Question 1

We can explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is correct?

Accepted Answer

A)   Short run fluctuations in economic activity happen only in developing countries.
B)   During economic contractions most firms experience rising sales.
C)   Recessions come at regular intervals and are easy to predict.
D)   When real GDP falls,the rate of unemployment rises.E) C) and D)
F) A) and C)

Question 3

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.E) None of the above
F) B) and D)

Question 4

Figure 20-2. 
-Refer to Optimism.In the short run what happens to the price level and real GDP?

Accepted Answer

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

Question 5

Keynes believed that economies experiencing high unemployment should adopt policies to

Accepted Answer

A)   reduce the money supply.
B)   reduce government expenditures.
C)   increase aggregate demand.
D)   increase aggregate supply.E) All of the above
F) A) and B)

Question 6

Which of the following is correct?

Accepted Answer

A)   Economic fluctuations are easily predicted by competent economists.
B)   Recessions have never occurred very close together.
C)   Spending,income,and production do not fluctuate closely with real GDP.
D)   None of the above is correct.E) A) and D)
F) A) and C)

Question 7

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 8

Figure 20-2. 
-Refer to Financial Crisis.If nominal wages are sticky,which of the following helps explains the change in output?

Accepted Answer

A)   real wages fall,so firms choose to produce less
B)   real wages fall,so firms choose to produce more
C)   real wages rise,so firms choose to produce less
D)   real wages rise,so firms choose to produce moreE) A) and D)
F) A) and C)

Question 9

The recessions of the 1970s are often attributed to

Accepted Answer

A)   declining inflation expectations.
B)   an increase in oil prices.
C)   declines in the price of stock.
D)   decreases in the money supply.E) C) and D)
F) None of the above

Question 10

The misperceptions theory of the short-run aggregate supply curve says that if the price level is higher than people expected,then some firms believe that the relative price of what they produce has

Accepted Answer

A)   decreased,so they increase production.
B)   decreased,so they decrease production.
C)   increased,so they increase production.
D)   increased,so they decrease production.E) B) and C)
F) None of the above

Question 11

Keynes thought that the behavior of the economy in the short run was influenced by what he called "animal spirits." By this he meant that business people sometimes felt good about the economy,and carried out lots of investment,and at other times felt bad about the economy,and so cut back on their investment spending.Explain how such fluctuations in investment would lead to fluctuations in real GDP and prices.

Accepted Answer

Fluctuations in investment cause the agg...

Question 12

The initial impact of an increase in an investment tax credit is to shift

Accepted Answer

A)   aggregate demand right.
B)   aggregate demand left.
C)   aggregate supply right.
D)   aggregate supply left.E) None of the above
F) A) and B)

Question 13

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) None of the above
F) B) and D)

Question 14

The effects of a higher than expected price level are shown by

Accepted Answer

A)   shifting the short-run aggregate supply curve right.
B)   shifting the short-run aggregate supply curve left.
C)   moving to the right along a given aggregate supply curve.
D)   moving to the left along a given aggregate supply curve.E) A) and D)
F) None of the above

Question 15

An increase in the actual price level does not shift the short-run aggregate supply curve,but an expected increase in the price level shifts the short-run aggregate supply curve to the left.

Accepted Answer

A) True 
 B)False

Question 16

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) B) and C)
F) C) and D)

Question 17

Figure 20-2. 
-Refer to Pessimism.In the long run,the change in price expectations created by pessimism shifts

Accepted Answer

A)   long-run aggregate supply right.
B)   long-run aggregate supply left.
C)   short-run aggregate supply right.
D)   short-run aggregate supply left.E) None of the above
F) A) and C)

Question 18

Which of the following shifts short-run aggregate supply right?

Accepted Answer

A)   an increase in the price level
B)   an increase in the minimum wage
C)   a decrease in the price of oil
D)   more people migrate abroad than immigrate from abroadE) None of the above
F) B) and C)

Question 19

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

Accepted Answer

A) True 
 B)False

Question 20

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,the value of the dollar falls.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) All of the above

Exam 33: Aggregate Demand and Aggregate Supply

The recessions of the 1970s are often attributed to

Correct Answer
verified

Sticky nominal wages can result in

Correct Answer
verified

Figure 20-2. -Refer to Pessimism.In the long run,the change in price expectations created by pessimism shifts

Correct Answer
verified

Keynes believed that economies experiencing high unemployment should adopt policies to

Correct Answer
verified

The initial impact of an increase in an investment tax credit is to shift

Correct Answer
verified

Figure 20-2. -Refer to Financial Crisis.If nominal wages are sticky,which of the following helps explains the change in output?

Correct Answer
verified

The effects of a higher than expected price level are shown by

Correct Answer
verified

The misperceptions theory of the short-run aggregate supply curve says that if the price level is higher than people expected,then some firms believe that the relative price of what they produce has

Correct Answer
verified

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 Answer
verified

An increase in the actual price level does not shift the short-run aggregate supply curve,but an expected increase in the price level shifts the short-run aggregate supply curve to the left.

Correct Answer
verified

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,the value of the dollar falls.In the short-run

Correct Answer
verified

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

Correct Answer
verified

Correct Answer
verified
Fluctuations in investment cause the agg...
View Answer

Which of the following is correct?

Correct Answer
verified

Figure 20-2. -Refer to Optimism.In the short run what happens to the price level and real GDP?

Correct Answer
verified

Which of the following is correct?

Correct Answer
verified

An increase in the money supply

Correct Answer
verified

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

Correct Answer
verified

We can explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time.

Correct Answer
verified

Which of the following shifts short-run aggregate supply right?

Correct Answer
verified

Exam 33: Aggregate Demand and Aggregate Supply

The recessions of the 1970s are often attributed to

Correct AnswerverifiedShow Answer

Sticky nominal wages can result in

Correct AnswerverifiedShow Answer

Figure 20-2. -Refer to Pessimism.In the long run,the change in price expectations created by pessimism shifts

Correct AnswerverifiedShow Answer

Keynes believed that economies experiencing high unemployment should adopt policies to

Correct AnswerverifiedShow Answer

The initial impact of an increase in an investment tax credit is to shift

Correct AnswerverifiedShow Answer

Figure 20-2. -Refer to Financial Crisis.If nominal wages are sticky,which of the following helps explains the change in output?

Correct AnswerverifiedShow Answer

The effects of a higher than expected price level are shown by

Correct AnswerverifiedShow Answer

The misperceptions theory of the short-run aggregate supply curve says that if the price level is higher than people expected,then some firms believe that the relative price of what they produce has

Correct AnswerverifiedShow 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

An increase in the actual price level does not shift the short-run aggregate supply curve,but an expected increase in the price level shifts the short-run aggregate supply curve to the left.

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,the value of the dollar falls.In the short-run

Correct AnswerverifiedShow Answer

Recessions occur at irregular intervals and are almost impossible to predict with much accuracy.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedFluctuations in investment cause the agg...View AnswerShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Figure 20-2. -Refer to Optimism.In the short run what happens to the price level and real GDP?

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

An increase in the money supply

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

We can explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time.

Correct AnswerverifiedShow Answer

Which of the following shifts short-run aggregate supply right?

Correct AnswerverifiedShow Answer

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verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified
Fluctuations in investment cause the agg...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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