more foreign goods.
D)   less foreign currency, and so buys fewer foreign goods.E) B) and D)
F) All of the above

Question 10

Figure 33-7. 
-Refer to Stock Market Boom 2015. What happens to the expected price level and what impact does this have on wage bargaining?

Accepted Answer

A)   The expected price level falls. Bargains are struck for higher wages.
B)   The expected price level falls. Bargains are struck for lower wages.
C)   The expected price level rises. Bargains are struck for higher wages.
D)   The expected price level rises. Bargains are struck for lower wages.E) A) and B)
F) All of the above

Question 11

Other things the same, if the price level rises by 2% and people were expecting it to rise by 5%, then some firms have

Accepted Answer

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

Question 12

Which of the following shifts aggregate demand to the left?

Accepted Answer

A)   The price level rises.
B)   Interest rates fall.
C)   The dollar depreciates for some reason other than a change in the price level.
D)   Stock prices fall for some reason other than a change in the price level.E) A) and B)
F) A) and C)

Question 13

Other things the same, the aggregate quantity of goods demanded decreases if

Accepted Answer

A)   real wealth falls.
B)   the interest rate rises.
C)   the dollar appreciates.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 14

Suppose the economy is in long-run equilibrium. Concerns about pollution cause the government to significantly restrict the production of electricity. At the same time, taxes fall. In the short-run

Accepted Answer

A)   real GDP will rise, and the price level might rise, fall, or stay the same.
B)   real GDP will fall, and the price level might rise, fall, or stay the same.
C)   the price level will rise, and real GDP might rise, fall, or stay the same.
D)   the price level will fall, and real GDP might rise, fall, or stay the same.E) A) and B)
F) B) and D)

Question 15

An increase in the expected price level shifts short-run aggregate supply to the

Accepted Answer

A)   right, and an increase in the actual price level shifts short-run aggregate supply to the right.
B)   right, and an increase in the actual price level does not shift short-run aggregate supply.
C)   left, and an increase in the actual price level shifts short-run aggregate supply to the left.
D)   left, and an increase in the actual price level does not shift short-run aggregate supply.E) A) and B)
F) None of the above

Question 16

As the price level rises

Accepted Answer

A)   people will want to hold more money, so the interest rate rises.
B)   people will want to hold more money, so the interest rate falls.
C)   people will want to hold less money, so the interest rate falls.
D)   people will want to hold less money, so the interest rate rises.E) C) and D)
F) B) and D)

Question 17

Other things the same, if the price level rises, then domestic interest rates

Accepted Answer

A)   rise, so domestic residents will want to hold more foreign bonds.
B)   rise, so domestic residents will want to hold fewer foreign bonds.
C)   fall, so domestic residents will want to hold more foreign bonds.
D)   fall, so domestic residents will want to hold fewer foreign bonds.E) B) and C)
F) A) and B)

Question 18

During World War II, the economy's production increased about

Accepted Answer

A)   25 percent and prices rose about 5 percent.
B)   50 percent and prices rose about 10 percent.
C)   75 percent and prices rose about 15 percent.
D)   100 percent and prices rose about 20 percent.E) None of the above
F) A) and D)

Question 19

Make a list of things that would shift the long-run aggregate supply curve to the right.

Accepted Answer

Examples in the text or variations) incl...

Question 20

Sticky nominal wages can result in

Accepted Answer

A)   lower profits for firms when the price level is lower than expected.
B)   a decrease in real wages when the price level is lower than expected.
C)   a short-run aggregate-supply curve that is vertical.
D)   a long-run aggregate-supply curve that is upward-sloping.E) A) and B)
F) None of the above

Exam 20: Aggregate Demand and Aggregate Supply

Other things the same, the aggregate quantity of goods demanded decreases if

Correct AnswerverifiedShow Answer

Other things the same, if the price level rises, then domestic interest rates

Correct AnswerverifiedShow Answer

During World War II, the economy's production increased about

Correct AnswerverifiedShow Answer

As the price level falls

Correct AnswerverifiedShow Answer

When the dollar depreciates, each dollar buys

Correct AnswerverifiedShow Answer

Which of the following would cause prices to fall and output to rise in the short run?

Correct AnswerverifiedShow Answer

Figure 33-7. -Refer to Stock Market Boom 2015. What happens to the expected price level and what impact does this have on wage bargaining?

Correct AnswerverifiedShow Answer

Other things the same, if the price level rises by 2% and people were expecting it to rise by 5%, then some firms have

Correct AnswerverifiedShow Answer

Figure 33-15. -Refer to Figure 33-15. Suppose the economy begins at point A. Decreases in what four variables could result in a movement to point D?

Correct Answerverifiedconsumption, investm...View AnswerShow Answer

Make a list of things that would shift the long-run aggregate supply curve to the right.

Correct AnswerverifiedExamples in the text or variations) incl...View AnswerShow Answer

We depart from the assumptions of classical economics when we focus on the relationship between

Correct AnswerverifiedShow Answer

When the price level increases, the real value of people's money holdings

Correct AnswerverifiedShow Answer

Suppose the economy is in long-run equilibrium. Concerns about pollution cause the government to significantly restrict the production of electricity. At the same time, taxes fall. In the short-run

Correct AnswerverifiedShow Answer

A relatively mild period of falling incomes and rising unemployment is called an)

Correct AnswerverifiedShow Answer

Which of the following shifts aggregate demand to the left?

Correct AnswerverifiedShow Answer

Sticky nominal wages can result in

Correct AnswerverifiedShow Answer

The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,

Correct AnswerverifiedShow Answer

As the price level rises

Correct AnswerverifiedShow Answer

An increase in the expected price level shifts short-run aggregate supply to the

Correct AnswerverifiedShow Answer

What curve shows the quantity of goods and services that households, firms, the government, and customers abroad want to buy at each price level?

Correct AnswerverifiedThe aggreg...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
consumption, investm...
View Answer

Correct Answer
verified
Examples in the text or variations) incl...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The aggreg...
View Answer