Question 1

Stagflation results from continued decreases in aggregate demand.

Accepted Answer

A) True 
 B)False

Question 2

Changes in what four variables will shift the long run aggregate supply curve?

Accepted Answer

Labor, capital, natu...

Question 3

When the dollar depreciates, U.S.

Accepted Answer

A)   net exports rise, which increases the aggregate quantity of goods and services demanded.
B)   net exports rise, which decreases the aggregate quantity of goods and services demanded.
C)   net exports fall, which increases the aggregate quantity of goods and services demanded.
D)   net exports fall, which decreases the aggregate quantity of goods and services demanded.E) All of the above
F) A) and D)

Question 4

Keynes believed that economies experiencing high unemployment should adopt policies to

Accepted Answer

A)   reduce the money supply.
B)   reduce government expenditures.
C)   increase aggregate demand.
D)   increase aggregate supply.E) None of the above
F) A) and B)

Question 5

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

Accepted Answer

When the price level increases, the purc...

Question 6

Which of the following affected aggregate demand during the recession of 2008-2009?

Accepted Answer

A)   a decline in residential construction and a decrease in lending
B)   a decline in residential construction but not a decrease in lending
C)   a decrease in lending but not a decline in residential construction
D)   neither a decrease in residential construction nor a decrease in lendingE) A) and D)
F) C) and D)

Question 7

According to the aggregate demand and aggregate supply model, in the long run a decrease in the money supply leads to

Accepted Answer

A)   decreases in both the price level and real GDP.
B)   an increase in real GDP and an increase in the price level.
C)   a decrease in the price level but does not change real GDP.
D)   an increase in the price level but does not change real GDP.E) B) and D)
F) C) and D)

Question 8

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) All of the above
F) C) and D)

Question 9

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

Question 10

A recession with inflation is known by what term?

Accepted Answer

The answer of A recession with inflation is known by...

Question 11

Figure 33-10. 
-Refer to Figure 33-10. If the economy starts at point A, a short-run fall in output would be consistent with a movement to point

Accepted Answer

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

Question 12

The long-run aggregate supply curve shifts right if

Accepted Answer

A)   the price level rises.
B)   the price level falls.
C)   the capital stock increases.
D)   the capital stock decreases.E) A) and C)
F) A) and B)

Question 13

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

Question 14

The aggregate-demand curve shows that a decrease in the price level

Accepted Answer

A)   decreases the dollar value of goods and services demanded in the economy.
B)   decreases the real value of goods and services demanded in the economy.
C)   increases the dollar value of goods and services demanded in the economy.
D)   increases the real value of goods and services demanded in the economy.E) None of the above
F) A) and B)

Question 15

Explain how a change in the expected price level would shift the short-run and long-run aggregate-supply curves.

Accepted Answer

Expected price level changes w...

Question 16

Sticky nominal wages can result in

Accepted Answer

A)   lower profits for firms when the price level is lower than expected.
B)   a decrease in real wages when the price level is lower than expected.
C)   a short-run aggregate-supply curve that is vertical.
D)   a long-run aggregate-supply curve that is upward-sloping.E) A) and C)
F) B) and C)

Question 17

If aggregate demand shifts right then in the short run

Accepted Answer

A)   firms will increase production. In the long run increased price expectations shift the short-run aggregate supply curve to the right.
B)   firms will increase production. In the long run increased price expectations shift the short-run aggregate supply curve to the left.
C)   firms will decrease production. In the long run increased price expectations shift the short-run aggregate supply curve to the right.
D)   firms will decrease production. In the long run increased price expectations shift the short-run aggregate supply curve to the left.E) B) and C)
F) None of the above

Question 18

An increase in the actual price level does not shift the short-run aggregate supply curve, but an expected increase in the price level shifts the short-run aggregate supply curve to the left.

Accepted Answer

A) True 
 B)False

Question 19

If speculators bid up the value of the dollar in the market for foreign-currency exchange, U.S. aggregate demand would shift to the left.

Accepted Answer

A) True 
 B)False

Question 20

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. What happens to the expected price level and what's the result for 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) None of the above
F) C) and D)

Exam 15: Aggregate Demand and Aggregate Supply

According to the aggregate demand and aggregate supply model, in the long run a decrease in the money supply leads to

Correct Answer
verified

Stagflation results from continued decreases in aggregate demand.

Correct Answer
verified

An increase in the actual price level does not shift the short-run aggregate supply curve, but an expected increase in the price level shifts the short-run aggregate supply curve to the left.

Correct Answer
verified

The aggregate-demand curve shows that a decrease in the price level

Correct Answer
verified

Explain how a change in the expected price level would shift the short-run and long-run aggregate-supply curves.

Correct Answer
verified
Expected price level changes w...
View Answer

A recession with inflation is known by what term?

Correct Answer
verified

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

Correct Answer
verified

Sticky nominal wages can result in

Correct Answer
verified

When the dollar depreciates, U.S.

Correct Answer
verified

Changes in what four variables will shift the long run aggregate supply curve?

Correct Answer
verified
Labor, capital, natu...
View Answer

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

Correct Answer
verified
When the price level increases, the purc...
View Answer

If aggregate demand shifts right then in the short run

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Figure 33-10. -Refer to Figure 33-10. If the economy starts at point A, a short-run fall in output would be consistent with a movement to point

Correct Answer
verified

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

Correct Answer
verified

The long-run aggregate supply curve shifts right if

Correct Answer
verified

Which of the following affected aggregate demand during the recession of 2008-2009?

Correct Answer
verified

If speculators bid up the value of the dollar in the market for foreign-currency exchange, U.S. aggregate demand would shift to the left.

Correct Answer
verified

Keynes believed that economies experiencing high unemployment should adopt policies to

Correct Answer
verified

Exam 15: Aggregate Demand and Aggregate Supply

According to the aggregate demand and aggregate supply model, in the long run a decrease in the money supply leads to

Correct AnswerverifiedShow Answer

Stagflation results from continued decreases in aggregate demand.

Correct AnswerverifiedShow Answer

An increase in the actual price level does not shift the short-run aggregate supply curve, but an expected increase in the price level shifts the short-run aggregate supply curve to the left.

Correct AnswerverifiedShow Answer

The aggregate-demand curve shows that a decrease in the price level

Correct AnswerverifiedShow Answer

Explain how a change in the expected price level would shift the short-run and long-run aggregate-supply curves.

Correct AnswerverifiedExpected price level changes w...View AnswerShow Answer

A recession with inflation is known by what term?

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

Sticky nominal wages can result in

Correct AnswerverifiedShow Answer

When the dollar depreciates, U.S.

Correct AnswerverifiedShow Answer

Changes in what four variables will shift the long run aggregate supply curve?

Correct AnswerverifiedLabor, capital, natu...View AnswerShow Answer

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

Correct AnswerverifiedWhen the price level increases, the purc...View AnswerShow Answer

If aggregate demand shifts right then in the short run

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 33-10. -Refer to Figure 33-10. If the economy starts at point A, a short-run fall in output would be consistent with a movement to point

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The long-run aggregate supply curve shifts right if

Correct AnswerverifiedShow Answer

Which of the following affected aggregate demand during the recession of 2008-2009?

Correct AnswerverifiedShow Answer

If speculators bid up the value of the dollar in the market for foreign-currency exchange, U.S. aggregate demand would shift to the left.

Correct AnswerverifiedShow Answer

Keynes believed that economies experiencing high unemployment should adopt policies to

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Expected price level changes w...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
Labor, capital, natu...
View Answer

Correct Answer
verified
When the price level increases, the purc...
View Answer

Correct Answer
verified

Correct Answer
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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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