Question 1

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) A) and B)
F) All of the above

Question 2

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 3

All explanations for the upward slope of the short-run aggregate supply curve suppose that the quantity of output supplied increases when the actual price level exceeds the expected price level.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)   increase foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange increases.
B)   increase foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange decreases.
C)   decrease foreign bond purchases,so the supply of dollars in market for foreign-currency exchange increases.
D)   decrease foreign bond purchases,so the supply of dollars in the market for foreign-currency exchange decreases.E) B) and C)
F) A) and C)

Question 5

Historical evidence for the U.S.economy indicates that

Accepted Answer

A)   recessions have occurred roughly once every six years since the 1960s.
B)   the unemployment rate usually decreases during a recession and increases shortly after the recession ends.
C)   real GDP usually remains roughly constant during a recession and decreases shortly after the recession ends.
D)   changes in real GDP over the business cycle are largely attributable to changes in investment over the business cycle.E) A) and B)
F) A) and C)

Question 6

The long-run aggregate supply curve shifts right if

Accepted Answer

A)   immigration from abroad increases.
B)   the capital stock increases.
C)   technology advances.
D)   All of the above are correct.E) C) and D)
F) All of the above

Question 7

In the early 1930s in the United States,there was a

Accepted Answer

A)   large increase in output.In the early 1940s there was also a large increase in output.
B)   large increase in output.In the early 1940s there was a large decrease in output.
C)   large decrease in output.In the early 1940s there was a large increase in output.
D)   large decrease in output.In the early 1940s there was also a large decrease in output.E) B) and D)
F) A) and B)

Question 8

The model of aggregate demand and aggregate supply explains the relationship between

Accepted Answer

A)   the price and quantity of a particular good.
B)   unemployment and output.
C)   wages and employment.
D)   real GDP and the price level.E) A) and D)
F) B) and C)

Question 9

Most economists believe that money neutrality holds

Accepted Answer

A)   in the short run but not the long run.
B)   in the long run but not the short run.
C)   in both the short run and the long run.
D)   in neither the short run nor the long run.E) A) and B)
F) All of the above

Question 10

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) A) and B)
F) B) and D)

Question 11

Which of the following is correct?

Accepted Answer

A)   Over the business cycle consumption fluctuates more than investment.
B)   Economic fluctuations are easy to predict.
C)   During recessions sales and profits tend to fall.
D)   Because of government policy the U.S.has suffered no recessions in the last 25 years.E) A) and B)
F) All of the above

Question 12

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

Question 13

Other things the same,as the price level rises,the real value of a dollar

Accepted Answer

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

Question 14

The equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level) ,where a is a positive number,represents

Accepted Answer

A)   an upward-sloping short-run aggregate supply curve
B)   a vertical short-run aggregate supply curve
C)   a downward-sloping aggregate demand curve
D)   None of the above is correct.E) B) and C)
F) None of the above

Question 15

The sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if

Accepted Answer

A)   the price level is higher than expected making production more profitable.
B)   the price level is higher than expected making production less profitable
C)   the price level is lower than expected making production more profitable .
D)   the price level is higher than expected making production less  profitable.E) A) and B)
F) A) and C)

Question 16

When taxes increase,consumption

Accepted Answer

A)   increases,so aggregate demand shifts right.
B)   increases,so aggregate supply shifts right.
C)   decreases,so aggregate demand shifts left.
D)   decreases,so aggregate supply shifts left.E) B) and D)
F) None of the above

Question 17

Most economists use the aggregate demand and aggregate supply model primarily to analyze

Accepted Answer

A)   short-run fluctuations in the economy.
B)   the effects of macroeconomic policy on the prices of individual goods.
C)   the long-run effects of international trade policies.
D)   productivity and economic growth.E) A) and B)
F) A) and C)

Question 18

Figure 33-2. 
-Refer to Figure 33-2.Starting from point B and assuming that aggregate demand is held constant,in the long run the economy is likely to experience

Accepted Answer

A)   a falling price level and a falling level of output.
B)   a falling price level and a rising level of output.
C)   a rising price level and a falling level of output.
D)   a rising price level and a rising level of output.E) A) and B)
F) A) and C)

Question 19

During World War II government expenditures increased almost five-fold and output almost doubled.

Accepted Answer

A) True 
 B)False

Question 20

Suppose that a decrease in the demand for goods and services pushes the economy into recession.What happens to the price level? If the government does nothing,what ensures that the economy still eventually gets back to the natural rate of output?

Accepted Answer

A decrease in aggregate demand causes th...

Exam 33: Aggregate Demand and Aggregate Supply

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

Correct AnswerverifiedShow Answer

The equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level) ,where a is a positive number,represents

Correct AnswerverifiedShow Answer

The sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if

Correct AnswerverifiedShow Answer

In the early 1930s in the United States,there was a

Correct AnswerverifiedShow Answer

Suppose that a decrease in the demand for goods and services pushes the economy into recession.What happens to the price level? If the government does nothing,what ensures that the economy still eventually gets back to the natural rate of output?

Correct AnswerverifiedA decrease in aggregate demand causes th...View AnswerShow Answer

Figure 33-2. -Refer to Figure 33-2.Starting from point B and assuming that aggregate demand is held constant,in the long run the economy is likely to experience

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve shifts right if

Correct AnswerverifiedShow Answer

The aggregate demand and aggregate supply graph has

Correct AnswerverifiedShow Answer

Historical evidence for the U.S.economy indicates that

Correct AnswerverifiedShow Answer

The model of aggregate demand and aggregate supply explains the relationship between

Correct AnswerverifiedShow Answer

When taxes increase,consumption

Correct AnswerverifiedShow Answer

Most economists use the aggregate demand and aggregate supply model primarily to analyze

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Other things the same,as the price level rises,the real value of a dollar

Correct AnswerverifiedShow Answer

During World War II government expenditures increased almost five-fold and output almost doubled.

Correct AnswerverifiedShow Answer

All explanations for the upward slope of the short-run aggregate supply curve suppose that the quantity of output supplied increases when the actual price level exceeds the expected price level.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Most economists believe that money neutrality holds

Correct AnswerverifiedShow Answer

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A decrease in aggregate demand causes th...
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