Question 1

The long-run aggregate supply curve would shift right if the government were to

Accepted Answer

A)   increase the minimum-wage.
B)   make unemployment benefits more generous.
C)   raise taxes on investment spending.
D)   None of the above is correct.E) B) and C)
F) A) and D)

Question 2

Which of the following is correct?

Accepted Answer

A)   Real GDP is the variable most commonly used to measure short-run economic fluctuations.These fluctuations can be predicted with some accuracy.
B)   Real GDP is the variable most commonly used to measure short-run economic fluctuations.It is almost impossible to predict these fluctuations with much accuracy.
C)   Nominal GDP is the variable most commonly used to measure short-run economic fluctuations.These fluctuations can be predicted with some accuracy.
D)   Nominal GDP is the variable most commonly used to measure short-run economic fluctuations.It is almost impossible to predict these fluctuations with much accuracy.E) A) and B)
F) A) and C)

Question 3

The aggregate demand and aggregate supply graph has the

Accepted Answer

A)   quantity of output on the horizontal axis.Output is best measured by real GDP.
B)   quantity of output on the horizontal axis.Output is best measured by nominal GDP.
C)   quantity of output on the vertical axis.Output is best measured by real GDP.
D)   quantity of output on the vertical axis.Output is best measured by nominal GDP.E) B) and D)
F) B) and C)

Question 4

According to classical macroeconomic theory,changes in the money supply change real GDP but not the price level.

Accepted Answer

A) True 
 B)False

Question 5

Other things the same,if the price level rises,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 B)
F) C) and D)

Question 6

A decrease in the expected price level shifts

Accepted Answer

A)   only the long-run aggregate supply curve right.
B)   only the short-run aggregate supply curve right.
C)   both the short-run and the long-run aggregate supply curve right.
D)   Neither the short-run nor the long-run aggregate supply curve right.E) A) and B)
F) All of the above

Question 7

The model of short-run economic fluctuations focuses on the price level and

Accepted Answer

A)   real GDP.
B)   economic growth.
C)   the neutrality of money.
D)   None of the above is correct.E) B) and D)
F) C) and D)

Question 8

People will buy more if the price level

Accepted Answer

A)   rises because rising prices increase the real value of a dollar.
B)   rises because rising prices decrease the real value of a dollar.
C)   falls because falling prices increase the real value of a dollar.
D)   falls because falling prices decrease the real value of a dollar.E) None of the above
F) B) and C)

Question 9

Optimism
Imagine that the economy is in long-run equilibrium.Then,perhaps because of improved international relations and increased confidence in policy makers,people become more optimistic about the future and stay this way for some time.
-Refer to Optimism.How is the new long-run equilibrium different from the original one?

Accepted Answer

A)   both price and real GDP are higher
B)   both price and real GDP are lower.
C)   the price level is the same and GDP is higher.
D)   the price level is higher and real GDP is the same.E) A) and C)
F) A) and B)

Question 10

Other things the same,as the price level falls,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) A) and B)
F) A) and C)

Question 11

An increase in the expected price level shifts the

Accepted Answer

A)   short-run and long-run aggregate supply curves left.
B)   the short-run but not the long-run aggregate supply curve left.
C)   the long-run but not the short-run aggregate supply curve left.
D)   neither the long-run nor the short-run aggregate supply curve left.E) All of the above
F) C) and D)

Question 12

If speculators lost confidence in foreign economies and so wanted to buy more U.S.bonds

Accepted Answer

A)   the dollar would appreciate which would cause aggregate demand to shift right.
B)   the dollar would appreciate which would cause aggregate demand to shift left.
C)   the dollar would depreciate which would cause aggregate demand to shift right.
D)   the dollar would depreciate which would cause aggregate demand to shift left.E) B) and C)
F) A) and C)

Question 13

Economic variables are most often expressed in

Accepted Answer

A)   nominal terms,and that's what's important.
B)   nominal terms,but real variables are what's important.
C)   real terms,and that's what's important.
D)   real terms,but nominal variables are what's important.E) B) and C)
F) C) and D)

Question 14

Which of the following typically rises during a recession?

