Question 1

If businesses in general decide that they have overbuilt and so now have too much capital,their response to this would initially shift

Accepted Answer

A)   aggregate demand right.
B)   aggregate demand left.
C)   aggregate supply right.
D)   aggregate supply left.E) A) and B)
F) A) and C)

Question 2

Below are pairs of GDP growth rates and unemployment rates.Economists would be shocked to see most of these pairs in the U.S.Which pair of GDP growth rates and unemployment rates is realistic?

Accepted Answer

A)   5 percent,1 percent
B)   3 percent,5 percent
C)   -1 percent,3 percent
D)   -2 percent,4 percentE) C) and D)
F) A) and B)

Question 3

The saying "Money is a veil." means that

Accepted Answer

A)   while nominal variables are the first thing we may observe about an economy,what's important are the real variables and the forces that determine them.
B)   money is the principal medium of exchange in most economies.
C)   the primary determinant of short-run economic fluctuations is not real variables,but rather changes in the money supply.
D)   in the long run money is of no importance to the determination of either real or nominal variables.E) B) and D)
F) None of the above

Question 4

Compare changes in the price level for a recession resulting from a shift in aggregate demand to that of a recession resulting from a shift in short run aggregate supply.

Accepted Answer

the price level decreases when...

Question 5

Figure 20-1 
-Refer to Figure 20-1.An increase in the money supply 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 D)
F) A) and C)

Question 6

When the price level falls

Accepted Answer

A)   households want to lend less.
B)   the interest rate rises.
C)   firms want to spend less on investment goods.
D)   None of the above are correct.E) None of the above
F) A) and C)

Question 7

Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage.They may infer that the reward to working is

Accepted Answer

A)   temporarily low and so supply a smaller quantity of labor.
B)   temporarily low and so supply a larger quantity of labor.
C)   temporarily high and so supply a smaller quantity of labor.
D)   temporarily high and so supply a larger quantity of labor.E) B) and D)
F) None of the above

Question 8

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Suppose the government raises taxes.Which curves in the aggregate demand and aggregate supply model would be affected,and which way would they shift?

Accepted Answer

The aggreg...

Question 11

Other things the same,the aggregate quantity of output supplied will decrease if the price level

Accepted Answer

A)   is lower than expected so that firms believe the relative price of their output has increased.
B)   is lower than expected so that firms believe the relative price of their output has decreased.
C)   is higher than expected so that firms believe the relative price of their output has increased.
D)   is higher than expected so that firms believe the relative price of their output has decreased.E) B) and D)
F) A) and B)

Question 12

Historically,the change in real GDP during recessions has been

Accepted Answer

A)   mostly a change in investment spending.
B)   mostly a change in consumption spending.
C)   about equally divided between consumption and investment spending.
D)   sometimes mostly a change in consumption and sometimes mostly a change in investment.E) None of the above
F) B) and C)

Question 13

An increase in the price level and a reduction in output would result from

Accepted Answer

A)   a fall in stock prices.
B)   natural disasters such as hurricanes,floods,and droughts.
C)   declining government expenditures.
D)   tax rebates.E) B) and D)
F) A) and D)

Question 14

Other things the same,technological progress raises the price level.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following effects helps to explain the slope of the aggregate-demand curve?

Accepted Answer

A)   the exchange-rate effect
B)   the wealth effect
C)   the interest-rate effect
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 16

Which of the following would shift the long-run aggregate supply curve right?

Accepted Answer

A)   both an increase in the capital stock and an increase in the price level
B)   an increase in the capital stock,but not an increase in the price level
C)   an increase in the money supply,but not an increase in the capital stock
D)   neither an increase in the money supply nor an increase in the capital stockE) A) and B)
F) A) and C)

Question 17

Increased uncertainty and pessimism about the future of the economy lead firms to desire less investment spending which shifts the aggregate-demand curve to the left.

Accepted Answer

A) True 
 B)False

Question 18

Other things the same,if the price level falls,people

Accepted Answer

A)   increase foreign bond purchases,so the dollar appreciates.
B)   increase foreign bond purchases,so the dollar depreciates.
C)   increase domestic bond purchases,so the dollar appreciates.
D)   increase domestic bond purchases,so the dollar depreciates.E) All of the above
F) C) and D)

Question 19

The mathematical equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level) ,expresses

Accepted Answer

A)   how the long run equilibrium adjusts to changes in money supply.
B)   how output deviates in the short run from its long run natural rate.
C)   how the short run aggregate supply curve shifts.
D)   how adverse shifts in aggregate supply can cause stagflation.E) B) and C)
F) A) and B)

Question 20

When looking at a graph of aggregate demand,which of the following is correct?

Accepted Answer

A)   There are nominal variables on both the vertical and the horizontal axes.
B)   There are real variables on both the vertical and horizontal axes.
C)   The variable on the vertical axis is nominal;the variable on the horizontal axis is real
D)   The variable on the vertical axis is real;the variable on the horizontal axis is nominalE) All of the above
F) B) and C)

Exam 33: Aggregate Demand and Aggregate Supply

When looking at a graph of aggregate demand,which of the following is correct?

Correct AnswerverifiedShow Answer

Other things the same,the aggregate quantity of output supplied will decrease if the price level

Correct AnswerverifiedShow Answer

Figure 20-1 -Refer to Figure 20-1.An increase in the money supply would move the economy from C to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose the government raises taxes.Which curves in the aggregate demand and aggregate supply model would be affected,and which way would they shift?

Correct AnswerverifiedThe aggreg...View AnswerShow Answer

Compare changes in the price level for a recession resulting from a shift in aggregate demand to that of a recession resulting from a shift in short run aggregate supply.

Correct Answerverifiedthe price level decreases when...View AnswerShow Answer

Increased uncertainty and pessimism about the future of the economy lead firms to desire less investment spending which shifts the aggregate-demand curve to the left.

Correct AnswerverifiedShow Answer

Which of the following effects helps to explain the slope of the aggregate-demand curve?

Correct AnswerverifiedShow Answer

The saying "Money is a veil." means that

Correct AnswerverifiedShow Answer

If businesses in general decide that they have overbuilt and so now have too much capital,their response to this would initially shift

Correct AnswerverifiedShow Answer

Which of the following would shift the long-run aggregate supply curve right?

Correct AnswerverifiedShow Answer

Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage.They may infer that the reward to working is

Correct AnswerverifiedShow Answer

An increase in the price level and a reduction in output would result from

Correct AnswerverifiedShow Answer

When the price level falls

Correct AnswerverifiedShow Answer

Below are pairs of GDP growth rates and unemployment rates.Economists would be shocked to see most of these pairs in the U.S.Which pair of GDP growth rates and unemployment rates is realistic?

Correct AnswerverifiedShow Answer

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

Correct AnswerverifiedShow Answer

Historically,the change in real GDP during recessions has been

Correct AnswerverifiedShow Answer

Other things the same,if the price level falls,people

Correct AnswerverifiedShow Answer

The mathematical equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level) ,expresses

Correct AnswerverifiedShow Answer

Other things the same,technological progress raises the price level.

Correct AnswerverifiedShow Answer

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The aggreg...
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the price level decreases when...
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