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

Recession come at

Accepted Answer

A)   regular intervals.During recessions consumption spending falls relatively more than investment spending.
B)   regular intervals.During recessions investment spending falls relatively more than consumption spending.
C)   irregular intervals.During recessions consumption spending falls relatively more than investment spending.
D)   irregular intervals.During recessions investment spending falls relatively more than consumption spending.E) All of the above
F) C) and D)

Question 3

In the context of the aggregate-demand curve,the interest-rate effect refers to the idea that,when the price level increases,

Accepted Answer

A)   the real value of money decreases; in turn,the real value of the dollar increases in foreign exchange markets,which decreases net exports.
B)   the real value of money decreases; in turn,interest rates increase,which decreases net exports.
C)   households increase their holdings of money; in turn,interest rates decrease,which reduces spending on investment goods.
D)   households increase their holdings of money; in turn,interest rates increase,which reduces spending on investment goods.E) A) and B)
F) C) and D)

Question 4

Pessimism
Suppose the economy is in long-run equilibrium.Then because of corporate scandal,international tensions,and loss of confidence in policymakers,people become pessimistic regarding the future and retain that level of pessimism for some time.
-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) B) and C)
F) A) and B)

Question 5

The aggregate quantity of goods and services demanded changes as the price level falls because

Accepted Answer

A)   real wealth falls,interest rates rise,and the dollar appreciates.
B)   real wealth falls,interest rates rise,and the dollar depreciates.
C)   real wealth rises,interest rates fall,and the dollar appreciates.
D)   real wealth rises,interest rates fall,and the dollar depreciates.E) A) and B)
F) B) and C)

Question 6

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

Question 7

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

Question 8

Over the last fifty years both real GDP and prices have trended upward in most countries.Continuing real GDP growth and inflation can be explained by

Accepted Answer

A)   continuing technological progress alone.
B)   continuing increases in the money supply alone.
C)   continued technological progress and continuing increases in the money supply.
D)   None of the above can explain continuing real GDP growth and inflation.E) None of the above
F) A) and B)

Question 9

A relatively mild period of falling incomes and rising unemployment is called a(n)

Accepted Answer

A)   depression.
B)   recession.
C)   expansion.
D)   business cycle.E) A) and D)
F) A) and B)

Question 10

The Stock Market Boom of 2015
Imagine that in 2015 the economy is in long-run equilibrium.Then stock prices rise more than expected and stay high for some time.
-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) B) and C)
F) A) and B)

Question 11

In 1936,John Maynard Keynes published a book,The General Theory,which attempted to explain

Accepted Answer

A)   stagflation.
B)   the classical dichotomy.
C)   short-run economic fluctuations.
D)   how changes in the money supply had created the Great Depression.E) B) and D)
F) B) and C)

Question 12

Make a list of expenditures whose sum equals GDP.

Accepted Answer

consumption,investme...

Question 13

Which of the following is correct concerning recessions?

Accepted Answer

A)   They come at fairly regular and predictable intervals.
B)   They are associated with comparatively large declines in investment spending.
C)   They are any period when real GDP growth is less than average.
D)   They tend to be associated with falling unemployment rates.E) A) and B)
F) All of the above

Question 14

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

Accepted Answer

A) True 
 B)False

Question 15

If output is above its natural rate,then according to sticky-wage theory

Accepted Answer

A)   workers and firms will strike bargains for lower wages.In response to the lower wages firms will produce less at any given price level.
B)   workers and firms will strike bargains for lower wages.In response to the lower wages firms will produce more at any given price level.
C)   will strike bargains for higher wages.In response to the higher wages firms will produce less at any given price level.
D)   workers and firms will strike bargains for higher wages.In response to the higher wages firms will produce more at any given price level.E) B) and C)
F) A) and C)

Question 16

Which of the following shifts aggregate demand to the right?