Accepted Answer

A)   consumption
B)   unemployment
C)   corporate profits
D)   automobile salesE) A) and D)
F) A) and B)

Question 15

Suppose a fall in stock prices makes people feel poorer.The decrease in wealth would induce people to

Accepted Answer

A)   decrease consumption,shown as a movement to the left along a given aggregate-demand curve.
B)   increase consumption,shown as a movement to the right along a given aggregate-demand curve.
C)   decrease consumption,shown by shifting the aggregate-demand curve to the left.
D)   increase consumption,shown by shifting the aggregate-demand curve to the right.E) All of the above
F) None of the above

Question 16

An increase in the money supply causes the interest rate to fall,investment spending to rise,and aggregate demand to shift right.

Accepted Answer

A) True 
 B)False

Question 17

The effect of a change in the value of the dollar in the foreign exchange market due to a change in the price level helps explain the slope of aggregate demand,but does not shift it.The effects of a change in the value of the dollar in the foreign exchange market due to speculation is shown by shifting the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 18

If the dollar appreciates,perhaps because of speculation or government policy,then U.S.net exports

Accepted Answer

A)   increase which shifts aggregate demand right.
B)   increase which shifts aggregate demand left.
C)   decrease which shifts aggregate demand right.
D)   decrease which shifts aggregate demand left.E) B) and D)
F) A) and B)

Question 19

Which of the following can explain the upward slope of the short-run aggregate supply curve?

Accepted Answer

A)   nominal wages are slow to adjust to changing economic conditions
B)   as the price level falls,the exchange rate falls
C)   an increase in the money supply lowers the interest rate
D)   an increase in the interest rate increases investment spendingE) A) and D)
F) A) and C)

Question 20

When the price level falls

Accepted Answer

A)   the interest rate rises,so the quantity of goods and services demand rises.
B)   the interest rate rises,so the quantity of goods and services demand falls.
C)   the interest rate falls,so the quantity of goods and services demand rises.
D)   the interest rate falls,so the quantity of goods and services demand falls.E) A) and B)
F) A) and C)

Exam 23: Aggregate Demand and Aggregate Supply

When the price level falls

Correct Answer
verified

Suppose a fall in stock prices makes people feel poorer.The decrease in wealth would induce people to

Correct Answer
verified

The long-run aggregate supply curve would shift right if the government were to

Correct Answer
verified

According to classical macroeconomic theory,changes in the money supply change real GDP but not the price level.

Correct Answer
verified

The aggregate demand and aggregate supply graph has the

Correct Answer
verified

The model of short-run economic fluctuations focuses on the price level and

Correct Answer
verified

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

Correct Answer
verified

An increase in the money supply causes the interest rate to fall,investment spending to rise,and aggregate demand to shift right.

Correct Answer
verified

If the dollar appreciates,perhaps because of speculation or government policy,then U.S.net exports

Correct Answer
verified

People will buy more if the price level

Correct Answer
verified

If speculators lost confidence in foreign economies and so wanted to buy more U.S.bonds

Correct Answer
verified

An increase in the expected price level shifts the

Correct Answer
verified

A decrease in the expected price level shifts

Correct Answer
verified

Correct Answer
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Economic variables are most often expressed in

Correct Answer
verified

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

Correct Answer
verified

Which of the following is correct?

Correct Answer
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Which of the following can explain the upward slope of the short-run aggregate supply curve?

Correct Answer
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Which of the following typically rises during a recession?

Correct Answer
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Correct Answer
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Exam 23: Aggregate Demand and Aggregate Supply

When the price level falls

Correct AnswerverifiedShow Answer

Suppose a fall in stock prices makes people feel poorer.The decrease in wealth would induce people to

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve would shift right if the government were to

Correct AnswerverifiedShow Answer

According to classical macroeconomic theory,changes in the money supply change real GDP but not the price level.

Correct AnswerverifiedShow Answer

The aggregate demand and aggregate supply graph has the

Correct AnswerverifiedShow Answer

The model of short-run economic fluctuations focuses on the price level and

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An increase in the money supply causes the interest rate to fall,investment spending to rise,and aggregate demand to shift right.

Correct AnswerverifiedShow Answer

If the dollar appreciates,perhaps because of speculation or government policy,then U.S.net exports

Correct AnswerverifiedShow Answer

People will buy more if the price level

Correct AnswerverifiedShow Answer

If speculators lost confidence in foreign economies and so wanted to buy more U.S.bonds

Correct AnswerverifiedShow Answer

An increase in the expected price level shifts the

Correct AnswerverifiedShow Answer

A decrease in the expected price level shifts

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economic variables are most often expressed in

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Which of the following can explain the upward slope of the short-run aggregate supply curve?

Correct AnswerverifiedShow Answer

Which of the following typically rises during a recession?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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