Question 1

Which of the following explains why production rises in most years?

Accepted Answer

A)  increases in the labor force
B)  increases in the capital stock
C)  advances in technological knowledge
D)  All of the above are correct.E) B) and D)
F) C) and D)

Question 2

Other things the same, a decrease in the price level makes consumers feel

Accepted Answer

A)  less wealthy, so the quantity of goods and services demanded falls.
B)  less wealthy, so the quantity of goods and services demanded rises.
C)  more wealthy, so the quantity of goods and services demanded rises.
D)  more wealthy, so the quantity of goods and services demanded falls.E) A) and B)
F) A) and C)

Question 3

A decrease in the money supply will shift the long-run aggregate-supply curve to the left.​

Accepted Answer

A) True 
 B)False

Question 4

The long-run trend in real GDP is upward. How is this possible given business cycles? What explains the upward trend?

Accepted Answer

There are occasional short-lived periods...

Question 5

In which case can we be sure aggregate demand shifts left overall?

Accepted Answer

A)  people want to save more for retirement and the Fed increases the money supply.
B)  people want to save more for retirement and the Fed decreases the money supply.
C)  people want to save less for retirement and the Fed increases the money supply.
D)  people want to save less for retirement and the Fed decreases the money supply.E) A) and D)
F) C) and D)

Question 6

Which of the following shifts the long-run aggregate supply curve to the left?

Accepted Answer

A)  either an increase in the price of imported natural resources or a reduction in trade restrictions.
B)  neither an increase in the price of imported natural resources or a reduction in trade restrictions.
C)  an increase in the price of imported natural resources and an increase in trade restrictions.
D)  an increase in trade restrictions and a decrease in the price of imported natural resources.E) B) and C)
F) C) and D)

Question 7

Figure 33-10. 
-Refer to Figure 33-10. If the economy starts at point C, stagflation would be consistent with point

Accepted Answer

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

Question 8

Most economists believe that classical theory describes the world in the short run but not in the long run.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Other things the same, as the price level falls, the exchange rate rises. A rise in the exchange rate leads to a decrease in net exports.

Accepted Answer

A) True 
 B)False

Question 11

The aggregate demand curve shifts left if either

Accepted Answer

A)  speculators gain confidence in U.S. assets or foreign countries enter into recession.
B)  speculators gain confidence in U.S. assets or recessions in foreign countries end.
C)  speculators lose confidence in U.S. assets or foreign countries enter into recession.
D)  speculators lose confidence in U.S. assets or recessions in foreign countries end.E) None of the above
F) All of the above

Question 12

As the price level rises

Accepted Answer

A)  people are more willing to lend, so interest rates rise.
B)  people are more willing to lend, so interest rates fall.
C)  people are less willing to lend, so interest rates fall.
D)  people are less willing to lend, so interest rates rise.E) C) and D)
F) A) and C)

Question 13

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

Accepted Answer

A)  both investment and consumption
B)  consumption but not investment
C)  investment but not consumption
D)  neither investment nor consumptionE) B) and C)
F) None of the above

Question 14

During the 2008-2009 unemployment rose from about 4.4% to about

Accepted Answer

A)  6%
B)  8%
C)  10%
D)  12%E) C) and D)
F) A) and D)

Question 15

If there are sticky wages, and the price level is greater than what was expected, then

Accepted Answer

A)  the quantity of aggregate goods and services supplied falls, which is shown by a shift of the short-run aggregate supply curve to the left.
B)  the quantity of aggregate goods and services supplied falls, as shown by a movement to the left along the short-run aggregate supply curve.
C)  the quantity of aggregate goods and services supplied rises, as shown by a shift of the short-run aggregate supply curve to the right.
D)  the quantity of aggregate goods and services supplied rises, as shown by a movement to the right along the short-run aggregate supply curve.E) A) and C)
F) B) and C)

Question 16

Suppose that the economy is at long-run equilibrium. If there is a sharp rise in the stock market combined with a significant increase in the minimum wage, then 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 17

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

Question 18

Refer to Financial Crisis. In the long run, if the Fed does not respond, the change in price expectations created by the crisis shifts

Accepted Answer

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

Question 19

Other things the same, if the long-run aggregate supply curve shifts left, prices

Accepted Answer

A)  and output both increase.
B)  and output both decrease.
C)  increase and output decreases.
D)  decrease and output increases.E) A) and B)
F) B) and D)

Question 20

Policymakers who control monetary and fiscal policy and want to offset the effects on output of an economic contraction caused by a shift in aggregate supply could use policy to shift

Accepted Answer

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

Exam 33: Aggregate Demand and Aggregate Supply

Which of the following decreases in response to the interest-rate effect from an increase in the price level?

Correct AnswerverifiedShow Answer

As the price level rises

Correct AnswerverifiedShow Answer

When the price level falls

Correct AnswerverifiedShow Answer

The aggregate demand curve shifts left if either

Correct AnswerverifiedShow Answer

Which of the following shifts the long-run aggregate supply curve to the left?

Correct AnswerverifiedShow Answer

A decrease in the money supply will shift the long-run aggregate-supply curve to the left.​

Correct AnswerverifiedShow Answer

Suppose that the economy is at long-run equilibrium. If there is a sharp rise in the stock market combined with a significant increase in the minimum wage, then in the short run

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

Other things the same, if the long-run aggregate supply curve shifts left, prices

Correct AnswerverifiedShow Answer

Figure 33-10. -Refer to Figure 33-10. If the economy starts at point C, stagflation would be consistent with point

Correct AnswerverifiedShow Answer

Most economists believe that classical theory describes the world in the short run but not in the long run.

Correct AnswerverifiedShow Answer

The long-run trend in real GDP is upward. How is this possible given business cycles? What explains the upward trend?

Correct AnswerverifiedThere are occasional short-lived periods...View AnswerShow Answer

Refer to Financial Crisis. In the long run, if the Fed does not respond, the change in price expectations created by the crisis shifts

Correct AnswerverifiedShow Answer

Which of the following explains why production rises in most years?

Correct AnswerverifiedShow Answer

Other things the same, a decrease in the price level makes consumers feel

Correct AnswerverifiedShow Answer

Other things the same, as the price level falls, the exchange rate rises. A rise in the exchange rate leads to a decrease in net exports.

Correct AnswerverifiedShow Answer

During the 2008-2009 unemployment rose from about 4.4% to about

Correct AnswerverifiedShow Answer

If there are sticky wages, and the price level is greater than what was expected, then

Correct AnswerverifiedShow Answer

Policymakers who control monetary and fiscal policy and want to offset the effects on output of an economic contraction caused by a shift in aggregate supply could use policy to shift

Correct AnswerverifiedShow Answer

In which case can we be sure aggregate demand shifts left overall?

Correct AnswerverifiedShow Answer

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A decrease in the money supply will shift the long-run aggregate-supply curve to the left.

Correct Answer
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Correct Answer
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Correct Answer
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The aggreg...
View Answer

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Correct Answer
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There are occasional short-lived periods...
View Answer

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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