Accepted Answer

A)   Congress reduces purchases of new weapons systems.
B)   The Fed buys bonds in the open market.
C)   The price level falls.
D)   Net exports fall.E) C) and D)
F) A) and C)

Question 17

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

Accepted Answer

A)   and output both increase.
B)   and output both decrease.
C)   increase and output decreases.
D)   decrease and output increases.E) All of the above
F) B) and C)

Question 18

A change in the money supply changes only nominal variables in the long run.

Accepted Answer

A) True 
 B)False

Question 19

If the price level falls,the real value of a dollar

Accepted Answer

A)   rises,so people will want to buy more.
B)   rises,so people will want to buy less.
C)   falls,so people will want to buy more.
D)   falls,so people will want to buy less.E) B) and C)
F) A) and B)

Question 20

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

Accepted Answer

A)   an increase in the money supply.
B)   an increase in government expenditures.
C)   a fall in stock prices.
D)   bad weather in farm states.E) A) and C)
F) None of the above

Exam 23: Aggregate Demand and Aggregate Supply

Which of the following shifts aggregate demand to the right?

Correct Answer
verified

In the context of the aggregate-demand curve,the interest-rate effect refers to the idea that,when the price level increases,

Correct Answer
verified

Which of the following is correct concerning recessions?

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

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

Correct Answer
verified

Over the last fifty years both real GDP and prices have trended upward in most countries.Continuing real GDP growth and inflation can be explained by

Correct Answer
verified

The aggregate quantity of goods and services demanded changes as the price level falls because

Correct Answer
verified

Correct Answer
verified

If output is above its natural rate,then according to sticky-wage theory

Correct Answer
verified

A relatively mild period of falling incomes and rising unemployment is called a(n)

Correct Answer
verified

In 1936,John Maynard Keynes published a book,The General Theory,which attempted to explain

Correct Answer
verified

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

Correct Answer
verified

Recession come at

Correct Answer
verified

The Stock Market Boom of 2015 Imagine that in 2015 the economy is in long-run equilibrium.Then stock prices rise more than expected and stay high for some time. -Refer to Stock Market Boom 2015.What happens to the expected price level and what impact does this have on wage bargaining?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

If the price level falls,the real value of a dollar

Correct Answer
verified

Make a list of expenditures whose sum equals GDP.

Correct Answer
verified
consumption,investme...
View Answer

A change in the money supply changes only nominal variables in the long run.

Correct Answer
verified

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

Correct Answer
verified

Exam 23: Aggregate Demand and Aggregate Supply

Which of the following shifts aggregate demand to the right?

Correct AnswerverifiedShow Answer

In the context of the aggregate-demand curve,the interest-rate effect refers to the idea that,when the price level increases,

Correct AnswerverifiedShow Answer

Which of the following is correct concerning recessions?

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

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

Correct AnswerverifiedShow Answer

Over the last fifty years both real GDP and prices have trended upward in most countries.Continuing real GDP growth and inflation can be explained by

Correct AnswerverifiedShow Answer

The aggregate quantity of goods and services demanded changes as the price level falls because

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If output is above its natural rate,then according to sticky-wage theory

Correct AnswerverifiedShow Answer

A relatively mild period of falling incomes and rising unemployment is called a(n)

Correct AnswerverifiedShow Answer

In 1936,John Maynard Keynes published a book,The General Theory,which attempted to explain

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Recession come at

Correct AnswerverifiedShow Answer

The Stock Market Boom of 2015 Imagine that in 2015 the economy is in long-run equilibrium.Then stock prices rise more than expected and stay high for some time. -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 falls,people

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the price level falls,the real value of a dollar

Correct AnswerverifiedShow Answer

Make a list of expenditures whose sum equals GDP.

Correct Answerverifiedconsumption,investme...View AnswerShow Answer

A change in the money supply changes only nominal variables in the long run.

Correct AnswerverifiedShow Answer

Policymakers who influence aggregate demand can potentially mitigate the severity of economic fluctuations.

Correct AnswerverifiedShow Answer

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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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
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Correct Answer
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consumption,investme...
View Answer

Correct Answer
verified

Correct Answer
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